Uzbekistan: Small and Microfinance Development Project

Sovereign Project | 33196-013 Status:

Summary

The overall goal of the small and microfinance development facility (SMDF) is to create a viable and sustainable institutional framework and mechanism for effective delivery of financial services particularly to the poor, low-income households and small and micro enterprises. To support the large small and microfinance (SMF) requirements of the country, the SMDF advocates the development of a broad and sustainable delivery mechanism for the SMF.

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Project Name Small and Microfinance Development Project
Project Number 33196-013
Country Uzbekistan
Project Status
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
Loan 1963-UZB: Small and Microfinance Development Project
Ordinary capital resources US$ 20.00 million
TA 4021-UZB: Developing Prudential Regulations & Supervision of SCUs
Technical Assistance Special Fund US$ 400,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Private sector development
Sector / Subsector

Finance - Inclusive finance

Gender Equity and Mainstreaming Gender equity
Description The overall goal of the small and microfinance development facility (SMDF) is to create a viable and sustainable institutional framework and mechanism for effective delivery of financial services particularly to the poor, low-income households and small and micro enterprises. To support the large small and microfinance (SMF) requirements of the country, the SMDF advocates the development of a broad and sustainable delivery mechanism for the SMF. The Project has four major elements: (i) development of an enabling policy, legal and regulatory cum supervisory framework for savings and credit unions (SCUs); (ii) promotion of the establishment of an institutionally and financially sustainable network of a minimum of 20 SCUs in accordance with the Law on Credit Unions supervised and regulated prudentially by the Central Bank of Uzbekistan (CBU); (iii) development of institutional capacities of the designated commercial banks to effectively mobilize deposits from and intermediate to households, and micro and small enterprises; and (iv) institutional capacity building both at the banks and SCUs for SMF delivery capacities. These four elements reinforce each other and are designed to develop an effective and well-funded financial system which mobilizes savings and provides poor with financial support to set up opportunities for income generation. The Project is critical to support Uzbekistan's transition and poverty reduction efforts.
Project Rationale and Linkage to Country/Regional Strategy

An effective and well-funded rural financial system, which mobilizes savings and provides poor with financial support to set up opportunities for incoming generation, are critical to support Uzbekistan's transition and reduce proverty. ADB, along with other MDBs, has been looking at developing a more holistic approach to improve the access outreach and delivery of small and microfinance services to the population and especially the poor. This encompasses the simultaneous pursuit of alternative microfinance delivery mechanisms. These include the (i) creation of new institutions with adequate capacities to improve rural and microfinancial intermediation; and (ii) development of some banks that have better outreach to intermediate larger flows of small loans.

Project is linked to CSP and is highly relavant.

Impact Creation of a viable and sustainable institutional framework and mechanism for effective delivery of financial services, particularly to the poor, low income households , and small and microenterprises.

Project Outcome

Description of Outcome

(i) Development of an effective legal, regulatory, and institutional framework for SCUs;

(ii) Establishment of financially sustainable network of at least 20 SCUs that would serve to provide a role model for further growth of SCU sector;

(iii) Improving commercial banks' financial intermediation and access to poor individuals, households, microenterprises, and SCUs.

Progress Toward Outcome Progress in developing an effective regulatory and institutional framework has been satisfactory. As a result appraisal estimates in terms of number of credit unions has already been exceeded significantly. Membership is growing and geographic coverage is expanding. Credit unions show sustainable growth in assets, capital, savings and loans. Credit line to PCBs contributed to improving of financial intermediation to micro and small enterprises, especially in rural areas.
Implementation Progress
Description of Project Outputs

Establish an SCU network that is financially sound and institutionally sustainable, meeting the measurable prudential standards stated in the next column.

Expand outreach to and beyond oblast capital, supplying remunerative financial services that meet effective demand from field membership.

Establish enabling legal and regulatory framework for SCU operations.

Establish prudential supervision and regulation infrastructure for SCUs.

Enhance capacity of the FSDA to provide training and institutional capacity building to nascent SCUs.

