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

6. VALUE CHAIN FINANCING ANALYSIS 
“Value chain finance” refers to the flows of funds to and among the various links within a 
value chain. It relates to any or all of the financial services, products, and support 
services flowing to and/or through a value chain to address the needs and constraints of 
those involved in that chain, be it to obtain financing, or to secure sales, procure products, 
reduce risk and/or improve efficiency within the chain.
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Due to a lack of expertise in value chain financing of the commercial banks and existing 
regulatory limitations, the ability of SMEs to integrate into global value chains is limited.
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The international financial institutions initiated value chain financing on the request of the 
Government of Uzbekistan aimed at developing several agriculture value chains. 
According to the World Bank estimates, the demand for investments in the horticulture 
value chain is of $1 billion
59
while there is also a high demand for credit in the livestock 
value chain.
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As mentioned earlier, the key problems for development of the horticulture value chain 
as well as other agricultural produce value chains (like meat and milk, processed food, 
water, juices and beverages, etc.) lie in very poor progress in the change of policies in 
the agricultural production sector. A lack of market mechanisms on the one hand, such 
as government monopoly over agricultural land and absence of efficient reforms of
the entire sanitary phytosanitary (SPS) system. The absence of efficient food chain 
practices based on international standards and the New and Global Approach “from field 
to fork,” deters the process of the development of the VC in the agricultural sector. Yet, 
the prospects for development are quite high, provided that the government takes 
concrete steps towards the modernization of the SPS system, revising its SPS laws and 
removing prevailing government intervention in production processes. The private sector 
cannot develop with such a dominant government role, and as a result, no real prospects 
for value chain financing will emerge.
The list of the projects described in Table 13 focuses on developing the business models 
of value chains, improving the quality and volume of agricultural production and post-
harvest handling and production, facilitating market linkages, and linking educational 
institutions with private sector demand.
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See at: https://www.marketlinks.org/good-practice-center/value-chain-wiki/value-chain-finance. 
58
OECD. 2013. Policy Handbook. Improving Access to Finance for SMEs in Central Asia through Credit 
Guarantee Schemes. 
59
International Bank of Reconstruction and Development (IBRD). Project appraisal document on a 
proposed loan in the amount of $150 million to the Republic of Uzbekistan for a horticulture development 
project. 2014.
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International Development Agency (IDA) and IBRD. Project appraisal document on a proposed credit in 
the amount of $120 million equivalent and a proposed loan to the amount of $30 million equivalent to the 
Republic of Uzbekistan for a livestock sector development project. 2017. 

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ADBI Working Paper 997 
D. Tadjibaeva 
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