Microsoft Word Microfinance development in Uzbekistan Eng doc

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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Introduction 
Ensuring the rapid development of the private sector, increasing the private sector’s 
share in the country’s economy, and expanding and enhancing small businesses were 
identified as priorities in the implementation of economic reforms in the address of the 
President in the joint meeting of the Legislative Chamber and the Senate of the Oliy Majlis 
on January 28, 2005. The expansion of microcredit is viewed as a tool for the implementation 
of these priorities. 
The declaration of 2005 as the International Year of Microfinance reinforces the special 
status of microfinance on a nationwide scale, clearly demonstrated by the creation of the 
microfinance.uz informational website. 
Although MFIs show strong growth dynamics, the sector is in its initial stage of 
development in Uzbekistan and can not yet fully realize its potential. Microfinance so far has 
not enjoyed wide-scale development in Uzbekistan. Microcredits (microloans) and 
microleasing (to an insignificant extent) have dominated among the alternative services of 
microfinance
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. Yet it should be acknowledged that microcredit involving 70,000 clients is 
the most viable opportunity for a significant portion of Uzbekistan’s population to improve 
their socioeconomic status. Entrepreneurs involved in microcredit programmes employ 2-3 
family members on average, which is essential in the context of the existing employment 
issues and demographic situation in Uzbekistan. A sociological survey held within research 
has shown that of those entrepreneurs creating new jobs using microcredits, 81% are clients 
of MFIs and CUs. 
In encouraging the process of microfinance, it is important to address the issues of 
employment and poverty and the expansion of entrepreneurship can hardly be overestimated.
In the meantime, it reduces the appeal of other informal alternative microfinance schemes in 
Central Asian countries. 
Actions intended to encourage the further development of microfinance primarily focus 
on the development of legal and regulatory framework. Although some components of 
microfinance have existed in Uzbekistan for 7 years, their legal framework has been 
developed unevenly: given the full package of regulations for microcredit by commercial 
banks, there is no legal or regulatory framework for microcredit by NGOs-MFOs. The legal 
framework of microinsurance, microleasing, and microsavings has not been developed either. 
Another major issue is the lack of clear legal status and registration procedures for 
various types of MFIs. Issues surrounding the taxation of microfinance institutions and their 
access to external sources of borrowing require special attention. 
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Microfinance includes the following components: microcredit, microsavings, microinsurance, microleasing, 
provision of consulting services, and money wires. 

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There are a number of other technical issues related to reporting, human resources, 
information components, financial viability, cash transactions, introduction of new 
microfinance products, the coordination of efforts, and the targeted and effective use of 
microcredit resources.