World Bank: Central Asia Private Sector Needs Room to Grow

Central Asia is attracting growing interest from international investors, but turning that attention into lasting economic growth will require giving the private sector more room to develop, a senior World Bank official has said. Najy Benhassine, the World Bank’s division director for Central Asia, said the region had enjoyed strong economic growth, but much of it had been driven by public investment, favorable commodity prices, and remittances rather than improvements in productivity. In an interview published on October 27 by Novastan, an independent European news outlet, Benhassine discussed the region’s economic prospects over the coming decade. “The interest is real and, in some respects, historic,” he said, referring to growing engagement from foreign investors and governments. “Global attention generates visits, pledges, and headlines, but these are just the start.” Benhassine said Central Asia had seen expanding trade and transit activity, alongside increased foreign direct investment in extractive industries and transport infrastructure. However, these investments had yet to produce the wider economic benefits needed to make the region less dependent on natural resources. One of the main challenges is the gap between economic growth and productivity. According to Benhassine, labor productivity in manufacturing has stagnated or grown only modestly across most Central Asian countries, while small businesses continue to struggle to expand. Access to finance remains a major obstacle. Small and medium-sized enterprises often face high interest rates and collateral requirements that make investment difficult. Meanwhile, state-owned enterprises continue to absorb capital that could otherwise support private businesses. Uneven enforcement of regulations adds to the difficulties facing smaller firms. Benhassine pointed to the World Bank Group’s Access to Finance for Jobs and Growth (FINGROW) Program as one initiative intended to address these problems. The $4 billion FINGROW program aims to mobilize up to $6 billion in additional private capital across Europe and Central Asia, he said. Its first phase includes Uzbekistan, where the World Bank approved $105 million in financing in December 2025. The project aims to help around 7,000 businesses obtain credit by 2030. Education systems must focus on equipping graduates with skills that match employers’ requirements, rather than simply increasing enrollment, he said. In Uzbekistan, more than half of employers identify an inadequately skilled workforce as a significant constraint on growth. Benhassine identified Uzbekistan as one of the countries that had made significant changes to its economic system since 2017. He highlighted the liberalization of the exchange rate and the opening of previously state-dominated sectors to private investment. He also praised progress toward joining the World Trade Organization. Kazakhstan is seeking to reduce the dominance of state-owned enterprises. Tajikistan has introduced reforms aimed at increasing competition in telecommunications and aviation. In Kyrgyzstan, the government is working to expand opportunities for private participation in utilities. Benhassine said these reforms could help major projects, including the Kambarata-1 Hydropower Plant and the China-Kyrgyzstan-Uzbekistan railway, generate employment and wider economic benefits. Transport links have become increasingly important as Central Asia seeks to expand trade between Asian and European markets. But Benhassine warned that...