The Impact of Microcredit: OXUS Tajikistan - November 2010

What is the impact of the participation in a microcredit programme?

The case of OXUS Tajikistan

Submitted by: Caroline THIEULIN-MALEAUD

ESC Rennes School of Business - The Open University - IFEAC
Supervised by: Servane DELANOË
November 2010
Keywords - Microcredit, Microfinance, Tajikistan, Impact assessment, Gender

The purpose of this research is to study the impact of the participation in a microcredit
programme, OXUS Tajikistan, on its beneficiaries.

Literature review - Microcredit is presented as a tool to reduce poverty (Bikbaeva and

Gaibnazarova, 2009; Chowdhury et al., 2005; Menon, 2006; Matin et al, 2002). It is “an
increasingly common weapon in the fight to reduce poverty and promote economic growth”
(Karlan and Zinman, 2010, p.2). However studies found a negative impact on the borrowers,
keeping them in a poverty trap (Coleman, 1999; Weiss and Montgomery, 2005; Karlan and
Zinman, 2010). To carry an impact assessment which “compares the outcomes of a program or
policy against an explicit counterfactual of what would have happened without the program or
policy” (McKenzie, D., 2009, p.2), the previous researches indicate three principal levels of
impact: Individual, Household and Enterprise. According to the literature, the framework
proposed was the following:

Chart 1: Proposed framework

 The Impact of Microcredit: OXUS Tajikistan - November 2010

Related to the framework a set of propositions was defined. Since there are two independent
and eleven dependent variables, 11 double propositions were stated taking them it into account.
Only one example is given:

P1CCC CLIENT CUMULATED is positively related to ENTERPRISE MANAGEMENT.

P1CLC CLIENT LOAN CYCLE

Methodology – To evaluate the impact of microcredit a cross sectional survey was filled in by
408 clients in addition to 6 focus focus groups. Only client were chosen following Strobach and
Zaumseil (2007) and Copestake et al. (2001) assumption that the impact assessment can be
done within the programme. The questionnaire was based on the questionnaire of Nelson et al.
(2001) made for practitioners, reduced and translated in Tajik, Russian or Uzbek. A pilot test
was done to finalize it. According to the table providing “the minimum sample sizes required
from different sizes of population at the 95 per cent level of certainty” (Saunders, M et al., 2007,
p.212), the sample size had to be at least 400 out of the 7,921 active OXUS clients. Then the
collected data were analyzed using a correlation and regressions tests taking into account the
qualitative findings from the focus groups. They were completed with a mean analysis of the
relevant groups.

Findings of the qualitative study – They are summarized in the following table:
Access to microcredit:
Increases the income.
Enterprise Increases the ability to forecast the expenses and sales.
Increases the trust and loyalty of respondent’s clients and family.
Increases the vulnerability of weak businesses.
Increases the ability of the client to take business related decision by himself.
Individual
Increases the ability to save money.
Increases the ability to care of the housing.
Household Increases the access to food.
Does not change the access to education and health.

Thus, the variable “Health and Education” was used in the quantitative study only as categorical
items for descriptive purpose and the variable “CONTROL OVER INDIVIDUAL RESOURCES”
(ICP) was not quantitatively analysed because not mentioned during the discussions.

The findings of the quantitative study – The quantitative study showed that access to
microcredit has positive impacts its beneficiaries. It agrees with Pitt and Khandker (1998) or
Bikbaeva and Gaibnazarova (2009) in the same geographical area. It does not have a wide
impact since the results are not generalizable. The dependent variables on which microcredit
had an impact while participating in a programme were: ENTERPRISE ASSETS, CONTROL
 The Impact of Microcredit: OXUS Tajikistan - November 2010

OVER BUSINESS RESOURCES and HOUSEHOLD DIET. ENTERPRISE ASSETS (a) is

positively related to CLIENT LOAN CYCLE and CLIENT CUMULATED CAPITAL like in Kaboski
(2005) and CGAP (2009); (b) is predicted by CLlENT CUMULATED CAPITAL; (c) is more likely
to be high for an individual loan invested in trade. CONTROL OVER BUSINESS RESOURCES
(a) is positively related to and predicted by CLIENT CUMULATED CAPITAL like in Brau et al.
(2009); (b) men display greater results than women like in De Mel et al. (2008), to a certain
extent Mayoux (1999) or Hoque et al. (2009) but contrarily to Pitt and Khandler (1998).
HOUSEHOLD DIEThas no impact on housing like Brau (2007) or health (Akpabio, 2010); (b) is
positively related to CLIENT LOAN CYCLE and CLIENT CUMULATED; (c) is predicted by to
CLIENT LOAN CYCLE like Gehlich-Shillabeer (2006) and Chowdhury et al. (2005); (d) clients
with a group loan or in Khujand area, and especially for group loans undertaken in Shahrituz
display better results.

Limitations – The study was done for a particular microfinance institution, in Tajikistan where
not many studies have been done. In addition the findings appeared to be valid only for the
sample studied. The findings can be enhanced by (a) improving the preparation of the
questionnaire with a better knowledge of the environment and studies done by researchers, (b)
by improving the data collection with a multi-cross sectional study and (c) by choosing another
period for the research since Tajikistan economy is recovering from the financial and
economical crisis of 2009. Nonetheless the dependability of the study was ensured. All the
information was provided to be able to repeat it faithfully

Suggestions for further research – (a) Central Asia has a mature microfinance sector but only
one relevant study was found in this area (Bikbaeva and Gaibnazarova, 2009). (b) The present
study did not go through all the domains of impact described by Nelson et al. (2001) such as the
“Community level”. In addition, Hulme (2000) indicates that these four levels of impact are
important as well as Institutional impact and Household economic portfolio. (c) The study was
mainly based on the survey therefore it can be improved by more qualitative studies.