Microfinance Development in Uzbekistan

This paper argues that the development of microfinance in Uzbekistan would improve the social and economic well-being of the population and reduce social tension in the country. The report states that:

• Although microfinance has grown in Uzbekistan, it has not yet realized its full potential;
• Microcredit and microleasing have dominated the microfinance scene;
• Microfinance in Uzbekistan faces the following problems:
  • Lack of a legal and regulatory framework;
  • Lack of a clear legal status and registration procedures for MFIs;
  • Issues of taxation of MFIs and their access to external sources of borrowing;
  • Technical issue related to reporting, human resources, information components, financial viability, cash transactions, introduction of new microfinance products, coordination of efforts, targeted and effective use of microcredit resources.

The report draws special attention towards:

• The development of non-government MFIs;
• Issues related to the demand for microfinance services;
• Recommendations made by the draft resolution of the Cabinet of Ministers.

The report concludes that improving the state of microfinance would improve socio-economic conditions by:

• Providing a solution to employment problems;
• Reducing the appeal of underground financing schemes;
• Encouraging a new culture of savings;
• Solving problems related to cash circulation;
• Forming a new segment of the financial market;
• Aiding the process of decentralization.