Uzbekistan: Microfinance Sector Development Program
The SS-KSTA will provide important knowledge input and background diagnostics for the conceptualization of a Microfinance Sector Development Program and input for a project concept paper. ADB will aim to assist and advise on the further development of a market-based microfinance sector, by supporting the improvement of access to finance through both the commercial banking and the MFO sector. This is expected to support the development of the private sector as well as commercialize the SOBs to finance MSE on a sustainable basis and by doing so deepen and broaden financial intermediation and reach out to microentrepreneurs including women and rural.
Project Details
-
Project Officer
McCartney, Andrew C.
Central and West Asia Department
Request for information -
Country/Economy
Uzbekistan -
Sector
- Public sector management
| Project Name | Microfinance Sector Development Program | ||||
| Project Number | 56363-001 | ||||
| Country / Economy | Uzbekistan |
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| Project Status | Active | ||||
| Project Type / Modality of Assistance | Technical Assistance |
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| Source of Funding / Amount |
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| Strategic Agendas | Inclusive economic growth |
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| Drivers of Change | Gender Equity and Mainstreaming Governance and capacity development Knowledge solutions Partnerships Private sector development |
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| Sector / Subsector | Public sector management / Public expenditure and fiscal management |
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| Gender Equity and Mainstreaming | Some gender elements | ||||
| Description | The SS-KSTA will provide important knowledge input and background diagnostics for the conceptualization of a Microfinance Sector Development Program and input for a project concept paper. ADB will aim to assist and advise on the further development of a market-based microfinance sector, by supporting the improvement of access to finance through both the commercial banking and the MFO sector. This is expected to support the development of the private sector as well as commercialize the SOBs to finance MSE on a sustainable basis and by doing so deepen and broaden financial intermediation and reach out to microentrepreneurs including women and rural. The TA will look for ways to increase access to finance by i) identifying further reforms across both the banking and microfinance sector the market to enable greater access to finance, (ii) identify capacity building requirements for the market to both downscale the banks to do more with MSE as well as upgrading the capacity of corporate governance for MFOs and (iii) develop a business plan to establish an apex body to support sustainable funding models for the microfinance sector. | ||||
| Project Rationale and Linkage to Country/Regional Strategy | Micro and Small Enterprises (MSE) are a key driver to the Uzbekistan economy, representing 56% contribution to GDP and 75% of total employment in the country. Despite their importance to the economy the sector remains largely unbanked and underserved with an estimated credit gap of $6 billion today (Source IFC 2020). The MSE finance market is heavily state-owned bank? (SOB) -led, but these banks lack the specialist skills and products away from the government programs to undertake MSE financing sustainably. They also have low approval rates, a lack of customized delivery models for MSE as well as high collateral requirements (130%+). The large-scale rollout of heavily subsidized social lending programs by the Uzbekistan Government from 2016 onwards has also had a heavily distortionary effect, creating perverse incentives among borrowers and disincentivized commercial financing. Aside from the Banks, the Microfinance Organizations (MFOs) sector is small given the size of the market, with total loans outstanding across 80 institutions at $150 million only. This is due to their high-cost funding model that is difficult to scale up, coupled with poor governance across the sector leading to a lack of investor interest. Recent reforms for the sector include the approval of a new Non-Bank Financial Institution (NBFI) law, but this failed to address many of the underlying barriers needed to create a healthy MSE finance sector. | ||||
| Impact | Impact the TA is Aligned with Contribution of microenterprises to the gross domestic product of Uzbekistan, which is aligned with the objectives of the government to promote entrepreneurship and create jobs, increased. |
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| Project Outcome | |
|---|---|
| Description of Outcome | Microfinance sector strengthened |
| Progress Toward Outcome | |
| Implementation Progress | |
| Description of Project Outputs | Review of the policy, regulatory, and legal frameworks for microfinance sector development carried out |
| Status of Implementation Progress (Outputs, Activities, and Issues) | |
| Geographical Location | Nation-wide |
| Summary of Environmental and Social Aspects | |
|---|---|
| Environmental Aspects | |
| Involuntary Resettlement | |
| Indigenous Peoples | |
| Stakeholder Communication, Participation, and Consultation | |
| During Project Design | |
| During Project Implementation | |
| Responsible ADB Officer | McCartney, Andrew C. |
| Responsible ADB Department | Central and West Asia Department |
| Responsible ADB Division | Public Management, Financial Sector and Trade Division, CWRD |
| Executing Agencies |
Ministry of Finance |
| Timetable | |
|---|---|
| Concept Clearance | - |
| Fact Finding | 08 Dec 2022 to 08 Dec 2022 |
| MRM | - |
| Approval | 27 Dec 2022 |
| Last Review Mission | - |
| Last PDS Update | 03 Jan 2023 |
TA 10087-UZB
| Milestones | |||||
|---|---|---|---|---|---|
| Approval | Signing Date | Effectivity Date | Closing | ||
| Original | Revised | Actual | |||
| 27 Dec 2022 | - | 27 Dec 2022 | 31 Dec 2023 | - | - |
| Financing Plan/TA Utilization | Cumulative Disbursements | |||||||
|---|---|---|---|---|---|---|---|---|
| ADB | Cofinancing | Counterpart | Total | Date | Amount | |||
| Gov | Beneficiaries | Project Sponsor | Others | |||||
| 225,000.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 225,000.00 | 10 Jan 2023 | 0.00 |
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Tenders
| Tender Title | Type | Status | Posting Date | Deadline |
|---|---|---|---|---|
| Microfinance Sector Development Program - Intl Senior Microfinance Expert | Individual - Consulting | Active | 24 Jan 2023 | 29 Jan 2023 |
| Microfinance Sector Development Program - Natl Banking and Financial Inclusion Expert | Individual - Consulting | Closed | 06 Jan 2023 | 12 Jan 2023 |
| Microfinance Sector Development Program - National Microfinance Expert and Team Leader | Individual - Consulting | Closed | 06 Jan 2023 | 12 Jan 2023 |
| Microfinance Sector Development Program - National Legal Expert | Individual - Consulting | Closed | 06 Jan 2023 | 12 Jan 2023 |
Contracts Awarded
No contracts awarded for this project were found
Procurement Plan
None currently available.