The International Islamic Trade Finance Corporation (ITFC) and Asia Alliance Bank entered into a partnership to augment trade finance support for Uzbekistan’s private sector, with a special emphasis on Small and Medium-sized Enterprises (SMEs). The agreement entails ITFC extending a financing line of $10mn to Asia Alliance Bank, to cater to the trade finance requirements of its private sector clientele, particularly SMEs.
The trade finance facility will specifically cater to the import and pre-export financing needs of private sector entities, including SMEs, within Uzbekistan. The financing will be dispensed under the Murabaha structure, adhering to Shariah principles.
Nazeem Noordali, Chief Operating Officer at ITFC, expressed optimism about the partnership, noting that Asia Alliance Bank was ITFC’s first partner in Uzbekistan.
- Nazeem Noordali stated.
- Obidjon Norkulov, First Deputy Chairman of The Management Board at Asia Alliance Bank, underscored the significance of the agreement stated.
Since 2018, ITFC has approved trade finance facilities totalling $423mn for 12 banks in Uzbekistan, highlighting the Corporation’s substantial role in bolstering the country’s trade finance sector.
State of SMEs in Uzbekistan
Since 2019, SMEs and private entrepreneurship activities have constituted 50% of Uzbekistan’s gross domestic product (GDP), according to the Center for Progressive Reforms. However, in 2022, the share of SMEs and private entrepreneurship in GDP decreased by 4% compared to 2019. Additionally, during this period, the share of SMEs and private entrepreneurship in construction and employment also decreased by 2-3%.
One of the primary objectives of the state in Uzbekistan is to foster sustainable economic growth by developing small and medium-sized businesses (SMEs). The Uzbekistan 2030 Strategy aims to provide ample opportunities for these businesses to penetrate international markets and support startups.
SMEs in global economy
In many developing countries, including Uzbekistan, over 50% of the employed population works in the SME sector. This sector contributes over 50% to the GDP of most developing economies. The development of the SME sector is often a key factor in ensuring economic growth in both developed and developing countries.
In 2021, 99.3% of the 3.2mn firms in Germany were SMEs, employing 56% of the total employed population, i.e., 38.4mn. Researchers assert that SMEs in Germany form the foundation of the German economy. Famous startups that originated in the United States’ Silicon Valley also began as small businesses.
Small and medium-sized businesses (SMEs) represent about 90% of businesses and more than 50% of employment worldwide. In this regard, the decision to implement 14 small business assistance centres in each region under the newly established Business Development Bank.
Follow Daryo's official Instagram and Threads pages to keep up to date on world news.
Comments (0)