TASHKENT (TCA) — The Asian Development Bank (ADB) has approved a $100 million loan that will be extended to four financial institutions for on lending to small businesses—the backbone of Uzbekistan’s economy, the ADB Country Office said.
The four financial institutions include Davr Bank, Hamkorbank, Ipak Yuli Bank and leasing company UzbekLeasing International A.O. All of them have strong financial track records, finance intermediation experience, and a commitment to serving rural and women-owned small businesses.
“Small businesses contribute over 50% of Uzbekistan’s GDP and 80% of employment but their access to finance, particularly in rural areas, is hampered by limited services and a range of other obstacles,” said Aliya Mukhamedyarova, Financial Sector Specialist in ADB’s Central and West Asia Department. “This loan will allow the participating financial institutions to extend finance for working capital and fixed asset investment to small businesses, particularly outside the capital and for businesses run by women, giving a shot in the arm to job creation and the wider economy.”
The loan will help meet a growing demand for credit and leases from small businesses and entrepreneurs. The funds will be lent to small businesses at market-based rates. To ensure the participating financial institutions can service a larger range of businesses, the maximum single subloan amount has been set at $300,000, 3 times the size of the subloan limit set under a previous ADB loan. In addition, to ensure a broad gender and geographical spread, the project aims to extend at least 20% of all eligible loans to women-owned businesses, and at least 60% to small businesses outside the capital.
A technical assistance grant of $500,000 will be financed by the Government of Luxembourg, through the Financial Sector Development Partnership Special Fund and administered by ADB. It will strengthen the policies and procedures of the participating financial institutions, raising their capability for small business lending. Stepped-up financial literacy programs for their small business clients will also be provided. The project will be implemented over 5 years with an estimated completion date of end December 2021.
