The Asian Development Bank (ADB) and Sanoat Qurilish Bank (SQB) have joined forces, signing a significant senior convertible loan agreement worth $50mn. The primary objective of this financial collaboration is to provide crucial support to Uzbekistan's ambitious privatization of state-owned banks, a strategic initiative aimed at fortifying the banking sector, fostering economic growth, and facilitating job creation.
The International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD) are parallel lenders in this transformative endeavor, underscoring the international commitment to Uzbekistan's economic development.
According to ADB, the loan proceeds will be instrumental in aiding SQB to expand its financing outreach, particularly targeting underserved micro, small, and medium-sized enterprises (MSMEs). This includes a special focus on businesses led or owned by women (WMSMEs). The diversification of SQB's portfolio is expected to play a pivotal role in its evolution into a fully universal commercial bank, broadening its customer base and contributing to a more inclusive financial landscape.
In addition to the financial support, ADB has pledged to provide technical assistance to facilitate the implementation of SQB's transformation roadmap, aligning with Uzbekistan's broader market reform agenda initiated in 2017. This agenda included the ambitious privatization of more than 100 state-owned banks.
Suzanne Gaboury, ADB’s Director General of the Private Sector Operations Department, expressed ADB's full support for Uzbekistan's transformation, stating,
"This project will support the stability of the country’s banking system, capitalization, and deposit levels while strengthening resilience and lending to climate projects and underserved MSMEs and WMSMEs."
The banking sector reform aligns with Uzbekistan's comprehensive strategy for economic revitalization. In 2020, the government outlined the "Strategy for Reforming the Banking Sector, 2020–2025," emphasizing the privatization of six of the largest state-owned banks. ADB, along with other multilateral development banks, has been actively supporting this privatization process and broader banking sector reforms.
Kanokpan Lao-Araya, ADB’s Uzbekistan Country Director, highlighted the challenges faced by MSMEs in accessing financing, emphasizing ADB's commitment to creating an enabling environment for easier access to markets and providing essential financing to close the financing gap for MSMEs. Lao-Araya stated,
"ADB’s partnership in SQB builds on those two objectives."
MSMEs play a pivotal role in Uzbekistan's economy, constituting the majority of registered businesses and employing 74% of the workforce. Despite their significance, access to financing remains a hurdle, with only 13% of the sector having access to commercial loans. The financing gap is more pronounced for women-led businesses, estimated at $2.7bn, with loans to women-owned businesses making up just approximately 2.5% of total bank loans.
SQB's Chairman of the Management Board, Aziz Akbarjonov, expressed gratitude for ADB's support, noting its importance in enhancing investor confidence and furthering SQB's environmental, social, and governance practices, along with its digitalization process.
Founded in 1922, SQB stands as one of Uzbekistan's oldest banks and is the second-largest state-owned bank. Recognized as one of the strongest brands and leaders in the banking market, SQB boasts one of the widest branch networks in the country.
The collaboration between ADB and SQB exemplifies a shared commitment to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, as ADB remains dedicated to eradicating extreme poverty. Established in 1966, ADB is owned by 68 members, with 49 from the region.
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