Uzbekistan Quality Job Creation as a Cornerstone for Sustainable Economic Growth

Private Sector Development and Access to Finance
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Credit markets have expanded but small businesses may not be benefiting 
from this. The average annual lending rate has risen for local and foreign 
currency loans since 2016, by 20.45% and 6.26%, respectively as of Q3 2018. 
This has limited small businesses’ access to bank credit. The Central Bank 
of Uzbekistan (CBU) has introduced Basel III (the international standard 
for banking supervision), which requires tighter risk management as well 
as greater capital and liquidity for commercial banks than was previously 
required. The Basel III standard may also negatively affect the banks’ 
attitude to lending to small businesses, which are typically considered 
high-risk borrowers. Given the financial soundness of the banking sector, 
commercial banks should be able to take more risks in financing small 
businesses, including start-ups and young entrepreneurs.
4.2.2. The nonbank finance industry and capital market
Uzbekistan’s nonbank finance industry is at an early stage of development 
and has yet to be a funding source for private businesses. As of Q3 2018, 89 
nonbank finance institutions, comprising 36 microcredit organizations and 
53 pawnshops, were active under the supervision of the CBU (Figure 4.13). 
The total assets of microcredit organizations and pawnshops were increasing 
and amounted to SUM349 billion ($43 million) in Q3 2018, but was equal to 
only 0.18% of commercial bank assets (Figure 4.14). Until 2010, there were 116 
credit unions, but the credit union system was abolished due to systematic 
defects. There are also some leasing companies, which are supervised by 
the Ministry of Finance. The government has discussed the possibility of 
creating a new financial authority for regulating and supervising all nonbank 
finance institutions including microcredit organizations, pawnshops, leasing 
companies, and the securities market, to add to the CBU’s supervision of the 
banking sector. 
The capital market is underdeveloped and has yet to be a source of long-term 
funding for private businesses. The Tashkent Stock Exchange was established 
to promote privatization of SOEs, and 186 companies were listed as of the 
end of 2017. However, the stock market is small in scale and with low trading 
liquidity (Figure 4.15). Market capitalization accounts for about 6% of the 
country’s GDP, and the total value of stocks traded accounts for only 0.1% 
of GDP. Stocks are normally traded over-the-counter. High turnover stocks, 
mainly banks, are owned by the government or by SOEs. The liberalization 
of foreign exchange markets in 2017 has allowed investors to convert capital 
gains from domestic currency to foreign currency, attracting more foreign 
investors to the securities market. At the end of 2017, 43% of the investors 

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