April 17, 2003—By investing up to $3 million to finance the expansion of Javoni, a garment company in Tajikistan, the International Finance Corporation (IFC) is supporting the local textile industry and strengthening local cotton production, one of the country’s major commodities.

The IFC, the private sector financing arm of the World Bank Group, aims to promote sustainable private sector investment in developing countries, in which private investors are reluctant to invest.

This undertaking is also paving the way for attracting future foreign investment in Tajikistan, the least developed of former Soviet Republics, whose economy is slowly recovering from civil conflict of the 1990’s.

As a Tajik-Italian-American company in northern Tajikistan, Javoni is the largest foreign-local textile joint venture in the country.

Javoni employs more than one thousand people in the northern town of Khojand. With the IFC investment, Javoni's workforce is expected to triple to about 3,500 staff in the next several years, and its garment production is expected to increase from 1.4 million to 4.1 million pieces a year.

"IFC's investment in Javoni will have a strong demonstration effect encouraging much-needed foreign direct investment in Tajikistan. Javoni is a plant operating close to European efficiency standards, which is notable considering the young history of Tajikistan and the difficult challenges it faces as a country in the very early stages of developing its economy," said Assaad Jabre, vice president of IFC.

Javoni is majority owned by Carrera Group, a global leader in the manufacturing and sales of casual garments, which in the past few years has been in a successful joint venture with Abreshim SA, the largest textile company in Tajikistan, partly state-owned. Javoni produces casual garments sold through Carrera into Europe and the United States.

Tajikistan, a country with a young history as a nation, and GDP per capita of $166, is the least developed republic of the former Soviet Union. The government is currently endeavoring to improve opportunities for its people by implementing one of the most far-reaching economic reform programs in Central Asia.

"The IFC investment in Javoni will contribute to an increase of annual Tajik exports of 2.3 percent, and will add about $15 million a year to Tajikistan's economy," said Amal Fabian, director general of Javoni.

In the last two years, IFC has been taking a proactive role in Tajikistan by providing much needed financing to the incipient private sector; helping balance the shareholding between foreign and local interests and, in its role as an honest broker, improving transparency between the private and public sectors.

"IFC's transaction will support technology transfer in the local garment manufacturing, and give strong support to the country's major comparative advantage, the production of high-quality cotton," Khosrow Zamani, IFC's director for Central Asia.

"It also shows IFC's integrated approach to investment, which not only includes financing but also technical advice and creating linkages between large companies and local small and medium enterprises."

An essential part of the IFC investment in Javoni is strengthening these links with smaller local entrepreneurs with the assistance of advisory services. Javoni will purchase, at market prices, part of its cotton supply from IFC's pilot Farmers' Ownership Model (FOM) project, which was launched in April 2002 with the assistance of IFC's Private Enterprise Partnership (PEP). PEP provides extensive advisory services including for agribusiness and corporate governance.

Today, FOM is a private company owned by farmers and is already financing the cotton crops of more than 350 farm families. PEP's staff is present full time on-site advising farmers on growing and selling their cotton more efficiently.

Useful links:  Click here   for more information on the IFC’s work.