The Asian Development Bank (ADB) and JSСB Hamkorbank signed a loan for $20 million equivalent in Uzbek sum to expand access to credit for micro, small, and medium-sized enterprises (MSMEs) and agricultural borrowers. 

“Small businesses and agricultural producers are of great importance to Uzbekistan’s economy, but they face difficulties gaining access to finance, particularly in outlying areas,” said ADB’s Private Sector Financial Institutions Division Director Christine Engstrom. “This loan will provide greater access to much-needed local currency financing, helping them to improve their livelihoods while contributing to the country’s recovery from the coronavirus disease (COVID-19) pandemic.”

Almost 74% of the country’s employment is generated by small businesses and more than 60% of those jobs are in rural areas. Access to finance, especially in local currency, has been a challenge made even more difficult by the COVID-19 pandemic. To help close this gap, 80% of the loan’s proceeds will be allocated to borrowers in outlying regions.

“Hamkorbank and ADB have a long-term fruitful cooperation, and the number of joint projects has long exceeded a dozen,” said JSCB Hamkorbank Chairman of the Management Board Bakhtiyor Jurayev. “Loan funds under this agreement will be allocated to business entities whose business has felt the negative impact of the COVID-19 pandemic, as well as to agribusiness entities located in remote regions. This agreement is unique due to the fact that one of the largest development financial institutions in the world, as ADB, provides the loan funds in the amount of $20 million without the government guarantee to a commercial bank of Uzbekistan. This fact proves once again that Hamkorbank and ADB have set their course for long-term and mutually beneficial cooperation based on trust.”

The loan will promote gender equality by increasing loans to women-run MSMEs. In 2019, only 11.9% of registered companies in Uzbekistan were majority-owned by women, and just 14.0% had minority female ownership. In 2017, loans for Uzbek women represented only 2.5% of total bank loans.

The loan will help JSСB Hamkorbank develop the country’s finance sector, as a local currency bond will be issued to fund the transactions. The government began implementing banking sector reforms in 2017, including stronger private sector engagement and a privatization roadmap for some state-owned banks. Given the lack of access to developed capital markets and limited deposits, ADB’s longer-term local currency funding will bolster JSCB Hamkorbank’s lending capacity and complement the reforms.

Founded in 1991, JSСB Hamkorbank is the largest private sector bank in Uzbekistan focused on MSME and retail financing.