Microsoft Word Microfinance development in Uzbekistan Eng doc

The impact of microfinancing on the development of the financial sector of the economy 
Through the attraction of small entrepreneurs into the financial sector it is possible to 
decrease the out-of-bank turnover of money resources by means of providing individuals 
with access to MFO capital. The monetary policy of the Central Bank will become more 
effective, banks will be able to credit businesses in market terms, and the reduction of a 
shadow economy will result in an increase in tax collections into the state budget. 
Microfinancing has already begun to form a new segment in the financial market. 
Survey results have shown that there is a segment of micro entrepreneurs in the country who 
have developed themselves without resorting to any banking services. 10% of entrepreneurs 
are sure that banks do not issue small credits at all, 14% of respondents did not use banking 
services during their business activity, and 38% of respondents had not used banking services 
within the last two years. Thus, microfinancing became an underpinning for the formation of 
a new segment of the financial market which operates exclusively based on market principles 

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and accelerates the growth of financial mediation in the country and the diversification of the 
savings and loans market as a whole. 
Microfinancing establishes a new culture of savings. The principle of forming an 
obligatory savings within the programme framework for group microcrediting allows the 
prompt accumulation of a significant savings volume. Subject to the organization of 
microfinance movements on a nation-wide scale, the given plan for forming savings can 
become a new and stable component of investment programmes. 
 
The impact of microfinancing on solutions to social issues 
Every social aspect of microfinancing is important for Uzbekistan, considering the 
current demographic tendencies and increasingly stiff labour market
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. 
Microfinancing has attracted more than 70 thousand clients. Analysis has shown that 
entrepreneurs working in microcrediting programmes recruit on average 2-3 family members 
in their businesses. It means that additional employment has been provided for 200 thousand 
people in Uzbekistan.
The financial sector of the country also lacks serious gender inequality. In a recent 
survey 71% of respondents answered that difficulties associated with receiving of a credit did 
not depend on the sex of the borrower, while 22,5% of respondents believed that it is easier 
for women to receive credit. The survey also showed that entrepreneurial women always 
recruit female employees and they tend to recruit the women in their families.
There is a special interest in assessing the access of poor groups to MFO loans. Unlike 
commercial banks and CUs, MFOs actively and organizational seek to increase employment 
and incomes. In practice MFO credits are not only more accessible but seem to defy the 
urban/rural divide and thus allow for a levelling off of regional social inequalities.
Taking into account the low mobility and challenging employment problems of the 
agrarian labour, it is most likely that microfinancing here can serve as a long-term, 
fundamental and effective tool to reduce the acuteness of social problems.