Microsoft Word Microfinance development in Uzbekistan Eng doc

Coordination of efforts. Due to the small number of MFOs, there is no coordination 
of their efforts to focus their resources into tense socioeconomic areas. But due to the 
sector’s increasingly competitive environment and growth in the number of MFOs, the 
coordination of actions and the consolidation of their efforts to provide microfinance services 
will become crucial to ensure effective operations.
The Ministry of Labor and Social Welfare is currently developing the concept for the 
creation of the Social Investment Fund in Uzbekistan which endeavors to ensure the 
consolidation of efforts, coordination, and diversity in microfinance services. The principal 
feature of this Fund is envisioned as the partial re-allocation of commercial banks’ credit 
lines to the credit lines of this Fund. 
• Maximum risk level. In comparison with similar activities of other institutions such as 
banks and CUs, microcrediting by NGO-MFO is the riskiest. The majority of loans are 
provided without collateral. Additionally, all of the microbusinesses in which clients engage 
are risky. This is particularly true for livestock farming, where price fluctuations are more 
significant, many inputs are required in the initial stage and turnover is much slower. 

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Businesses with high profit margins and small turnovers are extremely susceptible to 
market fluctuations. Even the smallest reduction in profit margins results in businesses 
losing money. Agriculture is particularly susceptible to such risks, and those loans are a 
constant threat to the financial sustainability of MFOs. Although MFOs are trying stabilize 
the effect of the loan
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, professional risk assessments of the local markets are not conducted. 
• Reporting. Traditional forms of reporting are not suitable for NGO-MFOs as they are 
too cumbersome. Nevertheless, there is a clear need to push for systematization and 
information transparency in NGO-MFOs by developing simplified forms of reporting 
adapted to the particular features of MFOs’ activities. 
Currently some NGO-MFOs are utilizing methods developed with the assistance of 
CAMFA for filing consolidated reports on current loan flows and for creating financial 
projections based on uniform standards. Local NGO-MFOs (Daulet, Sabr, and BWA of 
Karakalpakistan and Kashkadarya region) have accumulated solid practical experience in 
training professionals of microfinance programmes for poor population groups. However, in 
terms of methodology, the distribution of labor, and financial expenditures, the overall 
internal calculations, monitoring, and assessment of MFOs are not optimal.
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