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.