44318-025: Housing for Integrated Rural Development Improvement Program - Tranche 2

Project Data Sheet (PDS): Details


Description

The Housing for Integrated Rural Development (HIRD) Program is a high priority component of Uzbekistan s Welfare Improvement Strategy (WIS) 2012 2015 for achieving inclusive growth and greater diversification of the economy. HIRD focuses on rural housing as an engine for economic transformation and accelerating rural development. Planned communities, modern house designs, new construction technology and materials, and more environmentally sustainable construction solutions are advancing the construction sector and providing opportunities for Uzbek entrepreneurs and industries. As part of HIRD up to 10,000 homes are being built per year, creating opportunities for up to 1,000 small rural contractors and 100,000 rural construction jobs annually. Improved access to nearby schools and clinics is a key part of this program. More reliable electricity, gas, and water supply, combined with community designs that include space for retail shops and commercial services, are opening up opportunities for home-based businesses. HIRD is an important driver for the 500,000 rural micro and small enterprises and home-based jobs targeted each year. On 31 August 2011, the Asian Development Bank (ADB) approved a $500 million multitranche financing facility (MFF) for the Housing for Integrated Rural Development (HIRD) Investment Program principally to provide financing to participating commercial banks (PCBs) for onlending to more than 40,000 targeted rural homebuyers. Under HIRD, subloans financed by the MFF help support construction of new modern houses built in planned rural community sites, with serviced land plots with electricity, gas, water supply and sanitation, and roads provided by local governments. Local governments also provide access to and improvements in nearby schools and medical clinics, and are making space available for new retail shops and commercial services.

Project Rationale and Linkage to Country/Regional Strategy

Uzbekistan s strong macroeconomic fundamentals have helped maintain high rates of economic growth over the last decade and resiliency during the global financial crisis. Gross domestic product growth has averaged 8% since 2004, per capita income has doubled in real terms, and absolute poverty has almost been cut in half, from 27% of households in 2000 to about 15% in 2012. While declining, rural poverty in Uzbekistan remains higher (20.1%) than urban poverty (13.4%). Higher rural population growth and increases in the working age population (from 54% in 2001 to 61% in 2010), along with shifts in the economy from agriculture to industry, means that rural jobs are harder to find. Urban migration and informal and seasonal employment are all rising. Key inputs needed to attract rural investment for job creation, and to retain entrepreneurs and skilled professionals in rural areas, include improvements in: (i) education and health services; (ii) telecommunications and reliable infrastructure; (iii) promotion of regional investment; (iv) access to finance; and (v) housing and living conditions. As part of HIRD, the MFF roadmap and policy framework links ADB investment support to the government's reform program. The overall program will improve the quality of life for rural households by: (i) increasing access to modern rural housing with related infrastructure, (ii) strengthening local government capacity for integrated rural planning and results-based delivery of rural services, and (iii) accelerating rural MSME development to diversify and increase rural jobs and attract regional investment in industry. The MFF supports the program implementation unit (PIU) and capacity development, as well as rural housing finance under the first component. Housing plots, related infrastructure arrangements, and associated commercial and social services are provided by the government. The second and third components, with accompanying reforms, are financed by the government with support from the PIU for monitoring and evaluation.

Impact

Improved rural housing for targeted beneficiaries.

Project Outcome

Description of Outcome

Downstreaming of the rural housing scheme for moderate and lower income beneficiaries, with a focus on women.

Progress Towards Outcome

Ongoing

Implementation Progress

Description of Project Outputs

Housing loans provided by PCBs to targeted credit worthy 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 MSEs to establish or expand new businesses in rural areas

Status of Operation/Construction or Implementation Progress

Under Component 1, site due diligence conducted in accordance with the ADB Safeguard Policy Statement (SPS) 2009 ensured that HIRD sites complied with the ADB SPS and related Uzbek laws and regulations. Use of extensive public advertising, social scoring and information technology solutions to assess mortgage applications has improved targeting. QQB delivered training on HIRD and credit appraisal and portfolio risk management processes to its branch managers, loan officers, and other staff. Efforts to improve creditworthiness for women applicants included promoting the use of cosigners and help to mobilize down payments. Standard bidding documents and templates were developed, consistent with ADB Procurement Guidelines (2010, as amended from time to time). Consultations with technical agencies, industry, contractors, and homebuyers have resulted in house design improvements to increase the cost effectiveness and environmental sustainability. Under Component 2, local governments are developing and delivering community plans, land use arrangements, installation of infrastructure and social services, and is tendering housing contracts. Budget allocations are now made annually to relevant state entities and local governments to ensure site and services development for HIRD, and to fulfill Component 2 and 3 work plans. Hokimiyat capacity building and rural skills development are being delivered nationwide under specialized professional education programs. Training curricula is being developed for results-based regional investment planning, with additional TA support. The Program also developed three intern programs. Under Component 3, the government is implementing targeted measures to improve access to a broad range of financial services and to reduce bureaucratic bottlenecks for MSEs. In 2012 the government reduced license and permit requirements, simplified and reduced tax payments, and reduced inspections to lower MSE transaction costs. Programs to increase access to finance for rural MSEs, including existing and proposed ADB financial inclusion projects with emphasis on rural and women-owned businesses, are under way. To reduce small business barriers, pilots are being launched for online business registration and online property registration linked to collateral registries.

Safeguard Categories

Environment: FI
Involuntary Resettlement: FI-C
Indigenous Peoples: FI

Summary of Environmental and Social Aspects

Environmental Aspect
Environmental impacts are anticipated to be insignificant. Each PCB will adopt an environmental and social management system (ESMS) with screening criteria and monitoring procedures to ensure that the subprojects have minimal or no adverse environmental or social risks.

Involuntary Resettlement
Only land sites with no involuntary resettlement impacts will be considered. The ESMS will also monitor this.

Indigenous Peoples
Only land sites with no indigenous peoples' impacts will be selected. The ESMS will also monitor this.

Stakeholder Participation and Consultation

During Project Design
The Housing for Integrated Rural Development Investment Program cuts across a number of development themes. Donor coordination focuses on three key themes: rural development, financial sector development, and local government capacity building. Close ADB donor coordination is maintained in these three themes and in cross-cutting areas, specifically governance, environment, and gender. With the World Bank, collaboration is supported in the financial sector, micro and small enterprises, local government, and cross-cutting governance issues including public procurement. Cooperation with the UNDP is achieving synergy on local government capacity building efforts and environmentally sustainable approaches for rural housing and community development. The Islamic Development Bank is evaluating cofinancing as part of its country programming process. Possibilities linked to plans to diversify small to medium enterprise programs have also been explored with Kreditanstalt fur Wiederaufbau (KfW).

During Project Implementation
The Housing for Integrated Rural Development Investment Program continues to work with a number of stakeholders to help achieve the objectives of the program. This includes working with district hokimiyats, mahallas, branch offices of the women's committee, and local youth groups around beneficiary selection, site selection and other local issues.



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.

Project Data Sheets (PDS)

Timetable

Management Review Meeting
18 Jul 2013

Board Approval
01 Oct 2013

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