Development finance assessment

Measures to strengthen the domestic private sector
Address shortcomings in the SME finance policy framework and harmonize it with the COVID-19 
SME support measures. 
The magnitude and speed of institutional and regulatory reforms undertaken by the GoU 
in recent years call for a full revision of the existing SME finance policy framework to ensure 
its coherence and alignment with the new policy thrust of the government. Furthermore, the 
COVID-19 response includes SME support measures which would have to be harmonized 
within this revised SME finance policy framework. One recent in-depth review (Tadjibaeva, 
2019) of SME development in Uzbekistan points to the following recommendations for 
improvement:
„
Improve the effectiveness of government SME financing support through the restructuring 
and consolidation of subsidy programs in the government’s development bank, and 
eliminate the interest rate subsidies for existing and sustainable enterprises;
„
Build a ecosystem for SME finance, which includes venture capital companies, business 
angels, platforms for the emergence and communication of start-ups, incubation and 
acceleration platforms;
„
Improve access to finance for SMEs through regulatory reform, including addressing 
cash-flow-based lending, collateral alternatives, lending in cash, and better use of credit 
histories (develop credit scoring). Providers should also be explicitly allowed to use such 
types of loan security as goods for sale and future harvest (currently, collectively used for 
less than 0.1% of all loans)—as these may be suitable options for many micro and SME 
finance borrowers; 
„
Support and strengthen the development of a sound legal environment and institutional 
for a more effective partial credit guarantee fund;
„
Design and implement a SME financial literacy program to improve their capacity to 
secure financing;
„
Partner with international finance institutions to design capacity building for commercial 
banks and microfinance institutions to serve the SME market efficiently;
„
Fundamental institutional and legislative reforms, including liberalization of land 
ownership, reduction of governmental intervention in agricultural production and 
marketing processes;
„
Optimize regulations to develop digital services for SMEs.