How useful is microfinance? (Migration v Microfinance)

28 June 2010 at 20:29 7 comments

by Rosalind Piggot, KF10, Tajikistan

Many Kiva Entrepreneurs I have met took up business to earn money to support their families. Some previous work didn’t pay enough.

But in Tajikistan, micro-entrepreneurship has big competition when it comes to supporting the family. The rival is employment in Russia. As part of the Soviet Union for over 60 years, many Tajiks speak Russian. They can enter Russia without a special visa. With limited job opportunities and lower wages in Tajikistan, Russia is the obvious way forward for a lot of Tajiks.

Russian migration in the culture

Without reading the statistics, you know Russia is important just by the popular culture. For example:

  • Beeline, a mobile phone operator, airs commercials where a small boy asks “When will daddy call?” as his mother tucks him in. Then the phone rings – you see daddy calling with images of Russia in the background. Everyone is happy.

    Beeline ad in Kulob, Tajikistan

  • The music video for “Ota ma Russia daay” (Dad’s in Russia) by Firdovs Alivod.  Although the tune is cheerful, the words and images aren’t. Dad goes to Russia – maybe for 3 years. Fatherless boy gets beaten up. Mother cries and runs out of money. Dad passes out in the Russian snow after too much vodka.

The stats

Father drinking vodka in Russia. Scene from the music video for Ota ma Russia daay by Firdovs Alivod

The statistics are nonetheless impressive.  Tajikistan’s population is about 7 million. Estimates of the number of Tajiks living in Russia vary from 600,000 to 1.5 million, with a recent Irex paper putting the number at 800,000 (or roughly 10% of the population) for 2009.   Remittances (from Russia and other countries) exceeded  50% of Tajikistan’s GDP in 2008, with Russia as the largest source of remittances (as per this World Bank report).

Almost every family I have met here has at least 1 family member studying or working in Russia. Some go for several years. Some go and settle there. Some go seasonally, maybe staying for 6 months and then coming home for 6 months.

In Russia, you can make triple what you can in Tajikistan. And it is addictive. During the economic crisis, many Tajiks working in Russia lost their jobs and returned to Tajikistan. But, even if they could find work in Tajikistan, it was difficult to adjust to the reduced salary.

The gamble

But, Russia is a gamble. I’ve asked a lot of people about the impact of Russian migration on Tajikistan. Many of the migrants are men, and there two scenarios:

  • “Good men.” Good men go to Russia, make a lot of money, and send it home regularly. They come home and often times build or buy a house.

Kiva Entrepreneurs and Russia

Before becoming a Kiva Fellow, I had a soft spot for Tajikistan’s male borrowers. These men were struggling to make a decent living at home in Tajikistan. I thought their relationships with family weren’t strained by months of separation.  By lending to them, I thought I was helping the whole family by enabling them to stay home.

But my recent borrower verification has shown me that Kiva Entrepreneurs are not “immune” to Russia.

While visiting borrowers, I met one entrepreneur whose wife had left for Russia and decided not to come home.

I was also scheduled to meet another Kiva Entrepreneur, who actually had gone to Russia. I was meant to meet him when he returned home from his rice fields. However, the entrepreneur’s wife called Kiva’s Field Partner to say he had gone to Russia.

As I talked with his wife, I saw the story wasn’t as simple as a rice farmer trying to grow the business. Both he and his wife were actually history teachers. However, to earn enough to support the family, he also farmed and his wife sold clothes in the market part-time. Their oldest son had recently gone to Russia and gotten a job. When he called home saying “I found a job for dad too”, there was no question of staying home when so much more could be earned in Russia.*

Russia rubles paying Tajik loans

Although at first glance this situation might seem unusual, this additional income will probably make repayment much easier for the family. In microfinance, multiple income streams are often used to repay a loan.

The relation between migration and loan repayments was also explained to me by a branch director from one of  Kiva’s Field Partners. He mentioned that, during the worst of the financial crisis, only families with Russian migrants could afford to make the monthly payments. Migration income is not considered when the Field Partner assesses the potential client’s debt capacity. However, when it comes down to actually making payments, it can make a huge difference.

For more on remittances to countries where Kiva Entrepreneurs live, see blogs about Kyrgyzstan, Samoa and Nicaragua.

If you would like to support entrepreneurs in Tajikistan, you can lend, join the team Supporters of Tajikistan, or learn more about Tajikistan from Kiva Fellow blog posts

*The first question Kiva’s Field Partner and I asked was “how is the loan going to get repaid”. Well, in the meantime, this client’s brother will tend the rice and his wife will pay back the loan.

Entry filed under: blogsherpa, KF10 (Kiva Fellows 10th Class), Tajikistan. Tags: , , , , , , , .

Kigali here I come What is Social Performance?


  • 1. Judy  |  23 December 2010 at 10:48

    I teach English as a Second Language to immigrants in Virginia, USA. Everyone knows that English will improve educational and vocational opportunities. Yet, I know that I will lose students to job demands, because food on the table today trumps tomorrow’s income.

    Conscientious borrowers will repay their loans, and those with more than one stream of income can meet their obligations more confidently. In fact, I often look at the total income package of the family in assessing the level of risk.

    Every borrower who repays his loan makes it possible for another family to receive a loan. Not only is the first farmer or shopkeeper ahead, but he in turn assists his neighbor. I may be original source of loan money and the decision maker for the next loan, but I am beholden to the entrepreneur…and this is truly humbling. We’re all significant cogs in the wheel that keeps this enterprise rolling!

  • […] find work abroad, of which large amounts of the male population do for at least part of the year (read here). So the loan of say 350 dollars can help the person receiving the loan, the family of the person […]

  • 3. Kevin Henderson  |  29 June 2010 at 22:16

    Roz, this is a really good analysis. Great post!

  • 4. Antoine S. TERJANIAN  |  29 June 2010 at 03:36

    Thank you Rosalind for shedding the light on a problem spread throughout the former USSR.
    Sometimes I wonder: Are the business plans we see for the requested loans, realistic? can these people pay the loan back? Or is the loan really so one can purchase a plane ticket to get a job in Russia, or try to sneak into Europe or America?
    I also have heard stories where these ‘illegal’ work migrants get beaten-up, are not paid their wages and return home penniless.

  • 5. madhab  |  28 June 2010 at 23:37

    nice ,

  • 6. Sam  |  28 June 2010 at 22:12

    wow… I knew this was huge. Its big in Ukraine as well, but thats shocking.

  • 7. brittanygoesglobal  |  28 June 2010 at 21:23

    This was really interesting, thanks!

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