Tashkent, Uzbekistan (UzDaily.com) —  The Asian Development Bank (ADB) has approved a US$300 million sector development program aimed at assisting the government of Uzbekistan in expanding access to financing for microenterprises that are underserved or inadequately served by banks. This initiative will help ensure sustainable and inclusive growth in the country.

"An inclusive and sustainable microfinance sector is key to supporting micro and small businesses, which drive economic growth and job creation in Uzbekistan," said ADB Director General for Central and West Asia, Eugene Zhukov. "The financial reforms supported by ADB will contribute to the government's efforts to commercialize state-owned banks. These reforms will also create a favorable environment for the development of microfinance organizations so they can better serve the needs of farmers, micro, and small businesses, and promote financial stability."

The first subprogram of the Inclusive Financial Sector Development Program will support structural reforms aimed at improving the policy environment for inclusive financing, enhancing the institutional capacity of financial service providers, and diversifying funding sources to stimulate growth in the microfinance market.

"With this loan, ADB is expanding its partnership with Uzbekistan, ensuring entrepreneurs, including women, have equal access to financial products and services. This will help improve their lives and create additional income streams," said Kanokpan Lao-Araya, ADB Country Director for Uzbekistan.

State-owned commercial banks dominate the country's financial sector, while microfinance organizations providing inclusive financing account for only 0.5% of the banking system.

According to the Global Findex 2021, only 44% of Uzbek adults have accounts in formal financial institutions, significantly lower than the regional average of 58% for Central Asia.

The nascent level of commercial microfinancing has resulted in a significant credit gap in the inclusive finance market for small and medium-sized businesses (SMEs). ADB's support will help the government address the credit gap, expand the inclusive financial system, and foster sustainable and inclusive growth under the "Uzbekistan 2030" strategy.

ADB is a strategic partner and investor in Uzbekistan’s banking sector, working with key public and private banks focused on sustainable support for the SME sector.

Uzbekistan joined ADB in 1995, and since then, the bank has provided the country with loans, grants, and technical assistance totaling US$12.5 billion.