Investment in agriculture could boost growth in Central Asia

Policy reviews published recently by the UN suggest former Soviet Union countries Tajikistan and Kyrgyzstan could boost growth and create more jobs by attracting investment into their agriculture, textile and tourism sectors.

By Denene Erasmus
November 18, 2016 8:19 am

Although Tajikistan’s GDP has grown on average 8%/year since 2000, half of its working-age population is unemployed, according to a statement released by the United Nations Conference on Trade and Development (UNCTAD).

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The statement quotes James Zhan, director of UNCTAD’s Division on Investment and Enterprise, as saying that private investment in the country has been among the lowest in Central Asia.

“We’ve seen increased investment in prospecting for minerals and oil, but for the time being, Tajikistan has only a few proven deposits compared with its neighbours,” said Zhan, noting that these deposits were hard to access.

However, according to the report, Tajikistan, which used to be a major producer of fruits, vegetables, silk and cotton, has strong potential in agribusiness.

According to the UNCTAD, most of the agricultural products currently produced in Tajikistan are unprocessed, leaving an opportunity for processing, storage and packaging.

Tajikistan’s neighbour, Kyrgyzstan experienced failing investor confidence following political unrest in 2005 and 2010, however, according to the UNCTAD, foreign direct investment (FDI) in the country’s mining sector jumped from US$50 million in 2005 to some US$600 million in 2011.

Meanwhile FDI in other sectors struggled to pass US$200 million/year, sometimes dipping below US$100 million and investments in the mining sector failed to generate enough jobs to slow the growth of unemployment among its 5,8 million population.

The UNCTAD’s investment policy review on Kyrgyzstan suggested that, with its “low labour costs, mild weather, good pasture and pristine mountain landscapes” the country held strong potential for agribusiness development.

Furthermore, it had access to large markets in the Russian Federation and Kazakhstan. But the report also called for more investment in infrastructure, noting that roads were in severe need of maintenance and that electrical grids were unreliable.