A cumulative ca. US$30 million has been invested in and/or lent to various banks across the republic. Tajikistan is not rich with natural resources or land, which almost necessarily implies that small and medium enterprises and services’ sector should be targeted for the country to become self sufficient. These sectors need credits and loans that are normally provided by banks. Most commercial banks in the newly independent states started their existence with small capital and were thus dodgy to work with. The banking sector has especially suffered in the former Soviet countries after all the savings of the citizens were either cancelled or heavily devalued. Therefore, even if some commercial banks have sufficient capital and assets, winning back public trust is yet another significant objective to achieve. Luckily, during the 1998 default in Russia which had an inevitable affect on most CIS countries, the banking sector in Tajikistan did not draw considerable capital from the population, which would have meant a double loss of trust.

With the support of the international organizations, Tajikistan’s banks can increase their capital and offer profitable rates for deposits or enhance short-term investment. In fact, Tajikistan as of today. probably has the best deposit interest rates, ranging from 20-30 percent annually. With microeconomic stabilization performing relatively well, the country has succeeded in maintaining a low inflation rate. For three years, the now somoni has been stable to the US Dollar in the range of 3.2 somoni per Dollar.

The biggest bank in Tajikistan is Orienbank, with overall capital of over US$18 million. The capital of Agroinvestbank, Tajsodirotbank, Tajprombank, Amonatbank, and the First Microfinance Bank also well exceeds US$5 million, and these banks have branches in most of the cities of the country. Accessibility is a big step forward to make banking attractive and trustworthy. Moreover, a solid and stable banking sector is very instrumental in improving small and medium enterprises internally and it is also a necessary precondition for foreign investment. Yet not long ago, money was transported in cash from one place to another by representatives of various organizations.

An interesting connection can be drawn between labor migration and the banking sector in Tajikistan. The migrant workers do not only help their families survive back home, but also directly and indirectly have affected and are continuing to help the banking sector in Tajikistan. The International Organization for Migration has estimated the volume of remittances to be twice the size of the national GDP, and unlike Russia where the national wealth is invested abroad even by those working in the country, Tajikistanis are loyal in sending money back to their country.

Economically speaking, the migrant workers are investing in Tajikistan either by increasing their families’ savings or increasing spending. Their indirect contribution to the strengthening of the banks in Tajikistan has unfortunately taken root from the awful experience that most of them overcame while transporting money back home after a seasonal work in the late 1990s. Many became victims of corrupt border guards and custom officials along the way to Tajikistan. With the appearance of Western Union and then the more profitable Anelik, Migom, and InterExpress in Tajikistan’s major cities, money transfers via banks have become more attractive and less risky for the migrant workers, which in turn makes interaction of their families with banks more frequent back home. This could be very conducive to restoring trust in the banks.

On the negative side, the strong dependency of commercial banks on external capital prevents them to require necessary procedures on funds reporting, and illegal money from drugs can be stored safely and contribute to the criminal economy. Furthermore, with corruption and bribery rife, banks are a convenient way of money laundering from the republic. Given that most of the banks in fact belong to the individuals close to the authorities, accountability is an element yet to achieve. Deloitte and KPMG, some of the world biggest finance and auditing companies, are stretching their activities as far as Central Asia, which could bring about more transparency in the banking sector. The EBRD, IMF, ADB, and other IFIs that have given loans to Tajikistan’s banks need to work with the government in order to pass and enforce necessary and relevant laws for strengthening transparency and accountability.