World Bank allocates $100 mln to Uzbekistan for small business development
TASHKENT. Dec 16 (Interfax) - The World Bank's Board of Executive Directors has approved a $100 million loan and a $5 million grant to Uzbekistan to expand access to financing for small businesses.
The funds will be directed towards "implement[ing] the Access to Finance for Jobs and Growth Project (FINGROW). It will expand access to credit and private equity financing for capital-constrained micro, small, and medium enterprises (MSMEs)," the World Bank said in a press release.
As reported, in Uzbekistan, MSMEs constitute over 90% of all operating enterprises in the country, provide 75% of total employment and generate around 55% of GDP. Despite an increase in lending to MSMEs in recent years, small businesses still face limited access to capital, which constrains growth, their contribution to the economy and job creation.
More than a third of MSMEs do not have bank accounts, less than 30% of their sales are conducted electronically and access to credit financing remains low. Only 10% of small and 16% of medium-sized enterprises report having loans. The total credit financing demand of MSMEs is estimated at $13 billion, while the financing deficit is around $6 billion. Enterprises led by women face even more significant financial constraints. Despite women owning nearly a third of registered MSMEs, they receive only around 14% of the loans provided to such enterprises.
The demand for private investments is estimated at $20 billion to $30 billion, while the total attracted capital of the three private equity funds operating in the country amounts to approximately $2 billion.
The World Bank-funded FINGROW project will provide support to JSC Entrepreneurship Development Company (EDC) under the Uzbek Economy and Finance Ministry. The EDC's subsidiary structures will interact with banks, microfinance organizations and investors to provide credit (bank) guarantees to MSMEs and facilitate the attraction of private investments into the equity of competitive enterprises, which will mobilize an additional $500 million in capital.
According to World Bank data, it is expected that project activities will ensure access to credit financing for approximately 7,000 MSMEs by 2030. This support will allow beneficiary companies to create around 100,000 new and better-paid jobs, with more than half of them being occupied by women and young workers.
In addition, as part of the project, support will be provided to up to 70 small and medium-sized enterprises with high growth potential through attracting private investment and transferring new knowledge and experience to them for business expansion.
Uzbekistan and Turkey have become the first countries in the ECA region to receive assistance under the FINGROW program.
