Under ECTAP the EU provides a grant support for specified investments in targeted agriculture and agribusiness with the aim of enhancing the competitiveness of Tajik agricultural sectors. The grant support in the form of financial incentives are expected to be blended with on-lending funds from the EBRD to be channelled through the selected Tajik partner financial institutions. The grant to eligible borrowers will equal 20% of the ECTAP-loan received. The eligibility of a borrower to receive such financial incentive will be verified and certified (providing all criteria are met by a borrower) by an independent verification consultant as assigned by the EBRD.
To show the positive effects the grant support has on the costs of the loan we are in the following providing an example of a 12 months Tajik Somoni (TJS) 10,000 loan. In Example 1 a grant of 20% of the loan amount is available. At the end of the loan maturity the client has to repay TJS 11,800 (principal and interest).
In the second example there is no grant available and that is why the total amount the client has to repay is TJS 13,800. In the first example the borrower saves TJS 2,000.
Example: Impact of Incentive Payment (grant) and additional loan fees on the loan effective interest rate