When more than one million of its people working in Russia from a country of just nine million people, Tajikistan rather resembles a nation exporting its most precious resource: its workforce.
Dushanbe has turned this exodus into an economic marvel of sorts. The economy grew by 8.4 per cent in 2024, supported by remittance-driven domestic demand, making it one of the world’s fastest-growing economies. This impressive performance, however, conceals a troubling reality that even the most optimistic development economists would struggle to spin as sustainable.
Remittances amounted to about 49 per cent of GDP in 2024, driving private consumption and financing imports. This figure represents a jump from 39 per cent in 2023, suggesting that rather than weaning itself off external labour income, Tajikistan has become more addicted to it.
The World Bank’s latest economic update, released at the end of July, paints a suitability mixed picture of robust growth masking fundamental vulnerabilities.
The remittance economy has delivered tangible benefits. The poverty rate declined to 9.1 per cent in 2024 from 11.1 per cent in 2023, under the lower middle-income poverty line. Yet inequality has risen sharply, particularly in rural areas where the Gini coefficient reached 39 in 2023.
The benefits flow unevenly: 86 per cent of money sent home by an overwhelming majority of young, unqualified migrants is used by family in Tajikistan to meet basic current consumption needs, with precious little channelled into productive investment.
The inevitable slowdown
Tajikistan’s growth is already moderating, and for good reason. The World Bank projects growth will slow to seven per cent in 2025, 4.9 per cent in 2026, and 4.7 per cent in 2027, mainly due to anticipated normalisation of remittance flows. This euphemistic phrase—normalisation—reflects the uncomfortable truth that Russia’s economy, the source of 90 per cent of Tajik remittances, faces its own constraints.
Russia remains active in the telecom market, and Russian fuel and energy products are significant Tajik imports, yet rising anti-migrant feeling in Russia is causing many Tajiks to rethink their decision to work in Russia. The Russian government’s periodic tightening of migration policies adds another layer of uncertainty. When your economic model depends on the goodwill of another country’s labour market, you are playing a risky game indeed.
The structural weaknesses run deeper than remittance dependency. Foreign direct investment (FDI) inflows remained low, at 1.3 per cent of GDP, whilst state-owned enterprises employ 24 per cent of the labour force, use 50 per cent of all available credit, and account for 17 per cent of the country’s economic output. This is hardly the recipe for dynamic, private-sector-led growth that development economists favour.
The digital escape route
Enter digital transformation, stage left. Tajikistan’s government has latched onto digitisation as a potential cure for its economic ailments, and the diagnosis is not entirely misguided. For a landlocked country, digital strategies can cut trade costs by over 13 per cent while improving efficiency, transparency, and access to global markets. Given that Central Asia is the highest trade cost region in the world, any reduction would be welcome.
The potential is there. International evidence shows that strong digital trade regulations can reduce goods trade costs by up to 20 per cent and service costs by up to 30 per cent. For a country whose geography has historically constrained its economic options, digital trade offers a chance to leapfrog physical limitations.
Nevertheless, only one per cent of the Tajik population shopped online in 2021, according to the World Bank’s Global Findex survey. Tajikistan’s e-commerce market is expected to grow at a modest 4.7 per cent annual rate from 2025 to 2029, reaching only 28.4 million US dollars by 2029—a figure that would barely register as a rounding error in China’s daily digital commerce volume.
Infrastructure is a key problem. Poor internet connectivity affects nearly half of customs checkpoints, whilst internet prices in Tajikistan are among the highest in Central Asia. An estimated 46 per cent of Tajiks have regular access to the Internet, but access and meaningful usage are different beasts entirely.
The regulatory thicket
Tajikistan’s approach to digital governance resembles a work in progress that has stalled mid-construction. A Concept for a Digital Economy in Tajikistan was published in 2019, followed in December 2022 by the first e-commerce law in the country. Progress, of sorts. Yet legal and regulatory frameworks in Tajikistan have significant gaps that hinder the development of digital commerce.
The problems are both granular and systematic. Missing data subject rights, unclear consent protocols, and insufficient breach notification requirements create an environment where digital trust—the cornerstone of e-commerce—struggles to take root. The tax system remains complicated, with high tax burdens, arbitrary penalties, and unduly targeting tech start-ups and digital products.
Even more tellingly, licensing requirements for parcel delivery companies drove international companies out of the market in 2017 and created a thriving grey market for last-mile delivery. When regulatory policy inadvertently creates black markets, one suspects the policymakers may have missed the point.
The path to reinvention
Tajikistan’s leaders are not blind to these challenges. The country has established the new Agency for Innovation and Digital Technologies, under the President of the Republic of Tajikistan, to spearhead digital transformation. The new national programme works across the digital ecosystem, from infrastructure to cybercrime prevention and fintech development.
The World Bank has identified seven critical areas for improvement: building digital foundations through improved connectivity and security; modernising government digital services; creating an integrated trade ecosystem; implementing performance monitoring; strengthening legal frameworks with international standards; establishing trust mechanisms; and developing institutional expertise. Each represents a substantial undertaking that would challenge far wealthier nations.
Some green shoots are visible. Mobile payment instrument subscribers reached 2.2 million in March 2021 from a zero base in 2017, suggesting appetite for digital financial services exists. Local companies like Alif, Somon.tj and others are pioneering e-commerce platforms, whilst with 70 per cent of its population under 30, e-commerce is increasingly viewed as a potential driver of growth in Tajikistan.
The bottom line
Many developing economies would recognise Tajikistan’s predicament. Its current growth model—exporting labour to import consumption—has delivered impressive GDP figures and poverty reduction. But it has also created dangerous dependencies and failed to build productive capacity at home.
Digital transformation offers a genuine alternative, though not the silver bullet that policymakers might hope for. Success will require far more than new laws and agencies. It demands fundamental improvements in infrastructure, education, regulatory frameworks, and institutional capacity—precisely the unglamorous, long-term investments that democracies struggle to prioritise and authoritarian systems often bungle.
The country that has become expert at sending its people abroad to work now seeks to bring global markets to its doorstep through digital means. Whether Tajikistan can reinvent itself from a remittance republic into a digitally integrated economy will depend on sustained political commitment, substantial investment, and the gradual accumulation of trust—commodities that prove stubbornly resistant to policy pronouncements.
For now, the remittances keep flowing, the growth figures remain impressive, and the digital dreams persist. But as any economist will tell you, trees do not grow to the sky, and models built on other countries’ labour markets have a habit of disappointing their architects. The question is not whether Tajikistan’s current trajectory is sustainable—it manifestly is not—but whether its leaders can engineer a soft landing into a more balanced economic future.
The answer will determine whether today’s impressive growth statistics become tomorrow’s footnote in development economics textbooks, or the foundation for genuine economic transformation. The early evidence suggests that Tajikistan has correctly diagnosed its predicament and identified a plausible cure. The execution, as always, will prove considerably more challenging than the prescription.
Photo: Dreamstime.
