Statement of UN Resident Coordinator, UNDP Resident Representative in Tajikistan, Ms. Pratibha Mehta on the occasion of the International Day for the Eradication of Poverty, October 17, 2017Oct 17, 2017
It is my great pleasure to be here today and thank you for the opportunity to share some of my thoughts on promoting sustainable economic development and improving the investment climate in Tajikistan.
During the last 10 to 15 years, Tajikistan has taken several measures to promote economic growth, investment and jobs creation. Growth has averaged 6% to 6.5 % annually over the last decade. Basic services such as electricity and water supply have greatly improved. Many MDGs were achieved, most importantly, poverty has fallen from over 80% in 2000 to about 31% by early 2015. It’s worth mentioning that Tajikistan’s pace of poverty reduction over the past 15 years has been among the top 10% in the world.
However, many challenges remain. Tajikistan was hit hard by the 2008 global financial crisis and since late 2014 by the recession in Russia. In both cases, large number of migrant workers returned and income from remittances, close to 50% of GDP in normal times, sharply declined. But while the recovery from the 2008 crisis was swift, the country still feels the consequences of the 2014 global financial crisis.
At this critical juncture, Tajikistan adopted the new global agenda 2030 with 17 SDGs and formulated the NDS 2030, which includes over 70% of SDG indicators, providing a road map for national sustainable development.
While growth has, more or less, remained even, there is evidence that it has not necessarily translated into equitable development and job creation, especially in remote and rural areas, or in gender equality. Evidence show that a majority of working women are either in informal sector or work as unpaid labor in family business. Tajikistan has one of the highest percentage of young population but almost 40% of young men and women are neither in school nor working, and, off those working, nearly one third do unpaid work in family business. Higher tax on labor is discouraging formal hiring and is driving labor into casual labor and informal sector.
In a highly competitive and inter-dependent world, today’s development challenges are rooted in the relationship between economics and people’s well-being. And these links are fundamentally shaped by the nature of the labour market - how inclusive and equitable work is and to what extent poor and vulnerable are supported to access opportunities and are protected. Inclusion is at the heart of 17 SDGs adopted by the UN member states in 2015, with the core principles of "leaving no one behind”.
The Government of Tajikistan in its NDS has set ambitious goals to be reached by 2020 to double GDP, to reduce poverty to 20%, and to expand the middle class. To achieve these ambitious goals, Tajikistan would need to focus on improving the quality and sustainability of economic growth, and to adopt not just any model, but inclusive and green growth model which contributes in achieving interdependent social, economic and environmental goals for sustainable development for all.
The country would need to implement set of structural reforms: (a) for diversified, inclusive and green economy; reforms to promote domestic private sector by enabling enterpreneurs to establish new business, giving them incentives to create jobs; improving productivity by strengthening local value chains which can also generate more productive jobs in rural and urban areas; (b) investing in people and providing access to quality education, vocational skills and health care, especially girls and women, as their participation in pre-primary and post-secondary education is declining (c) regional cooperation for trade, climate change, water, energy: invest in disaster risk management and reducing external risks.
It is important to note that while economic inclusion emphasizes everyone's right to participate in the growth process, financial inclusion is an important instrument and means to realize this vision. Reforms are also necessary to enable improved access to credit and other financial services, including micro insurance, micro leasing of farm equipment, etc. and incentives for formal banking systems to do business with "unbanked groups" such as poor and vulnerable as well as with small and medium-sized enterprises.
Finally, while Tajikistan has a strategy to mobilize investment for large infrastructure projects, it can also explore new and emerging form of investment called “impact investment” for social and environment impact alongside financial gains. The complex set of SD cannot be achieved without partnership with Business. UN predicts that achieving the SDGs worldwide by 2030 will require an investment of about $3.3 to $4.5 trillion a year, while official development assistance in 2016 world- wide amounted to only $142.6 billion. Projected funding envelope of Tajikistan’s NDS is USD 118 Billion. This level of financing will require private capital to fill the gap.
Interest of impact investors in SDGs is growing as they want to invest in one another’s future by investing in renewable energy, green construction, preventing health epidemics, improving food security, etc. UNDP has started promoting incentivizing capital market investment in SDGs. A new SDG Impact Finance Initiative has been set up , first MOU has been signed with the European Investment Fund to enhance economic and social impact of special economic zones in Cambodia.
Similarily, a new impact fund to boost smart affordable housing options in Bangladesh has been created to raise $100 million from private investors willing to back green housing and other ventures in the country.
However, attracting any kind of investment requires that country must establish favorable conditions to build confidence of any investor.
Let me end by highlighting that in Tajikistan our support includes local economic development through livelihood improvement and capacity development. This has so far resulted in improving livelihoods of more than 170,000 people, including 90,000 women, in many parts of Tajikistan and creating more than 1,5 thousand full-time jobs in 2016 alone. Over 233,000 people (including close to 100,000 women) directly benefited from social and economic projects, whereas improved access to water, energy, land, healthcare and education has reached 700,000 people throughout the country, especially in rural areas.
We also closely collaborate with the Ministry of Economic Development and Trade to improve the national legislation on Free Economic Zones, including the recently adopted addition to the Law “On Free Economic Zones of the Republic of Tajikistan” and capacity development and experience sharing on the best FEZ practices.
The Free Economic Zone “Dangara”, which is an important platform and economic tool for encouraging business development, enhance entrepreneurship and improve the investment climate in Dangara district, has also benefited from this assistance.
Thank you for your attention!