ADB is helping Uzbekistan improve living standards and livelihoods in rural areas. The investment program will principally provide financing to participating commercial banks for lending to more than 40,000 targeted rural homebuyers. It will also strengthen the capacity of local governments for integrated rural development and support the establishment of micro, small, and medium-sized businesses.
|Project Name||Housing for Integrated Rural Development Improvement Program - Tranche 2|
|Project Type / Modality of Assistance||Loan
|Source of Funding / Amount||
|Strategic Agendas||Inclusive economic growth
|Drivers of Change||Governance and capacity development
Private sector development
|Sector / Subsector||
Agriculture, natural resources and rural development - Agricultural policy, institutional and capacity development
Finance - Housing finance
|Gender Equity and Mainstreaming||Effective gender mainstreaming|
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.
|Impact||Improved rural housing for targeted beneficiaries.|
|Description of Outcome||Downstreaming of the rural housing scheme for moderate and lower income beneficiaries, with a focus on women.|
|Progress Toward Outcome||During project 2 implementation, all outstanding deficiencies in government compliance with the FFA were remedied, including divestiture of the 13 construction materials companies and completion of technical and financial performance audits for 2012 and 2013. As a result of these audits, QQI has adopted an action plan to improve its processes and procedures, including (I) civil works procurement, (ii) contract management, (iii) financial management, (iv) beneficiary selection, and (v) materials procurement practices.|
|Description of Project Outputs||
Housing loans provided by PCBs to targeted credit worthy subborrowers in rural areas
Improved capacity of local governments to prepare and implement integrated rural development plans and investment promotion strategies
Improved enabling environment for entrepreneurs and MSEs to establish or expand new businesses in rural areas
|Status of Implementation Progress (Outputs, Activities, and Issues)||
As of 31 December 2016, cumulative contract awards stand at: $199.15 m (99.57%) and Disbursements are: $199.22 m 99.59%). The DMF set a target of providing at least 20,000 subloans to targeted rural beneficiaries, of whom at least 30% should be women. The subloan target was exceeded by 1,000, as 21,000 subloans were made in 2013 and 2014. The subloans were provided throughout 13 regions, and 21.6% went to women. 7,642 of the 21,000 subloans were financed by the tranche 2 loan.
For Component 2 the second output was the training of at least 27,500 of the staff members of local governments in rural housing program processes and participative development of integrated rural development planning and investment promotion strategies. In 2013_2014, more than 15,000 (7,463 in 2013 and 8,402 in 2014) local government staff received training, of whom 12% were women. District community development plans were prepared for only 100 districts by end-2014 as opposed to the project target of 160 plans.
Under component 3, target of an increase in total microcredit lending in rural areas from SUM835 billion in 2012 to SUM1,202 billion in 2014 was not achieved in nominal terms or on a percentage basis. However, the 2012 baseline of SUM835 billion used in the DMF was incorrect, and the actual amount of microcredit lending in rural areas was SUM506 billion. Based on the correct baseline, rural microcredit lending actually increased by 40% from 2012 to 2014, compared with the 44% increase implied by the DMF target. It rose from about SUM506 billion to SUM706 billion_or by about SUM200 billion, compared with the original targeted increase of SUM367 billion. In 2013_2014, 1,908 new microloans were issued to homebuyers, 41% (784) of which were provided to women. This indicator outperformed the set target (at least 500 microloans) by almost four times. Similarly, 1,518 newly issued micro-, small- or medium-sized enterprises (MSME) loans to homebuyers in two years exceeded the project target (at least 1,500 units), and women homebuyers received 695 MSME loans (exceeding the target of 600 units). In the context of MSME development, 24,338 new MSMEs were established in rural areas in 2013 (11,171) and 2014 (13,167), outperforming the project target of at least 10,000 units. 7,410 (30%) of the new MSMEs were established by women. The homebuyers established 1,810 new SMEs in 2013 (830) and 2014 (980), exceeding the target of at least 1,500 SMEs. Of these, women owned 307 in 2013 and 384 in 2014. The target of registering 25,000 businesses online was not met, as only 5,793 businesses were registered online by end-2014. The target was not reached because pilot online registration began in January 2014 (a year later than originally planned), and because there were difficulties encountered in implementing the pilot program. With support from ADB, e-registration of businesses recommenced on 1 April 2017.
Summary of Environmental and Social Aspects
|Environmental Aspects||Environmental impacts are anticipated to be insignificant. Each PCB will adopt an environmental and social management system (ESMS) with screening criteria and monitoring procedures to ensure that the subprojects have minimal or no adverse environmental or social risks.|
|Involuntary Resettlement||Only land sites with no involuntary resettlement impacts will be considered. The ESMS will also monitor this.|
|Indigenous Peoples||Only land sites with no indigenous peoples' impacts will be selected. The ESMS also monitored this aspect and no violation came to light.|
|Stakeholder Communication, Participation, and Consultation|
|During Project Design||The Housing for Integrated Rural Development Investment Program cuts across a number of development themes. The program development phase was well coordinated with other international partners. Coordination focused on three key themes: rural development, financial sector development, and local government capacity building. Close ADB coordination is maintained in these three themes and in cross-cutting areas, specifically governance, environment, and gender. With the World Bank, collaboration is supported in the financial sector, micro and small enterprises, local government, and cross-cutting governance issues including public procurement. Cooperation with the UNDP is achieving synergy on local government capacity building efforts and environmentally sustainable approaches for rural housing and community development. The Islamic Development Bank is evaluating cofinancing as part of its country programming process. Possibilities linked to plans to diversify small to medium enterprise programs have also been explored with Kreditanstalt fur Wiederaufbau (KfW).|
|During Project Implementation||Regular missions were undertaken by ADB wherein meeting were held with beneficiaries, contractors, local government officials, and community leaders (Mahallah committees). Meeting were regularly arranged with participating commercial banks, relevant government ministries and offices as well as the engineering company QQI.|
|Consulting Services||The MOE-PIU has engaged the services of an audit firm to conduct the technical and financial performance review of the program for years 2014 and 2015. The firm has completed its work and the final report, incorporating ADB and the government's comments is expected in April 2017.|
|Procurement||The construction period of HIRD houses ranges from 6 to 12 months. Requests for bids will be advertised each year up to six months prior to planned construction. For Tranches 1 and 2, advance initiation of the procurement process has been approved to enable broad public advertisement of the request for bids to be initiated in accordance with ADB procurement requirements. The procurement opportunities under the project came to a close at the physical closing date of 31 December 2016.|
|Responsible ADB Officer||Sumbal, Asadullah Khan|
|Responsible ADB Department||Central and West Asia Department|
|Responsible ADB Division||Uzbekistan Resident Mission|
Ministry of Economy
Uzbekistan Avenue, 45A Tashkent, 100060, Republic of Uzbekistan
|MRM||18 Jul 2013|
|Approval||01 Oct 2013|
|Last Review Mission||-|
|Last PDS Update||03 Apr 2017|
|Approval||Signing Date||Effectivity Date||Closing|
|01 Oct 2013||11 Oct 2013||24 Oct 2013||31 Mar 2016||31 Dec 2016||-|
|Financing Plan||Loan Utilization|
|Total (Amount in US$ million)||Date||ADB||Others||Net Percentage|
|Project Cost||1,764.65||Cumulative Contract Awards|
|ADB||200.00||01 Oct 2013||1.42||0.00||146%|
|Cofinancing||0.00||01 Oct 2013||0.97||0.00||100%|
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