Uzbekistan Quality Job Creation as a Cornerstone for Sustainable Economic Growth

part of public financial support. Because the organization is relatively new, 
credit guarantees have yet to be well disseminated across the country. The 
World Bank suggested principles for public credit guarantee schemes for 
SMEs, including the need for a comprehensive enterprise risk management 
framework and a transparent risk-based pricing policy (World Bank 2015). 
These are needed for sustainable credit guarantee operations but have yet 
to be developed in country’s credit guarantee system.
The credit market has been expanding in Uzbekistan, but small businesses 
are not yet able to enjoy the full benefits of the expanded market due to high 
interest rates and collateral requirements. Credit enhancement schemes 
supported by a credit bureau, a collateral registry, and credit guarantees 

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Uzbekistan Quality Job Creation as a Cornerstone for Sustainable Economic Growth
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have yet to function fully for small businesses to access appropriate financial 
services. Tightened risk management in the banking sector may make it 
even more difficult for small businesses to access bank credit. The nonbank 
finance industry and the capital market have yet to be a viable substitute for 
bank lending for SMEs. This forces small businesses to use their own funds 
and/or informal financing to survive. In particular, tech-based SMEs that are 
expected to lead sustainable economic growth in the country have failed to 
realize business opportunities due to the lack of access to appropriate long-
term funding options. Balanced development of banking and the nonbank 
finance industry, including market-based instruments, is needed to hasten 
private sector development in Uzbekistan. That requires a comprehensive 
policy framework for financial sector development, providing more financial 
inclusion or enhancing SMEs’ access to finance. The next section expands on 
accessible financial inclusion for future growth.
4.3. financial Inclusion for future Growth
Promoting financial inclusion is critical for the country to grow sustainably 
and resiliently while creating sufficient good jobs. Segments of the economy 
such as SMEs that are traditionally underserved by financial institutions often 
forego growth opportunities due to a lack of capital; hence, the opportunity 
cost for economic growth will increase unless SMEs’ access to finance is 
enhanced. In Uzbekistan, financial inclusion will reduce the extent of jobless 
growth and strengthen private sector business competitiveness. This section 
reviews small businesses’ access to finance in Uzbekistan and possible 
solutions for promoting financial inclusion.
4.3.1. financing gap and constraints on businesses
The International Finance Corporation (2017) estimates that the financing 
gap that formal micro, small, and medium-sized enterprises experience 
in developing economies amounts to $5.2 trillion or 19% of global GDP
(Figure 4.17). The Asia and Pacific region accounts for 46% of the total financing 
gap, or $2.4 trillion. Europe and Central Asia, including Uzbekistan, has the 
third-largest gap, accounting for 15% of the global gap, or $776 billion. The 
financing gap that Uzbekistan’s micro, small, and medium-sized enterprises 
face was estimated at $11.8 billion or 17% of country’s GDP in 2016.

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