# _Poor distribution and transport services in Tajikistan_

Physical connectivity is not the only challenge to access market. A poor distribution and transport system may be more constraining than connectivity. By distribution and transit system, we mean a network of wholesale or retail distributors and transit operators identifying the production of profitable goods/services within and outside the country as well as potential consumers of these goods/services and facilitate their interactions through various distribution outlets in exchange of a distribution margin. Some distributors have their own transit service unit, thus providing a full logistic service of transporting and distributing goods.

Distribution and transit systems allow production to reach markets. They are generally more developed in urban centers because they enjoy increasing return to scale. Indeed, the larger and more frequent freight has to be shipped between locations the lower the unit transport cost. This characteristic makes constant return to scale activities such as agriculture indirectly dependent on urban centers to thrive. An assessment of the distribution system in Dushanbe and Khujand therefore provides a good sense of the challenges faced by the whole country.

Wholesale trade in Dushanbe is represented by four large wholesale markets, seven in Khujand. Retail trade in Dushanbe comprises 11,555 retail firms and only 3,172 firms in Khujand.<sup>10</sup> The average cost of rented shop or outlet varies from $135 to $700/month, on top of utility cost, namely electricity and water. For food products traders are mainly cooperative farmers coming to Dushanbe and Khujand from neighboring districts and sell their products early in the morning in bulk to retailers, who in their turn resell the food products in retail markets. There are three major food markets in Dushanbe and two in Khujand, as well as few smaller markets for food.

Most of the farmers do not hold patents, but stay in the trade point for an hour or so and sell their products for very low price, in comparison with retail food markets, where the prices are up to 7 times higher. The estimated average operating cost of using a typical outlet (3mx3m) in a wholesale market place is in the range of $2,500-3,000 per year: the owner pays a so called check or receipt on a daily basis in amount of 2 somonis and the lessee pays up to 250 somonis per month. Note that this amount is about four times Tajikistan per capita GDP, which suggests that most of the farmers who are the poorest in the country can’t afford an outlet in formal wholesale and retail markets.

The modal split of freight transported in Tajikistan in 2008 was: 30 percent by rail, 69 percent by trucks and 1 percent by air. The freight transported by trucks is done by private operators (63 percent), ABBAT<sup>11</sup> (2 percent), Operators affiliated or recognized by the ministry of transport (12 percent), other ministries and institutions (23 percent). Multimodal transportation is not well-developed because of isolated rail lines (northern, central and southern line) compounded by a mountainous landscape. Only one company located in Khujand appears to provide multimodal transportation in the whole country to destinations as far as Vietnam and Thailand (Box 1). The major constraints faced (on top of physical one) by operators in the transit sector are the lack or poorly implemented transit agreements with neighbors. For instance, the current agreement with Uzbekistan (signed in 1992) is not implemented by Uzbekistan, and Tajik operators suspect an implicit order by Uzbek authorities to check Tajik trucks for not less than 4 hours in addition to unloading, loading and standing idle at customs control points. Furthermore, Tajik truckers are not yet allowed to cross the Khorgos border crossing point between Kazakhstan and China.

> 10 These data were collected by a local consultant who visited neighboring districts of Dushanbe and Khujand.

> 11 ABBAT is the association of transporter in Tajikistan.

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