The Financing Repression report examines investments by Development Finance Institutions (DFIs) in countries with restricted civic spaces, urging them to reconsider their funding strategies. The report underscores that open civic spaces are vital for inclusive development, enabling public participation, accountability, and transparency. Conversely, restricted civic spaces exacerbate inequality, suppress rights, foster corruption, and risk legitimizing authoritarian regimes. Despite existing policies to safeguard participation, the report finds DFIs often fail to adequately implement them. Between 2019 and 2023, investments in 18 countries with closed civic spaces, including Turkmenistan, were analyzed.
Investments in Turkmenistan
Between 2019 and 2023, DFIs invested $222 million across 16 projects in Turkmenistan, accounting for just 0.3% of total investments in the 18 countries studied. This is significantly lower than Uzbekistan, which received 22.5% of total funding. Investment per capita in Turkmenistan stood at $30.20, far below Uzbekistan’s $555.03. Moreover, DFI investments made up only 0.37% of Turkmenistan’s GDP, compared to 21.77% in Uzbekistan.
The financial sector received the most funding (13.6%) across the 18 countries, while sectors addressing critical human needs, such as water and sanitation (5.6%) and humanitarian response (0.2%), were underfunded.
Multi-Country Projects and Transparency Issues
DFIs often channel resources through multi-country projects, but transparency remains a challenge. Public data rarely specifies how much funding each country receives, making it impossible to assess the impact. Multi-country projects accounted for 14.8% of total investments in the 18 countries. However, 51.3% of all projects in these countries do not reveal their risk category, and 9.3% are classified as low risk, potentially underestimating the challenges of operating in restricted environments.
Turkmenistan was involved in two single-country projects and 28 multi-country projects. International Finance Corporation (IFC), Asian Development Bank (ADB), Development Finance Corporation (DFC), European Bank for Reconstruction and Development (EBRD) are the primary institutions supporting multi-country projects in these countries.
Technical cooperation projects
Technical cooperation projects provide expertise on specific issues and policies, drafting reports, and capacity building and training. But they lack the environmental and social safeguards applied to larger investments. In countries like Turkmenistan, these projects give DFIs substantial influence over laws, policies, and institutions. The report emphasizes that DFIs should use this leverage to promote open civic spaces and encourage policy reforms.
The report urges DFIs to adopt the following strategies:
- Promote Civic Freedoms: Leverage investments to encourage governments to uphold civic space and human rights.
- Contextual Risk Assessment: Comprehensively assess the impacts of civic space restrictions, and consult independent civil society groups before approving projects.
- Establish Standards: Implement clear eligibility requirements related to civic space and human rights for countries to qualify for funding, excluding high-risk projects, especially those funneled through financial intermediaries.
- Ensure Transparency: Disclose detailed information about projects, risks, and safeguards, and provide accessible complaint mechanisms for affected communities.
- Enhance Participation: Strengthen safeguards to ensure meaningful stakeholder engagement and prevent reprisals.
The report also calls on shareholder governments of DFIs to actively monitor and promote these recommendations, emphasizing the need for coordinated action to address civic space restrictions effectively.