Selection of Pakhta and Asaka Bank and other commercial banks that are operationally and financially sound

Status of Implementation Progress (Outputs, Activities, and Issues)

By the end of 2010 the total number of SCUs reached 116 with total membership of 212,000. Around 41% of members were women. The total assets were equal to $201 million, loans outstanding $175 million and savings $ 139 million.

Project significantly exceeded targets set for SCU development.

About 50% of SCUs are outside Tashkent. The SCUs serve the low end of SME market where banks are not present.

As of 31 Dec 2009 the total number of SCUs reached 103 with total membership of 153,063. The total assets were equal to $140.3 million, loans outstanding $121 million and savings $ 100.1 million.

As of 31 Dec 2008 there were 78 SCUs in Uzbekistan with total assets of US$ 80 million.

As of 31 December 2007 there were 55 SCUs operating in Uzbekistan with nearly 67,000 members in 11 regions of Uzbekistan. Total assets of SCUs reached $37.5 million with loans outstanding of $33.3 million.

As of 30 June 2007 there were 44 SCUs operating in Uzbekistan with nearly 59,000 members in 10 regions of Uzbekistan. The regulatory framework is regularly reviewed and necessary amendments introduced. Some amendments were made to the "Law on Credit Unions" in April of 2006. In addition, laws on microfinancing and microcredit institutions were adopted by the Parliament in August and September of 2006. FSDA in cooperation with other organizations developed training programs, which are contributing to improvement in SCUs' performance.

During 2006-2010 Asaka Bank and Agro bank (former Pakhta Bank) and Ipak Yuli provided financial intermediation to microenterprises and individuals. Credit Line was fully utilized.

Geographical Location To be determined

Safeguard Categories

Environment C
Involuntary Resettlement
Indigenous Peoples

Summary of Environmental and Social Aspects

Environmental Aspects No significant impact is expected.
Involuntary Resettlement No
Indigenous Peoples No
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation

Responsible Staff

Responsible ADB Officer Bobir Gafurov
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Uzbekistan Resident Mission
Executing Agencies
Asaka Bank
K. Oripov
67, Nukus Str., 100015, Tashkent, Uzbekistan
Financial Sector Development Agency (FSDA)
fsda@ars.uz
6 Uzbekistan Ave., Tashkent, Uzbekistan
Ipak Yuli Bank
R. Rakhimbekov
INFO@IPAKYULIBANK.COM
2 Abdulla Qodiriy Street, Tashkent, 100017, Uzbekistan
Pakhta Bank
A. Boymuratov
43, Muqimiy Str., Tashkent, 100096, Uzbekitan
Financial Sector Development Agency (FSDA)
Zafar A. Umarov
fsda@ars.uz
Uzbekistan Ave., Tashkent, Uzbekistan
Ipak Yuli Bank
12 a, Farkhadskaya Street
100135, Tashkent
Uzbekistan

Timetable

Concept Clearance 08 Mar 2002
Fact Finding 16 Apr 2002 to 30 Apr 2002
MRM 22 Jul 2002
Approval -
Last Review Mission -
PDS Creation Date 16 Feb 2007
Last PDS Update 12 Apr 2011

Loan 1963-UZB

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
09 Dec 2002 25 Sep 2003 20 Jul 2004 31 Dec 2010 - 31 May 2011
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 42.45 Cumulative Contract Awards
ADB 20.00 09 Dec 2002 1.56 0.00 100%
Counterpart 22.45 Cumulative Disbursements
Cofinancing 0.00 09 Dec 2002 1.56 0.00 100%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - - Satisfactory - - Satisfactory

TA 4021-UZB

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
09 Dec 2002 13 Feb 2003 13 Feb 2003 28 Feb 2004 31 Jan 2005 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
400,000.00 0.00 120,000.00 0.00 0.00 0.00 520,000.00 09 Dec 2002 399,999.42
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - - Satisfactory - - Satisfactory
Title Document Type Document Date
Small and Microfinance Development Project Project/Program Completion Reports Dec 2011
Small and Microfinance Development Project Reports and Recommendations of the President Nov 2002

Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.

Evaluation Documents See also: Independent Evaluation

Title Document Type Document Date
Uzbekistan: Small and Microfinance Development Project Validations of Project Completion Reports Dec 2012

Related Publications

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