Developing micro and small businesses

Furuz provides high quality financial services with a special focus on small business development and contributes this way to the development of Tajikistan.

Small Business Development

 Lack of employment is one of the main poverty and development issues in Tajikistan at this time. A large number of people want to work but are unable to find employment, or if they find work they are paid such a low salary that they cannot live on it. That is why many have to leave the country in search for work. With half the GDP coming from migrant workers, mainly from Russia, Tajikistan is the most remittance dependent country in the world.

Furuz is convinced that not microenterprises but growing small and medium enterprises will develop Tajikistan and create a sufficient number of jobs. We give loans to micro entrepreneurs to help them become successful and grow. But the long-term development of Tajikistan and creating sustainable jobs depends on small and medium enterprises (SME). These are not created when 50 women sell basically the same bread in a bazaar which could also be done by one person in a supermarket.

We met in 2008 at a Summer Academy of Frankfurt Scholl of Finance in Frankfurt/Germany the CEO of HasBank in Mongolia, the microfinance market leader there. He told us that recently South Korean companies came to Mongolia to offer 10,000 well-paid jobs in South Korea to Mongolians. His reaction: “Our clients are entrepreneurs. They won’t leave to be employed.” But in actual fact, many of HasBank’s clients left for employment in South Korea. Then he reported that he learned that many microfinance clients are not entrepreneurs at their heart. They are forced to be self-employed but they would prefer a regularly paid job.

“It is a fact that small and medium size companies are the back bone of developed countries. They create socio-economic changes which drive democratization and these enterprises also are an essential tax base for nations. (…) How come Bangladesh (a micro-enterprise country) is still poor and Taiwan (an SME country) is rich? Wouldn’t it be better to focus on small and medium size enterprises, SME’s?” (Quote from article: Why is Bangladesh still poor and Taiwan rich?)

In Tajikistan is seems very difficult to develop SMEs. Nonetheless we see progress and we have hope. There is everywhere a certain percentage of entrepreneurs, full of ideas and willing to take the risk – also in Tajikistan. We would like to support them, as much as possible.

  1. Develop pre-SMEs with whatever loan amount they need with the goal of growing the most successful into SME.
  2. Support high risk start-ups with potential to create jobs.

When growing a SME client, some develop a need for bigger loans like $50,000. But for Furuz such a loan is too risky with a loan portfolio of $1.5 million. So the client with 60 employees working in 2 shifts baking bread and other bakery products had to get this loan from a bank. Growing the loan portfolio of Furuz to $3 or $5 million would be a huge step forward to give higher maximum loan amount for promising SME client with high potential.


To develop pre-SME and SMEs with whatever amount of loan they need. We define a pre-SME to start with 3 jobs or more. In our case they often are agricultural family businesses who have enough land to employ family members as well others, often seasonal workers. We have some cases of pre-SME companies having 5-10 employees. But they run their business in small entities to remain in the simplified tax system which means they pay 4-5 times less taxes than businesses with proper accounting over 500,000 TJS turnover. Micro businesses have a low flat rate tax, independent of their turnover. So often growing businesses try to appear as micro businesses for tax reasons.


Funding promising start-up businesses with the potential to be profitable to create jobs is another part of the strategy to develop SMEs.