The objective of this study was to provide an assessment of the SME sector in Uzbekistan, through a careful analysis of the latest trends in the development of the Uzbek business environment and the legal framework relevant for SMEs in general and women-led SMEs in particular. The assessment provided the European Development Bank an identification of key constraints faced by each sub-segment of SMEs and women-led SMEs in accessing finance, while also providing recommendations on possible measures to address the supply and demand side challenges faced by SMEs and women-led SMEs.
The following digital report highlights the key findings.
In 2017, Uzbekistan, Central Asia’s traditional population and economic hub, initiated a political and economic reform process. The country seeks to transition towards a more dynamic and private business-led economic model.
What does this mean for the country's women entrepreneurs?
The country’s economy will need to be rebalanced away from state-owned enterprises with limited competitiveness.
Access to skills and employment and access to finance remain crucial challenges.
SMEs could play an important role in the diversification of the economy and the installation of a more inclusive growth model. A large domestic market and several export-oriented sectors (especially textiles and agriculture) hold relevant opportunities that should also be accessible to female entrepreneurs – in addition to offering opportunities for female employment. While the business environment shows early signs of improvement it remains not yet particularly conducive.
The country’s economy will need to be rebalanced away from state-owned enterprises with limited competitiveness.
Access to skills and employment and access to finance remain crucial challenges.
SMEs could play an important role in the diversification of the economy and the installation of a more inclusive growth model. A large domestic market and several export-oriented sectors (especially textiles and agriculture) hold relevant opportunities that should also be accessible to female entrepreneurs – in addition to offering opportunities for female employment. While the business environment shows early signs of improvement it remains not yet particularly conducive.
While legal setting and Soviet influences put women on an equal footing in society and economy, socio-cultural norms and societal expectations of women role models place a heavy burden on Women in Business
Labour force participation has not kept up with educational achievement, and marriage and childrearing are major thresholds encumbering women’s economic activities.
Gender roles in Uzbekistan imply a significant trade-off for women to enter, stay and succeed in the workforce, with expectations of early marriage, single-handedly managing household chores and childcare, and social stigma on being outside of the home beyond core working hours. Their continued own economic activity is often seen as forcing women to forgo marriage and family. For business-women these burdens weigh even heavier and may explain why entrepreneurship is often associated with empty-nest women or widowers or tends to be based around the home and community.
Persisting barriers hold back potential of women in business for impact
including limited financial literacy, and a widespread lack of trust in banks, as well as attitudinal challenges such as lower self-confidence and higher degrees of risk aversion.
Notwithstanding full legal equality in asset acquisition and control, women own markedly fewer assets that could serve as collateral and more often have to share ownership and control of assets. This contrasts with a regulatory-entrenched very high degree of reliance on collateral for bank lending. Limited support systems for care as well as for entrepreneurship, combined with an only just emerging civil society, provide little preparation and support for female entrepreneurs along the lifecycle of their business activity.
There may well be a window of opportunity to engage with policy makers and selected private financial intuitions
To create a conducive environment for an inclusive financial sector by transferring knowledge on relevant best practices
Current restrictive norms on collateral, KYC or distribution models requires revision by the Central Bank that is engaging global peers and interested in sector reform. Women-owned SMEs may be a good segment to try out some elements that would also be applicable to an updated overall SME banking in Uzbekistan – for banks as well as the regulator, such as tiered and remote KYC, agency banking, risk capital requirements and prudential supervision that make non-collateralized lending practices competitive, industry-wide collection, analysis and dis-semination of (gender-disaggregated) data on SMEs or a regulatory sandbox on fintech.