IFC - International Finance Corporation
IFC - International Finance Corporation
09/17/2021 | Press release | Distributed by Public on 09/17/2021 02:12
IFC Supports Uzpromstroybank to Drive Green Growth, Expand SME Lending in Uzbekistan
Tashkent, Uzbekistan, September 17, 2021-A new investment by IFC will help smaller businesses in Uzbekistan boost their access to finance, develop the country's green banking capacity and support privatization in the country's banking sector.
IFC's $75 million loan to Uzpromstroybank will support the bank's path to privatization,as it aims to finance more climate-friendly projects and expand lending to small and medium enterprises (SMEs) in Uzbekistan. The funding will be structured as an Uzbek Soum-linked loan to provide access to long-term local currency funding to the bank. The long-term funding-not readily available in the market given the COVID-19 pandemic-will further incentivize the bank's transformation with an option for IFC to convert the loan into equity.
While the proceeds of the project will be earmarked for on-lending to SMEs, 50 percent of the loan will be dedicated to climate finance, enabling the bank to scale up its green banking program.
Uzbekistan plans to sell shares in state-owned banks to investors as part of a drive to transform the country's financial sector. Privatization will bring in new capital, global expertise, and modern technology that will benefit the banking sector and its customers. Currently, state-owned banks dominate Uzbekistan's banking sector-83 percent of banking assets are held by state-owned banks.
'IFC welcomes Uzbekistan's determination to attract private investment into its financial sector,' said Makhtar Diop,IFC's Managing Director. 'Our financing aims to help Uzpromstroybank prepare for its privatization and become a standard setter on SME lending and green finance. This initiative is in line with IFC's strategy to support green growth by spurring investments and seizing opportunities to help Uzbekistan meet its climate goals and build a greener, resilient future.'
Since 2019, IFC has worked with Uzpromstroybank-the second largest bank in the country-to prepare for privatization by strengthening the bank's corporate governance practices, commercializing its operations, and reducing state involvement in decision-making, while also helping the bank build a green banking franchise.
«This agreement is the result of our intensive work with IFC to support Uzpromstroybank's transformation and its subsequent privatization. IFC's Uzbek Soum-linked loan will help expand the bank's capabilities to finance investment projects in national currency, de-dollarize its loan portfolio and support its path to privatization. IFC's investment will be used to increasing financing to SMEs and green projects,' said Sakhi Annaklichev, Chairman of the Management Board, JSCB Uzpromstroybank.
Uzbekistan, the most populous country in Central Asia, is undergoing an unprecedented economic transformation. As of September 1, 2021, IFC had $158 million in investment commitments in Uzbekistan. IFC's advisoryservices aim to help the government of Uzbekistan in preparing state-owned banks for privatization, developing and diversifying the financial market, transforming the cotton sector, developing the chemicals industry, and piloting public-private partnerships (PPPs) in the power and health sectors.
About IFC
IFC-a member of the World Bank Group-is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2021, IFC committed a record $31.5 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of the COVID-19 pandemic. For more information, visit www.ifc.org.
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About Uzpromstroybank (UzPSB)
UzPSB is the oldest bank in the Republic of Uzbekistan with its history dating back to the opening of the Central Asian office of the Industrial Bank in Tashkent in 1922. The bank will celebrate its centenary next year. Today, UzPSB is one of the largest banks in the country in terms of asset size, loan portfolio, and deposit base. Starting in 2018, with the assistance of IFC consultants, the bank initiated significant reforms in business processes, which led to the implementation of green banking practices, introduction of special loan facilities for women entrepreneurs, and online banking products. For more information, please visit www.sqb.uz