TASHKENT, The Asian Development Bank (ADB) and Sanoat Qurilish Bank (SQB) have agreed on a $50 million senior convertible loan to advance Uzbekistan’s privatization of state-owned banks and bolster the country’s banking sector. This financial move aims to fuel economic growth and generate employment opportunities. The International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD) join as parallel lenders in this initiative.
According to Asian Development Bank (ADB), the loan will enable SQB to extend its lending services to micro, small, and medium-sized enterprises (MSMEs), particularly focusing on enterprises either owned or led by women (WMSMEs). This effort is a part of SQB’s broader strategy to diversify its portfolio and transition into a fully-fledged universal commercial bank, catering to a wider array of customers. Additionally, ADB will contribute technical assistance to facilitate SQB’s transformation.
Suzanne Gaboury, ADB’s Director General of the Private Sector Operations Department, emphasized ADB’s support for the Uzbek government’s shift towards a dynamic, inclusive market economy and the ongoing banking sector reforms. She highlighted the project’s role in bolstering the stability of Uzbekistan’s banking system, enhancing capitalization, deposit levels, and extending support to climate projects and underserved MSMEs and WMSMEs. Gaboury also noted the project’s potential to serve as a model for other regional countries pursuing similar reforms.
Uzbekistan embarked on an ambitious market reform agenda in 2017, including the privatization of over 100 state-owned banks. The government’s 2020-2025 Strategy for Reforming the Banking Sector marked a significant step in this direction, prioritizing the privatization of six major state-owned banks. Multilateral development banks, including ADB, have been instrumental in supporting these reforms.
Kanokpan Lao-Araya, ADB’s Uzbekistan Country Director, pointed out the challenges MSMEs, particularly women-owned businesses, face in securing commercial financing. She stressed ADB’s role in creating a conducive environment for MSMEs in Uzbekistan, facilitating market access, and bridging the financing gap.
MSMEs are crucial to Uzbekistan’s economy, constituting the majority of registered businesses and employing 74% of the workforce. Despite their significance, only 13% of these enterprises have access to commercial loans, with women-led businesses facing an even larger financing gap, estimated at $2.7 billion.
Aziz Akbarjonov, SQB’s Chairman of the Management Board, acknowledged the timeliness and importance of ADB’s support in enhancing investor confidence, improving SQB’s environmental, social, and governance practices, and advancing its digitalization process.
Established in 1922, SQB stands as one of Uzbekistan’s oldest and second-largest state-owned banks, boasting a strong brand and an extensive branch network. ADB, founded in 1966 and comprising 68 members—49 from the Asia-Pacific region, remains dedicated to promoting prosperity, inclusivity, resilience, and sustainability in Asia and the Pacific, while also striving to eradicate extreme poverty.