Microsoft Word Microfinance development in Uzbekistan Eng doc

Macroeconomic implications of the abovementioned problems: 
• Low level of outreach depth. The average estimated outreach depth is 9 percent.
9
In 
comparison, advanced MFOs in the Eastern European countries undergoing reforms 
have achieved an indicator of 20-25 percent. 
• Low level of outreach to low-income populations. This indicator is estimated to be 
0.6%,
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which is substantially lower even than the average regional level which is 
estimated to be 2%.
Table 1.  
Assessment of the current potential of microfinance in Uzbekistan 
 
Indicators 2003 
2004 
Total amount of microcredits of all types of MFIs/ GDP, % 
- 
microcredits of commercial banks to GDP, % 
- 
employment generation Fund microcredits to GDP, % 
- 
EBRD microcredits to GDP, % 
- 
NGO - MFOs microcredits to GDP, % 
- 
CU microcredits to GDP, % 
Commercial bank microcredits / Total amount of bank loans in real 
sector of the economy, % 
Microcredits of all types of MFIs / Total volume of bank – credits 
into the real sector of the economy, % 
0,65 
0,42 
0,0 
0,2 
- 
0,03 
0,71
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0,35 
0,0 
0,3 
0,04 
0,02 
1,2 
2,4 
Source: authors’ estimates 
2.1. Activities of non-government non-profit microfinance organizations
Currently 14 NGO-MFOs are operating in Uzbekistan including: 
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Average outreach depth is calculated by comparing the average loan amount to GNP per capita. According to 
the CAMFA’s data on 11 large MFOs in Uzbekistan, the average loan amount stood at USD 146. According to 
World Bank data, the estimated GNP per capita of Uzbekistan in purchasing power parity stood at USD 1,720 
in 2003. 
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Measured as the ratio of total number of MFO clients to the number of poor population. According to World 
Bank data, the number of people below the poverty line was estimated to be at 27.5% of total population (25.6 
million in 2003). 
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For instance, the NGO-MFO loan portfolio is approximately USD 30 million or 1.8% of GDP in Kyrgyzstan.
In Kazakhstan this indicator is equal to USD 5 million or 0.02% of GDP, while in Tajikistan it makes up 
approximately USD 3 million. or 0.2% of GDP (2002 data). 

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- organizations, for whom microfinance is not main activity (e.g. Business Women’s 
Association); 
- local organizations registered in accordance with the legislation for whom 
microfinance is the main objective (e.g. Daulet NGO); 
- programmes and projects of international organizations not registered as entities in 
Uzbekistan (e.g. Barokot, acting within the Netherlands’ Mercy Corps project). 
The rate of growth in the volume of transactions and number of clients illustrates the 
overall market trend. While the loan portfolio of 9 NGO-MFOs was equal to USD 2.53 
million as of October 1 2004, it amounted to USD 3.9 million in May 2005. Since the 
beginning of microfinance in Uzbekistan, the total number of NGO-MFO clients has reached 
nearly 41,000, and number of active clients is approximately 25,000. 
Borrowers have been issued more than 10,300 loans, of which 97 percent did not exceed 
USD 500 and only 1% equaled USD 1,000. ¾ of all loans were provided for a period of up 
to 3 months, of which slightly more than a half were given for up to one month. Survey 
results have shown that 75 percent of the borrowers who applied for loans were not first time 
applicants, only 25 percent were newcomers. 
Characteristics of the NGO-MFO activities in Uzbekistan are: 
• Female clients (up to 70%) mainly with secondary education and involved in 
farming, trade or services; 
• Household based production by borrowers and the broad use of unpaid labor by 
family members; 
• Consistent programmes and policies of all NGO-MFOs, demonstrated by identical 
procedures for submitting and reviewing applications and disbursing loans; 
• High repayment rate of microloans exceeding 96 percent; 
• Demand for microfinance services significantly exceeds the supply, which implies 
existing interest rates are excessive and rigid; 
• high transaction costs; 
• relatively small maximum amount of loan (500,000 -600,000 soums). What is 
more, this loan can be received only after 1-1.5 years of participation in the 
programme. During the first year loan amount does not exceed 100,000 soums. 
• The average MFO client has more than 500,000 soums of turnover per month 
(persons with less than average monthly turnover cannot stay in MFO programs).