Development finance assessment

Domestic private investment
Domestic private investment is becoming an increasingly important source of development 
finance for Uzbekistan. In line with the country’s gradual transition to a market-led economy 
and the corresponding economic reforms undertaken commercial investment increased by 
a compound average annual growth rate of 37 percent between 2013 and 2018 (Figure 18). 
Following decades of underinvestment, credit growth boomed in 2018, financing a surge 
in private sector investment, peaking at 21.3 percent of GDP. Most of this credit went to 
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Member countries are: Afghanistan, Azerbaijan, Iran, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Turkey, 
Turkmenistan, and Uzbekistan.
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The participating countries are: Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkey, Turkmenistan, and Uzbekistan.
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United States Agency for International Development (USAID), Japan International Cooperation Agency (JICA), FAO-
Turkey Partnership Programme (FTTP) and FAO.
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The target countries are: Afghanistan, Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Russian Federation, 
Tajikistan, Turkmenistan and Uzbekistan.
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Iran hosts the UNIDO International Centre on Nanotechnology, established in 2012. 
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Private finance here refers to: domestic commercial investment, foreign direct investment, portfolio investment, 
borrowing by the private sector and remittances.

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DIMENSION 1: 
ASSESSING DEVELOPMENT FINANCE FLOWS
corporations
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. Credit at preferential terms
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, granted through SOBs, accounted for more 
than half of the credit growth in 2018. 
SMEs are the major driver of economic growth and have contributed not only to the 
creation of new jobs, but also reduction of poverty in the country. The share of SMEs in 
GDP rose to 57 per cent in 2016 from 31 per cent in 2000, according to Statistics Committee 
data. The SME share in employment increased to 78 per cent in 2017 from 50 per cent in 
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It is hard to interpret the extent in which this private investment includes SOEs and enterprises where government 
is a shareholder.
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Government credit policies have created a segmented market. The credit market is split into a commercially 
(market credit) driven segment and a preferential segment. Historically, market driven credit was largely allocated 
to the private sector (corporations and households) and in local currency, while the preferential credit was allocated 
to SOEs and priority sectors and in foreign currency. Preferential interest rates are well below market interest rates. 
In December 2018, the average interest rate on market loans was 21.8 percent while the rate on preferential loans 
was 8.4 percent. Therefore, government intervention in the credit allocation and pricing are key drivers of the market 
segmentation. (IMF, 2019).
Figure 18 Gross Fixed Capital Formation by the Private Sector 
17,0%
17,5%
18,0%
18,5%
19,0%
19,5%
20,0%
20,5%
21,0%
21,5%
0
20 000
40 000
60 000
80 000
100 000
120 000
140 000
160 000
2013
2014
2015
2016
2017
2018
percent
GDP
B
ill
io
n
S
o
u
m
,
co
n
st
a
n
t
Private sector GFCF
% of GDP
Source: World Bank, WDI 2020.
Figure 19 Private External Debt by Sector
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
O
il,
G
a
s
a
n
d
E
n
e
rg
y
B
a
n
ki
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g
Te
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-
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ic
a
ti
o
n
Te
xt
ile
O
th
e
r
se
ct
o
rs
Billion
Soum
Stocks
Jan-18
Jan-19
Jul-19
Oil, Gas
and Energy
68%
Banking
19%
Telecommunication
3%
Textile
2%
Other sectors
8%