At the Tashkent International Investment Forum, Martin Melecky, a lead economist for Central Asia, the World Bank, engaged in a critical discussion with Daryo on enhancing support for Small and Medium Enterprises (SMEs) in Uzbekistan. Melecky shared valuable insights from his panel discussion, stressing the significance of robust data for diagnosing challenges and implementing effective financial support mechanisms.
Melecky emphasized the necessity of comprehensive data to pinpoint areas requiring support. He highlighted the importance of addressing root causes rather than merely symptoms, advocating for strategies that maximize the impact on the private sector. Recognizing the limitations of government intervention alone, Melecky underscored the need for collaboration between public and private entities to address the substantial challenges faced by SMEs.
In terms of existing infrastructure to support SMEs, Melecky noted progress in digitalization. While SMEs increasingly utilize e-commerce and digital platforms for sales, he emphasized the need to bridge gaps in financial and digital capabilities. Melecky suggested that closing these gaps could enhance SMEs' connectivity to markets, transparency in financial operations, and overall resilience.
“SMEs use much more e-commerce and digital platforms to sell the products, but on other dimensions of financial capabilities or digital capabilities, we should do something more and close these gaps that we are observing to make, for example, through digitalization SMEs more connected to markets, more transparent in terms of their financials, but also more resilient,” Melecky remarked.
The discussion also touched upon the hurdles encountered by female entrepreneurs in accessing loans due to a lack of collateral, particularly land ownership. Melecky proposed addressing biases within financial institutions through tools such as behavioral and psychometric scoring. These tools, he explained, could mitigate biases against female-owned businesses and other marginalized groups unable to document their income.
Reflecting on Uzbekistan's progress, Melecky acknowledged governmental efforts to improve the SME sector. While governance mechanisms have shown improvement, he emphasized the ample room for further enhancement. Melecky stressed the potential of SMEs to contribute significantly to job creation, GDP growth, and export expansion, citing examples from the textile industry where trade finance constraints hindered SMEs' ability to capitalize on emerging opportunities.
“The governance is improving with this financial mechanism, but there is obviously a lot of room for improvement and there are a lot of good things that could be happening to unleash the potential that SMEs have to contribute to job creation and to GDP growth. We think that SMEs are well equipped to also address the need for exports,”
Melecky expressed optimism regarding Uzbekistan's trajectory in empowering SMEs and female-owned businesses. While challenges persist, he emphasized the importance of continued collaboration and innovative solutions to unlock the full potential of the SME sector, ultimately fostering sustainable economic development.
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