Microfinance in Uzbekistan

Linked with our presentation Sakhibakhon Irgasheva – Uzbekistan.

UNDP efforts on developing microfinance in Uzbekistan: UNDP efforts on developing microfinance in Uzbekistan
The United Nations proclaimed 2005 the International Year of Microcredit. The year offers to scale up efforts for making financial services more accessible to poor and low-income people. It will aim to raise public awareness about microcredit and microfinance, and promote innovative partnerships among governments, donors, international organizations, non-governmental organizations the private sector, academia, and microfinance clients.

UNDP, as one of the important development programs in the world actively involved in supporting successful achieving goals of International year of microcredit.

UNDP Uzbekistan has developed a national participation Strategy and action plan for the Year of Microcredit. The strategy includes conducting number of events and activities aimed at strengthening capacity of government of Uzbekistan in building sustainable microfinance sector.

Within the framework of this strategy it is planned to establish national Steering Committee on microfinance development, conducting assessment of microfinance sector and its contribution to building common financial system, preparing “Microfinance in Uzbekistan” study report, preparing drafts of legal documents, designing and posting special web site www.microfinance.uz, conducting capacity building trainings and publishing updated methodological guidelines on developing microfinance programs, supporting innovative microfinance schemes and conducting regional microfinance conference in September of this year.

Efforts in the microfinance including initiatives within the Year of Microcredit are now being coordinated by number of ongoing UNDP projects such as “Sustainable Income Generation”, “Center for Social and Economic Studies”, and “Micro-credit development for income generation and job creation in the Kashkadarya province”, “Uzbekistan Development Gateway” “Statistics Project Initiative”, as well as, within the newly establishing joint projects of UNDP and European Commission “Enhancing living standards in the Fergana Valley” and “Enhancing living standards in Karakalpakstan”.

Within the framework of “Sustainable Income Generation” project which aims at strengthening capacities of regional and local institutions in conceiving and implementing employment generation and poverty reduction projects several initiatives on microfinance sector development are being supported. The main partners in the UNDP projects in this field are regional branch offices of Business Women’s Association (BWA) in Karakalpakstan and Kashkadarya as well as non-governmental organization (NGO) “Daulet” and network of business incubators that were created by UNDP support.

To date within the framework of project two modules of training were organized for NGOs operating in the southern and northern parts of Uzbekistan. The first module included courses such as “Managing human resources”, “Establishing and developing NGO”, “Business planning and marketing”, “Features of NGO accounting and tax”.

As a result of conducted trainings NGOs developed strategic development documents including defining mission of their organization, functional duties of business incubators, modification of BWA documentations inline with new activity directions and developing strategic business plans of organization.

The second module of trainings included developing new products and fundraising for NGOs working in small business and entrepreneurship development support sector. As a result of this training participants have submitted four innovative project proposals aimed at piloting new microfinance products and schemes particularly, individual crediting of small businesses, microleasing and credits to agriculture processors and private farms.

Within the framework of one of the components of the “Sustainable Income Generation” project Small Grants Program is being supported. The purpose of the Small Grants Program (SGP) is to determine the most effective, demand-driven and sustainable schemes and strategies for employment creation, promotion of micro and small entrepreneurship and improving livelihood in rural areas based on local initiatives and participation. The schemes and initiatives that prove to be most successful will be replicated in other regions of the country.

In the first cycle of reviewing project applications from business incubators and microfinance organizations Grant committee has approved for financing four projects from different regions of the republic. In the near future, with the financial and technical assistance from Sustainable Income Genration project, implementation of two grant projects for providing microfinance services is planned. The implementation of the first grant project on developing and piloting new alternative schemes of microcredit services within the ‘Shakhrisabz’ business incubator in Kashkadarya region and the second grant project on developing and piloting complex of microleasing services to private and small businesses within the “Angor” business incubator in Surkhandarya region is planned to start in the beginning of March of this year.

Within the framework of “Center for Economic and Social Studies” project that aims at extensive research of reforming process of economy of Uzbekistan, based on the study of international experience proposing suggestions for further liberalization of the economy, elaborating and practicing the contemporary methods of macroeconomic analysis and forecasting as well as providing broad and impartial information to international community on economic transformations taking place in Uzbekistan, active work is maintained with representatives of Government, microfinance organizations, banks and donor organizations on elaboration of draft resolution on microfinance development in Uzbekistan as well as developing draft of legislative law on “Non-banking financial institutions”. Moreover, jointly with other UNDP projects such as “Statistics Project Initiative” and “Sustainable Income Generation” projects (see above) research is being conducted on the state of microfinance sector in Uzbekistan at the end which comprehensive report will be prepared.

“Uzbekistan Development Gateway” component of the Center for economic research developed and providing contant support on maintaining internet web site www.microfinance.uz dedicated to microfinance issues in Uzbekistan. The web-site intends to provide online access to comprehensive information on various theoretical, methodological and practical aspects of microfinance activities. On the site pages users can easily find useful resources, can find answers to questions and learn on essence of microfinance and how microfinance can help poor people to start and carry out their own business, who may become a customer of microfinance institutions, how the government supports microfinance sector, and what are the services presently available etc. Moreover, www.microfinance.uz provides links to analytics and statistics, news, events and announces, best practices and other useful information for people who cannot borrow from traditional financial institutions, but who would like and capable of getting involved and leading entrepreneurial activities. (Read the rest of this presentaion on this UNDP-site).

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