Small and Medium-Sized Enterprise Finance in Uzbekistan: Challenges and Opportunities

4.1 Demand-side Constraints 
(i) Low financial literacy and business skills
SMEs lack adequate training, knowledge and skills for effective business management, 
preparation of realistic business plans and debt management. This leads to weak 
business risks management, an increase in the cost of doing business, and limits access 
to bank loans. Small businesses have limited access to business development services 
that contribute to the efficiency, profitability, and expansion of their activities. Weak 
financial literacy, especially among women’s small businesses and low-income groups, 
limits their access to financial services and constrains their entrepreneurial capacity.
(ii) Limited knowledge of the availability and impact of business development 
services (BDS).
Around 60% of surveyed SMEs in Uzbekistan could not name any private BDS provider 
and almost none were aware of the existence of third-party providers, such as NGOs or 
business associations.
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 This is especially true for SMEs operating in the regions, where 
70% of SMEs do not know any private BDS providers. Public−private dialogue, and 
especially the role of business associations in promoting BDS, remains limited. 
Moreover, the perception of an overall poor quality of services offered by certified BDS 
providers, as well as of poor capacity of government-related bodies, leads to a limited 
use of such providers.  
(iii) Lack of knowledge on financial products, markets, technology and legislation 
This affects the efficiency of SME businesses and limits their access to finance. 
Misperceptions about the banks, and the financial system in general, appear to have led 
to a lot of negative sentiment about banks among SMEs. SMEs often lack market 
information, such as on prices and trading volumes, which limits their ability to prepare 
reliable business plans and forecast cash flows. This challenge is very significant due to 
the absence of an online portal for SMEs on new legislative changes or incentives 
provided by the government.