$50 million grant to boost small businesses

Uzbekistan’s small- and medium-scale enterprise (SME) sector will be revitalised through a US $50 million loan approved by the Asian Development Bank (ADB) on Tuesday. The project is expected to provide much-needed foreign exchange for the enterprises, generate employment opportunities and improve the sector’s regulatory framework. “The loan will help SMEs import capital goods, materials and technology to facilitate their production processes and become more competitive,” said ADB financial analyst Radhakrishna Narasimham. “Importantly, it will also help the Government reform the overall legal, regulatory, and policy framework for SMEs.”

Priority will go to export-oriented projects, which can better withstand shocks from currency depreciation. The project will help create new SMEs and modernise existing ones. ADB said the introduction of new technologies will increase demand for agricultural and mineral inputs, absorb surplus labour, and improve product quality.
Uzbekistan’s rich natural resources, including water and moderate climate, and its skilled and educated workforce are advantages in SME development, the Bank said. In late 1999, the country had over 32,000 SMEs, accounting for about eight percent of total employment. However, the sector’s contribution to GDP fell due to constraints in the legal and regulatory system, management, finance, marketing skills and access to credit, particularly foreign exchange. ADB will finance 50 percent of the total project cost of US $100 million while the balance will be financed by other borrowers and participating banks.