Uzbekistan: Small Business and Entrepreneurship Development Project

Sovereign Project | 42007-014 Status: Active

Summary

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.

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Procurement Documents


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Project Name Small Business and Entrepreneurship Development Project
Project Number 42007-014
Country Uzbekistan
Project Status Active
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 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 ADB loan if financially closed and PCR is expected in Q4 2016. PCBs are encouraged to recycle the funds.
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 the end of September 2014, 2063 subborrowers trained by PCBs had accessed subloans under the project. A loan review mission took place on 17-25 December 2015.
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

Loan was financially closed on 20 January 2016. The loan was fully disbursed by December 2015 1.5 years before the completion date. The

disbursement was made through 2 PFIs (Hamkorbank and Ipak Yuly Bank). The outcome and outputs' targets of the project have fully been achieved. It provided 10,500 new loans to small businesses of which 50% were provided to rural small businesses and 30% - to women's small businesses. It helped streamline lending processes and improve risk management capacity of the PFIs. The project trained the PFIs' staff to deliver business development and financial literacy training to subborrowers. During 2014-2015, more than 6000 subborrowers received the training.

Impact. The performance target in the Design and Monitoring Framework (DMF) of the project indicates that contribution of small businesses to GDP should increase to 60% by 2020. As of 30 September 2015, small businesses contributed to 53.6% of GDP. By 2020, active female individual entrepreneurs outside the city of Tashkent should increase to 42%. According to preliminary data, at the time of the review mission in December 2015, about 40% of female individual entrepreneurs run businesses outside the city of Tashkent indicating that this performance target is achievable within the specified timeline.

Outcome. There are two performance indicators. The first target is that by 2017 the PCBs should issue at least 50% of the number of new loans to small businesses in areas outside the city of Tashkent (rural small businesses). As of 30 September 2015, 4,212 new loans were issued by the PCBs of which 76% were onlent to rural small businesses. The second target is that by 2017 the PCBs should provide at least 30% of the number of new loans to women's small businesses. As of 30 September 2015, 31.2% of the new loans were onlent to women's small businesses. The outcome performance targets have been achieved well before the target date.

Outputs. The performance indicators for Output 1 are that by 2017, at least (i) 5,000 new microfinance loans, and (ii) 100 new small businesses loans are issued by the PCBs. Two PCBs issued 4,152 microfinance loans and 502 small businesses loans as of 30 September 2015. The indicator (i) has not yet achieved while the indicator (ii) has exceeded the target. The performance indicators for Output 2 are that by 2017, (i) at least 3,000 potential subborrowers trained by PCBs and accessed subloans under the project, of which at least 30% are women; and (ii) the number of small businesses registered reaches 310,000. As of 30 September 2015, the total of 8,765 business clients were trained by the PCBs and only 4,055 subborrowers (or 46.2%) received loans. Of these subborrowers, 1,471 (or 36.5%) were women who were trained and accessed loans. The targets have been achieved. According to the official statistics, as of 1 January 2015, 221,140 enterprises were registered as micro and small enterprises. It is expected that this indicator is achievable (target: 310,000) by 2017.

Gender Action Plan (GAP). Two PCBs have adopted the Gender Strategies which are aligned with their overall business strategies. The implementation of the GAP is on track. The outreach to women clients increased. Of the total number of microfinance loans issued to qualified subborrowers, more than 30% were to women small businesses. Based on the data provided by the PCBs, as of 30 September 2015 the project created 7,639 jobs of which 2,941 jobs were for women. The PCBs gather sex-disaggregated data on a regular basis. The PCBs have formed the gender teams who are responsible for the Gender Strategy implementation and have appointed the gender focal points responsible for tracking the progress of the GAP.

Technical Assistance (TA). The TA consultants were engaged during April 2014-December 2015 to deliver the TA's main outputs as follows (i) improving capacity of PCBs to lend to women's small businesses and rural small businesses; (ii) improving capacity of women's small businesses and rural small businesses; and (iii) strengthening regulatory and supervisory framework for the development and supervision of e-banking. The TA helped streamline internal organizational structure of the microfinance department, credit appraisal procedures, and develop new risk management dashboard and reporting template, performance management systems for loans officers, and credit scoring tool. Intensive capacity-building was provided in fundamentals of micro lending, loan appraisal techniques, process mapping and process optimization, tools for management of customer experience and risk management strategy. The training on microfinance lending was provided to over 120 staff of the PCBs, including at regional level. The TA provided strong support to the PCBs in the development of the gender strategies which were approved by the board of directors. The TA experts trained the trainers to conduct trainings for women clients. The impact evaluation specialist conducted the survey to assess the impact of the project on access to finance by rural and women's small businesses. The TA financed the study tour to the Philippines for 3 staff of the Central Bank of Uzbekistan on financial inclusion.

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 Staff

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 Mustaqiliik Square
Tashkent 100008
Republic of Uzbekistan

Timetable

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 27 Sep 2016

Loan 3043-UZB

Milestones
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%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating Satisfactory Satisfactory Satisfactory Satisfactory - Satisfactory

TA 8480-UZB

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
01 Oct 2013 07 Nov 2013 07 Nov 2013 31 Dec 2015 31 Dec 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 291,164.21
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating Satisfactory Satisfactory Satisfactory Satisfactory - Satisfactory

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

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Related Publications

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