Uzbekistan: MFF- Housing for Integrated Rural Development Investment Program

Sovereign Project | 44318-013

Summary

The Program, proposed as an MFF, comprises a series of financial intermediation loans, to help finance housing loans for lower to middle income borrowers. Young families and first time homeowners, teachers and health care workers (two occupations in which women predominate) will be prioritized. The Program will help to strengthen the impact of the government's Rural Development Program (RDP) and Rural Housing Scheme (RHS) to improve rural livelihoods and living standards, including better coordination with the government's financial sector strategy and new Small and Medium Enterprise (SME) Program. In the medium term, the MFF supports (i) access to affordable housing finance and housing (ii) improved local government capacity to implement integrated rural development strategies that focus on creating rural jobs; and (iii) strengthening the enabling environment for rural MSMEs.

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Project Name MFF- Housing for Integrated Rural Development Investment Program
Project Number 44318-013
Country Uzbekistan
Project Status Approved
Project Type / Modality of Assistance Loan
Source of Funding / Amount
MFF Facility Concept 0061-UZB: MFF - Housing for Integrated Rural Development Investment Program
Ordinary capital resources US$ 500.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change
Sector / Subsector Multisector - Multisector
Gender Equity and Mainstreaming Effective gender mainstreaming
Description

The Program, proposed as an MFF, comprises a series of financial intermediation loans, to help finance housing loans for lower to middle income borrowers. Young families and first time homeowners, teachers and health care workers (two occupations in which women predominate) will be prioritized. The Program will help to strengthen the impact of the government's Rural Development Program (RDP) and Rural Housing Scheme (RHS) to improve rural livelihoods and living standards, including better coordination with the government's financial sector strategy and new Small and Medium Enterprise (SME) Program. In the medium term, the MFF supports (i) access to affordable housing finance and housing (ii) improved local government capacity to implement integrated rural development strategies that focus on creating rural jobs; and (iii) strengthening the enabling environment for rural MSMEs.

Under the government's roadmap, inclusive rural economic growth will be supported through creation of direct and indirect job and other livelihood opportunities, expanded access to affordable housing finance, new improved housing and associated infrastructure and social services, and MSME development. Housing will be directed to targeted beneficiaries, using transparent selection criteria. Key indicators will track the number of new rural houses built and rural mortgages issued to targeted beneficiaries, investment in rural areas, growth in rural MSMEs, and rural jobs created. Under Tranche 1, the government will strengthen public awareness and transparency of the Rural Housing Scheme, and improve housing designs (including use of energy efficient options where cost effective). A program to improve local government capacity for investment promotion and integrated development planning will be developed and constraints to rural MSME development will be addressed, including improved access to finance, with an additional US $2.4 billion in MSME credit lines.

Project Rationale and Linkage to Country/Regional Strategy While Uzbekistan has achieved substantive gains in gross domestic product (GDP) growth (8.5% in 2010), led by services (11.2%), industry (8.4%), and agriculture (7.1%), living standards in rural areas continue to lag those in urban areas. Around 75% of the poor live in rural areas and rural poverty (22.2% in 2009) is decreasing at a slower pace than in urban areas (15.2% in 2009). The proposed project will support the government's strategy for more inclusive economic growth, improving rural job and livelihood opportunities, improving rural living standards, and addressing urban migration.
Impact Rural communities have improved living standards
Project Outcome
Description of Outcome Improved rural housing for targeted beneficiaries
Progress Toward Outcome During implementation of Tranche 1, the number of women, moderate- to low-income beneficiaries increased as the systems and processes identifying these people became more integrated into HIRD. Further progress is expected for Tranche 2 and 3.
Implementation Progress
Description of Project Outputs

Housing loans provided by PCBs to targeted creditworthy subborrowers in rural areas

Improved capacity of local governments to prepare and implement integrated rural development plans and investment promotion strategies

Improved enabling environment for entrepreneurs and MSMEs to expand or establish new businesses in rural areas

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

A project loan of $200 million was approved on 9 September 2011 for Tranche 1. Loan and project agreements were signed on 16 February 2012. Loan was declared effective on 20 April 2012. As of 23 March 2015 $199.8 million (99.7%) was disbursed. A technical and financial performance review is yet to be completed. The revised loan closing date is 30 June 2015.

Tranche 2 (Project 2). A second loan of $200 million was approved on 1 October 2013. Loan and project agreements were signed on 11 October 2013. The loan was declared effective on 24 October 2013 and the loan closing date is 31 March 2016. As of 23 March 2015 $198.7 million (99.3%) has been disbursed. A technical and financial performance audit is yet to be completed.

Tranche 3 (Project 3). The final Tranche in the program is programmed for $100 million, processing is ongoing.

Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects Environmental impacts from Program activities are anticipated to be insignificant. Only sites with no involuntary resettlement or indigenous peoples' (IR/IP) impacts will be considered. Each PCB will adopt an Environmental and Social Management System (ESMS) with screening criteria and monitoring procedures to ensure that sub-loans provided under the tranche will have minimal or no adverse environmental or social risks and that none of the housing sites have IR or IP impacts.
Involuntary Resettlement See above statement
Indigenous Peoples See above statement
Stakeholder Communication, Participation, and Consultation
During Project Design During processing of the program, the ADB team engaged and held dialogues with various Government agencies, and private sector and non-government agencies involved in the program. The ADB team also consulted with key development partners and through a number of field visits representative beneficiaries, and key stakeholders. The participation and consultation process is outlined in the project's Facility Administration Manual.
During Project Implementation Procurement Action was requested by the government under Tranche 3 and approved by ADB on 16 January 2015. The government plans to construct a total of 12,000 houses in 2015 of which 8,690 are expected to be part of Tranche 3, shared between QQB and NBU, and ADB will cofinance up to 3,000 houses. The remaining 3,310 houses are expected to be financed by the Islamic Development Bank and Ipoteka Bank. The government also revised and ADB approved the master bidding document and procurement guidelines (procurement manual) for Tranche 3. The master bidding document is based on ADB's Standard Bidding for Works (Small Works), single-stage: two-envelope procedure. Advance contracting has two conditions (i) that the invitation for bids be widely advertised, and (ii) that for each of the 13 regions the first two contracts will be prior reviewed by ADB.
Responsible ADB Officer Matthew Hodge-Kopa
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, CWRD
Executing Agencies
Ministry of EconomyUzbekistan Avenue, 45A Tashkent, 100060
Republic of Uzbekistan
Timetable
Concept Clearance 03 Feb 2011
Fact Finding 17 Jan 2011 to 16 Feb 2011
MRM 25 Feb 2011
Approval 31 Aug 2011
Last Review Mission -
Last PDS Update 25 Mar 2015

MFF Facility Concept

Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 0.00 Cumulative Contract Awards
ADB 0.00 - 0.00 0.00 %
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 - 0.00 0.00 %

MFF Facility Concept 0061-UZB

Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 500.00 Cumulative Contract Awards
ADB 500.00 - 0.00 0.00 %
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 - 0.00 0.00 %

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