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Uzbekistan: Small Business Finance Project

Sovereign (Public) Project | 42007-018 Status: Active

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 Details

Project Officer
Gafurov, Bobir Baisovich Central and West Asia Department Request for information
Country
  • Uzbekistan
Modality
  • Loan
  • Technical Assistance
Sector
  • Finance
 
Project Name Small Business Finance Project
Project Number 42007-018
Country Uzbekistan
Project Status Active
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
Loan 3405-UZB: Small Business Finance Project
Ordinary capital resources US$ 100.00 million
TA 9128-UZB: Strengthening Participating Financial Institutions
Financial Sector Development Partnership Special Fund US$ 500,000.00
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Knowledge solutions
Partnerships
Private sector development
Sector / Subsector

Finance / Small and medium enterprise finance and leasing

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.

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 Project implementation is on track.
Implementation Progress
Description of Project Outputs Expanded capacity of the PFIs for financing small businesses
Status of Implementation Progress (Outputs, Activities, and Issues) The loan effectivity was declared almost a year after approval. All PFIs have complied with the conditions for withdrawal from the loan account.All issues related to ability for PFIs to provide USD denominated subloans were resolved. Implementation of the attached Technical Assistance (Strengthening Participating Financial Institutions)started with some delay but now is on track. The consulting firm to implement the TA was engaged starting 30 April 2018 and TA implementation is progressing, including finalization of the Comprehensive Training Program (CTP) of Ipak Yuli Bank and Davr Bank. To ensure all tasks and targets under TOR of the consulting firm are accomplished, contract will be extended till 30 June 2019.
Geographical Location Nation-wide
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 were carried out during fact-finding. PFIs' environmental and social management systems (ESMS) was reviewed and any capacity development needs identified. 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 Consultation with private sector is conducted during review missions and regular discussions with government agencies.
Business Opportunities
Consulting Services Consulting services will include the engagement of (i) Agriculture Finance and Rural Banking Experts, (ii) Credit Scoring Experts, and a (iii) Small Business Banking Expert through a firm. An Environmental and Social Management System Specialist (international), and a Monitoring and Evaluation expert (national) will be hired individually.
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 ADB Officer Gafurov, Bobir Baisovich
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Uzbekistan Resident Mission
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 29 Apr 2019

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 72.81 0.00 73%

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 162,983.33

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.

Evaluation Documents See also: Independent Evaluation

None currently available.

Related Publications

None currently available.


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Tenders

Tender Title Type Status Posting Date Deadline
Monitoring and Evaluation Specialist (Natl) Individual - Consulting Closed 31 Jan 2018 09 Feb 2018
Training Program to Develop the Skills of PFI Officers Firm - Consulting Closed 24 Jan 2018 06 Feb 2018
Environmental and Social Management System Specialist Individual - Consulting Closed 20 Sep 2017 26 Sep 2017

Contracts Awarded

No contracts awarded for this project were found

Procurement Plan

None currently available.