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EBRD and Japan accelerate small-business lending in Uzbekistan
New $20 million framework expected to reach thousands of micro and small enterprises
Building on a pilot scheme that has already directed nearly 1,000 loans to micro and small enterprises across Uzbekistan, the European Bank for Reconstruction and Development and the Japanese Government are jointly investing in a $20 million full-scale programme that will make small-business finance even more widely available.
The EBRD Japan-Uzbekistan Small Business Programme will extend loans to local commercial banks, which will then on-lend funds to private Uzbek micro and small enterprises - especially those without a prior banking relationship or credit history. The first credit lines extended under the programme are to Hamkor Bank and Pakhta Bank, both of which successfully participated in the pilot phase launched last year.
The Japan-Europe Co-operation Fund will provide $5 million in technical assistance for training and institution building, as a key aspect of the programme is to continue developing the necessary structures in the Uzbek banking sector. LFS Financial System GmbH, a German consulting company, will advise and train partner banks and its personnel to establish streamlined MSE lending operations in the partner banks.
EBRD First Vice President Noreen Doyle, who is in Tashkent to sign the project agreements, said the support of micro and small companies in Uzbekistan is at the core of the EBRD's strategy for the country. The new Uzbek programme is designed to provide entrepreneurs with access to finance that is traditionally scarce. More broadly, she added, such finance is one of the best ways to support economic development and social stability in Uzbekistan.
The EBRD has been expanding and intensifying its support to the development of micro and small business. The Bank now operates long-term MSE financing programmes in 15 countries - in Central Asia as well as Russia, Ukraine, the Caucasus and south-eastern Europe. All told, more than 200,000 companies have received a combined $1.5 billion in financing. These programmes highlight the commitment not only of the EBRD but of other international investors, such as the International Finance Corporation and the US, Japanese and Swiss Governments, especially to the Central Asia region.
In Uzbekistan, the pilot programme involved the establishment of 10 specialised MSE Credit departments in five regions (Andijan, Asaka, Kokand, Namangan and Tashkent) and the training of 30 loan officers. Nearly 1,000 MSEs have received a combined $3 million so far. The full-scale programme will expand to additional banks, branches and regions, with two further participating banks expected to join by the end of the year. The programme will focus on simplifying application procedures and shortening the decision-making process.
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