Uzbekistan: Small Business and Entrepreneurship Development Project

Sovereign Project | 42007-014 Status: Approved


ADB is helping Uzbekistan expand financial services to small businesses, particularly those run by women and those in rural areas. The project will strengthen the capacity of participating commercial banks to provide loans to these small businesses. At least 30% of the loans will be to women’s small businesses and at least 50% will be to small businesses outside the city of Tashkent.

Latest Project Documents

Consulting Notices

See also: CMS

No notices are currently available for this project.

Procurement Notices

See also: Operational Procurement

No notices are currently available for this project.

Procurement Documents

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Public Communications Policy (PCP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Project Name Small Business and Entrepreneurship Development Project
Project Number 42007-014
Country Uzbekistan
Project Status Approved
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
Loan 3043-UZB: Improving Rural Small Business Access to Finance
Ordinary capital resources US$ 50.00 million
TA 8480-UZB: Improving Rural Small Business Access to Finance
Technical Assistance Special Fund US$ 500,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Private sector development
Sector / Subsector

Finance - Inclusive finance - Small and medium enterprise finance and leasing

Gender Equity and Mainstreaming Effective gender mainstreaming
Description The project will enable women''s small businesses and rural small businesses to grow, develop, expand, compete, and play a greater income-generating role in Uzbekistan. Through this financial intermediation loan, participating commercial banks (PCBs) will provide subloans to small businesses. At least 30% of the subloans will be to women's small businesses and at least 50% will be to small businesses outside the city of Tashkent. The project will be supported by TA to strengthen PCBs' capacity to provide loans to and improve the entrepreneurial capacities of women's small businesses and rural small businesses. The project implementation period is 2014 2017.
Project Rationale and Linkage to Country/Regional Strategy

The economic significance of small businesses in providing jobs and driving growth is high in Uzbekistan. The contribution of small businesses to gross domestic product (GDP) increased from 35.0% in 2003 to 54.6% in 2012. Small businesses are mainly active in agriculture (98.0% of the sector output). Other important sectors include construction (70.7% of the sector output), retail trade (45.3%), and services (44.7%). In 2012, about 9.3 million people worked in small businesses or 75.2% of the total number of persons employed. At the same time, 37.2% of total investments in 2012 went to small businesses.

In Uzbekistan, 48.8% of the 30.0 million population live and work in rural areas. Low-income earners in Uzbekistan accounted for 27.5% of the population in 2001: 30.5% rural and 22.5% urban. The indicator for low income earners declined to 17.5% in 2011. Small businesses contribute more than 60.0% of gross regional product in 9 of 14 regions, with Syrdarya region being the highest (80.0%). The largest share of the total number of employed persons is in agriculture and forestry, accounting for 48.3% of employed women and 51.7% of employed men. However, the contribution of agriculture to GDP decreased from 30.0% in 2000 to about 18.0% in 2011. Of the micro and small enterprises registered in 2012, 84.5% were outside the city of Tashkent, as were 81.5% of all individual entrepreneurs in 2011. Male entrepreneurship in rural areas is high in Namangan, accounting for 71.0% of total registration, followed by the Navoi, Fergana, and Bukhara regions (footnote 5).

The financial sector is dominated by banks: the banking subsector's assets accounted for 37.0% of GDP in 2012. Eight banks with state ownership accounted for 76.1% of total banking assets in 2012. The total banking loan portfolio accounted for 21.1% of GDP and deposits accounted for 23.6% of GDP in 2012. Lending to small businesses comprised 26.3% of banks' outstanding loans in 2012 and microcredit loans comprised 5.7% of banks' total outstanding loans. While small business lending has doubled since 2006 and the microcredit loan portfolio has grown nearly fourfold in that period, lending to women was less than 15.0% of total bank lending in 2012.

Financial services and delivery mechanisms do not meet the needs of small businesses, particularly outside the city of Tashkent. The branch network is limited and rural areas have few points of service terminals, creating constraints for existing and potential bank clients. Cost of transportation and time spent accessing financial services are other limiting factors. Small businesses have limited access to business development services that contribute to the efficiency, profitability, and expansion of their activities. Focus group discussions suggest that small businesses lack access to information on government programs, market opportunities, suppliers, competitors, technology, and banking products. Weak financial literacy, especially among women's small businesses and low-income groups, limits their access to financial services and constrains their entrepreneurial capacity. Very limited financial services and products are adapted to the needs of rural small businesses, which are largely dependent on agricultural cycles. Access to electronic banking (e-banking) is low. While debit cards are the most developed payment channel, about 70.0% of households do not have such cards, making cash their only payment option.

Limited access to bank credit and the high cost of borrowing are among the largest impediments to small businesses. The lack of liquidity and availability of capital, coupled with high perceived risks and high administrative costs when lending to small businesses, compel banks to charge high interest rates. Bank loans usually have short maturities, restraining small businesses from expanding and modernizing. Only one-third of the total microcredit loan portfolio of banks is for more than 3 years; the rest has maturities between 6 and 24 months. Weak bank risk management capacity restricts their lending, preventing engagement with small businesses that have little or no collateral. Insufficient collateral also limits the size of loans, thus restricting small businesses from borrowing more for their business expansion and capital investments. Collateral requirements for small businesses (146.0% of the loan size) are higher than for large enterprises (128.0% of the loan size). In stakeholder and focus group discussions, insufficient collateral was cited as the single greatest impediment to borrowing. Common forms of collateral include cars, jewelry, and real estate. Banks offer third-party guarantors, but they are difficult to find for first-time borrowers as they are often considered high risk.

