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Raising Development Impact through Evaluation

Uzbekistan: Housing for Integrated Rural Development Investment Program—Tranches 1, 2, and 3

Evaluation Document | 19 October 2018

This evaluation assesses the performance of the multitranche financing facility (MFF) of Asian Development Bank (ADB) for the Housing for Integrated Rural Development Investment Program in Uzbekistan (the ADB MFF program). ADB provided $500 million to support the government’s rural housing scheme (RHS), which had an estimated total investment of $3.05 billion. 

The ADB MFF program supported the country’s first rural housing intervention. The goal of the RHS was to improve incomes, job opportunities, and living standards in rural areas, and in turn to reduce inequality between rural and urban citizens. This objective was consistent with the housing needs of rural people. The ADB MFF program contributed to the improvement of rural housing conditions and to the initial introduction of mortgage financing in rural areas. The program provided lessons to better target the program in later stages and laid the foundation for the government’s current effort to develop a housing mortgage market. The government acknowledged the fact that ADB provided support for the housing program when other development partners’ support was not readily available. 

RHS as a whole, provided 41,510 housing loans exceeding the initial target of 40,500 loans. However concerning relevance of design, the institutional arrangement of the ADB MFF program was complex and several procurement issues were identified. Further, the ADB MFF program did not achieve the intended outputs and outcomes. The ADB MFF program was to provide at least 39,000 housing loans (95% of housing loans of RHS). ADB financed only 22,834 housing loans, 23.7% of which were to women (lower than the target of 30%). In addition, the share of home buyers belonging to the highest income quartiles (third and fourth) increased from the first tranche to the third tranche of the ADB MFF program. Also, the target of 65,000 local staff trained was not achieved. Furthermore, the financial sustainability of the housing scheme is uncertain because of issues related to subsidies, among others. Subsidies and government-led institutional arrangements crowd out private sector participation in rural mortgage finance. Three critical areas for improvement were identified in this evaluation: (i) competitive rural mortgage financing; (ii) affordability of rural houses, especially for the poor; and (iii) compliance of procurement. As a consequence, Independent Evaluation Department rates the ADB MFF program less than successful. 

During the Independent Evaluation Department’s final consultation mission to Uzbekistan to discuss the key findings of this report, the overall findings, conclusions, and recommendations were broadly confirmed. Further, the government feedback emphasized the importance of following ADB standards on procurement and their commitment to introduce procedures aligned with the spirit of ADB requirement and expressed commitment towards developing a mortgage market to improve the longterm sustainability of the housing market. Also, the need for targeting the program towards the lower income group was well recognized, which has already been incorporated in the ADB’s Affordable Rural Housing Program (2017). 

The evaluation recommends ADB to (i) support Uzbekistan to promote a competitive mortgage financial sector that supports rural development, (ii) support Uzbekistan to develop a unified database system of beneficiaries and applicants to assess beneficiary selection and the socioeconomic impact of the RHS, and (iii) ensure strict application of ADB procurement rules in all ADB projects and strengthen monitoring and reporting.