The project will support participating financial institutions (PFIs) to provide loans to small businesses. The TA will help PFIs strengthen credit underwriting to improve rural outreach, and enhance financial literacy of their small business clients.
| Project Name | Small Business Finance Project | ||||||||
| Project Number | 42007-018 | ||||||||
| Country | Uzbekistan | ||||||||
| Project Status | Active | ||||||||
| Project Type / Modality of Assistance | Loan Technical Assistance |
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| Source of Funding / Amount |
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| Strategic Agendas | Environmentally sustainable growth Inclusive economic growth |
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| Drivers of Change | Governance and capacity development Knowledge solutions Partnerships Private sector development |
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| Sector / Subsector | Finance - Small and medium enterprise finance and leasing |
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| Gender Equity and Mainstreaming | Effective gender mainstreaming | ||||||||
| Description | The project will support participating financial institutions (PFIs) to provide loans to small businesses. The TA will help PFIs strengthen credit underwriting to improve rural outreach, and enhance financial literacy of their small business clients. | ||||||||
| Project Rationale and Linkage to Country/Regional Strategy | Favorable hydrocarbon revenues and substantial public investments supported a strong gross domestic product (GDP) growth at an annual average rate of 8% during 2000_2015. The GDP per capita increased from $558 to $2,036 and the poverty rate decreased from 27% to 14% during the same period. An industry-focused growth strategy resulted in an increase in the industry sector's share of GDP from 14% in 2000 to 24% in 2015, while the agriculture sector's share of GDP decreased from 30% to 17% during the same period. However, the strong GDP growth failed to effectively absorb the country's growing workforce. While the unemployment rate remained low at 5.2% in 2015, the number of Uzbek migrants doubled to 2 million during 2000_2015. The ongoing recession in the Russian Federation, which hosts over 90% of Uzbek migrant workers, has led to an increase of returning migrants, posing challenges to absorb them into the economy. Small businesses effectively generate employment and income, and are critical for Uzbekistan's inclusive growth. The financial system is dominated by banks, which control 94% of finance sector assets. Eight state-owned banks control 75% of banking assets and provide the bulk of credit to state-owned entities. During 2011_2015, bank credit to small businesses substantially increased from 4.5% to 7.1% of GDP, reflecting a compound annual growth rate (CAGR) of 34.1%. However, lending to small businesses still represents less than one-third of overall bank credit, which is insufficient given their economic significance. Eighty percent of small businesses are still being funded by family and friends and informal resources. Access to finance remains a key constraint for private business growth. |
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| Impact | Improved contribution of small businesses to inclusive economic growth and employment | ||||||||
Project Outcome
| Description of Outcome | Increased sustainable provision of PFIs' financing to small businesses |
| Progress Toward Outcome | |
| Implementation Progress | |
|---|---|
| Description of Project Outputs | Expanded capacity of the PFIs for financing small businesses |
| Status of Implementation Progress (Outputs, Activities, and Issues) | |
| Geographical Location | |
Safeguard Categories
| Environment | FI |
| Involuntary Resettlement | FI-C |
| Indigenous Peoples | FI-C |
Summary of Environmental and Social Aspects
| Environmental Aspects | Safeguards due diligence for environment, indigenous people, and involuntary settlement will be carried out during fact-finding. PFIs' environmental and social management systems (ESMS) will be reviewed and any needed capacity building in this area will be structured. Recommendations will be identified to ensure that ADB safeguards requirements are met. |
| Involuntary Resettlement | No impact is expected |
| Indigenous Peoples | No impact is expected |
| Stakeholder Communication, Participation, and Consultation | |
|---|---|
| During Project Design | |
| During Project Implementation | |
Business Opportunities
| Consulting Services | Consulting services will include the engagement of the (i) Agriculture Finance and Rural Banking Experts; (ii) Credit Scoring Experts; (iii) Small Business Banking Expert; (iv) Environmental and Social Management System Specialist, and (v) Mobile loan application system vendor. |
| Procurement | A capacity building technical assistance ($500,000) financed by Financial Sector Development Partnership Special Fund, will strengthen the PFIs' capabilities to lend to small businesses on a commercially sustainable basis. The TA will (I) strengthen PFIs' credit underwriting policies and procedures, (ii) develop a credit-scoring and loan original system facilitated by mobile devices for small business loans, (iii) improve rural outreach by establishing mobile loan processing, and (iv) strengthen PFIs' financial literacy programs for their small business clients. |
Responsible Staff
| Responsible ADB Officer | Mukhamedyarova, Aliya |
| Responsible ADB Department | Central and West Asia Department |
| Responsible ADB Division | Public Management, Financial Sector and Trade Division, CWRD |
| Executing Agencies |
Ministry of Finance 5 Mustaqiliik Square Tashkent 100008 Republic of Uzbekistan |
Timetable
| Concept Clearance | 03 Mar 2016 |
| Fact Finding | 22 Feb 2016 to 04 Mar 2016 |
| MRM | 09 May 2016 |
| Approval | 30 Jun 2016 |
| Last Review Mission | - |
| Last PDS Update | 27 Sep 2016 |
Loan 3405-UZB
| Milestones | |||||
|---|---|---|---|---|---|
| Approval | Signing Date | Effectivity Date | Closing | ||
| Original | Revised | Actual | |||
| 30 Jun 2016 | 03 Mar 2017 | 29 May 2017 | 30 Jun 2022 | - | - |
| Financing Plan | Loan Utilization | ||||
|---|---|---|---|---|---|
| Total (Amount in US$ million) | Date | ADB | Others | Net Percentage | |
| Project Cost | 133.30 | Cumulative Contract Awards | |||
| ADB | 100.00 | 30 Jun 2016 | 0.00 | 0.00 | 0% |
| Counterpart | 33.30 | Cumulative Disbursements | |||
| Cofinancing | 0.00 | 30 Jun 2016 | 0.00 | 0.00 | 0% |
TA 9128-UZB
| Milestones | |||||
|---|---|---|---|---|---|
| Approval | Signing Date | Effectivity Date | Closing | ||
| Original | Revised | Actual | |||
| 30 Jun 2016 | 21 Jul 2016 | 21 Jul 2016 | 31 Dec 2019 | - | - |
| Financing Plan/TA Utilization | Cumulative Disbursements | |||||||
|---|---|---|---|---|---|---|---|---|
| ADB | Cofinancing | Counterpart | Total | Date | Amount | |||
| Gov | Beneficiaries | Project Sponsor | Others | |||||
| 500,000.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 500,000.00 | 30 Jun 2016 | 0.00 |
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.
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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.
None currently available.
Evaluation Documents See also: Independent Evaluation
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Related Publications
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ADB Loan To Help Fuel Small Business Lending, Stimulate Jobs, Growth
ADB has approved a $100 million loan that will be extended to four financial institutions for on lending to small businesses—the backbone of the Uzbekistan economy.