The proposed Asian Development Bank (ADB) loan aims to improve the ability of women's small businesses and rural small businesses to operate and expand. It will help these entrepreneurs build productive enterprises in profitable sectors, operate to scale, access finance, and benefit from economic opportunities. The PCBs will benefit from increased long-term finance and stronger institutional capacity, which will enable them to better meet the financial services demand of women's small businesses and rural small businesses. It will also enable PCBs to (i) provide short- and medium-term subloans in either sum or US dollars to small businesses; (ii) diversify income sources; (iii) spread risk; and (iv) increase the delivery of financial services and products such as e-banking, online loan applications, and services to support business development. The attached TA will support project implementation by improving the capacity of PCBs, their client small businesses, and the Central Bank of Uzbekistan (CBU).

Impact Viable rural small businesses with women's participation
Project Outcome
Description of Outcome Increased financial access by rural small businesses with women's participation
Progress Toward Outcome Ongoing
Implementation Progress
Description of Project Outputs

Strengthened capacity of PCBs to deliver financial services to women's small businesses and rural small businesses

Improved borrowing capacity of women's small businesses and rural small businesses

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

A review mission was fielded in October 2014 at which time the DMF and GAP indicators were reviewed. 2778 subloan were microfinance loans.

At least 50 were loans to small businesses.

As of end September 2014, 2063 subborrowers trained by PCBs had accessed subloans under the project

Geographical Location Nationwide
Safeguard Categories
Environment FI
Involuntary Resettlement FI-C
Indigenous Peoples FI-C
Summary of Environmental and Social Aspects
Environmental Aspects The loan is categorized as Financial Intermediation (FI) for environment. Subprojects categorized as A for environment will not be eligible for financing under this project. Each PCB will have in place or establish an appropriate environmental and social management system (ESMS) acceptable to ADB to ensure proposals for subprojects are screened for environment and social impacts and (if applicable) mitigating measures are in place. The PCBs ESMS should include all the elements of the ESMS template, including the subproject screening checklist
Involuntary Resettlement The loan is categorized as Financial Intermediary (FI treated as C) with respect to involuntary resettlement. When there is a need from the subborrowers to acquire fixed assets under the credit loan activities, the acquisition must be based on the willing buyer and willing seller mechanism and not involve involuntary land acquisition under eminent domain. Such transaction must be supported with the relevant due diligence documents from the PCBs and the clients and recorded in the project s ESMS.
Indigenous Peoples The FIL is categorized as Financial Intermediary (FI treated as C) for indigenous peoples. The PCBs will ensure the inclusion of potential small business clients and subborrowers from ethnic minority groups in the country through project s outreach, technical assistance training activities fitting to the distinctive needs and characters of the groups and credit loan to the eligible clients.
Stakeholder Communication, Participation, and Consultation
During Project Design Consultations with all stakeholders will be held during project preparation, including community meetings, interviews, and focus group discussions.
During Project Implementation An inception mission was conducted via video conference from 14 to 28 February 2014. The mission team held discussions with Ministry of Finance (MOF), Central Bank of Uzbekistan (CBU), Ipak Yuli Bank and Hamkorbank. The mission (i) reviewed progress made in regards to subsidiary loan agreements and legal opinions, (ii) reviewed progress made in participating commercial bank's implementation of environmental and social management systems acceptable to ADB and compliance with ADB''s Safeguard Policy Statement, (iii) clarified ADB reporting requirements, (iv) clarified potential outstanding issues related to the project administration manual (PAM), and (v) discussed the timeline of the capacity development technical assistance (TA 8480-UZB). A review mission was fielded in October 2014 at which time DMF and GAP indicators were reviewed as well as loan documetation. Field visits were conducted. Hamkorbank has fully disbuserd its allocation of $25 million and Ipak Yuli Bank is expected to fully disburse its $25 million allocation in 2015. The next review mission is scheduled for Q4 2015.
Business Opportunities
Consulting Services Consulting assignments for the international and national positions were advertised in January-February 2014. Expressions of interests for the international and national positions were reviewed, evaluated, and shortlisted. Government's no-objection to the shortlists has been received. The selected consultants have been fielded once. The next mission comprised of the consultants will take place in October 2014.
Procurement Not applicable as this is a credit line
Responsible ADB Officer Aliya Mukhamedyarova
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, CWRD
Executing Agencies
Ministry of Finance
5 Mustaqillik Maydoni Square
Tashkent 100008
Republic of Uzbekistan
Concept Clearance 15 Jun 2013
Fact Finding 20 May 2013 to 28 May 2013
MRM 22 Jul 2013
Approval 01 Oct 2013
Last Review Mission -
Last PDS Update 22 Sep 2015

Loan 3043-UZB

Approval Signing Date Effectivity Date Closing
Original Revised Actual
01 Oct 2013 21 Nov 2013 28 Feb 2014 31 Dec 2017 - 20 Jan 2016
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 133.33 Cumulative Contract Awards
ADB 50.00 01 Oct 2013 0.00 0.00 0%
Counterpart 83.33 Cumulative Disbursements
Cofinancing 0.00 01 Oct 2013 50.00 0.00 100%

TA 8480-UZB

Approval Signing Date Effectivity Date Closing
Original Revised Actual
01 Oct 2013 07 Nov 2013 07 Nov 2013 31 Dec 2015 30 Jun 2016 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
500,000.00 0.00 50,000.00 0.00 0.00 0.00 550,000.00 01 Oct 2013 274,136.28

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.

Evaluation Documents

See also: Independent Evaluation

None currently available.

Related Publications

None currently available.

The Public Communications Policy (PCP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.