World Bank sums up its activities in Uzbekistan for 2019

The World Bank offers support to Uzbekistan through 23 projects totaling $4.1 billion, and also through a comprehensive program of analytical and advisory services, representative of World Bank.

These activities contribute to the country’s economic growth, through the implementation of market-oriented reforms, and improvements in agriculture and water resources management, energy, transport, healthcare, education, social protection, water supply and sanitation services, and urban and rural development.

The bank said that over the last 24 months, Uzbekistan has taken significant steps in transforming its economy.

Following an initial wave of reforms to liberalize its currency and lift trade and regulatory barriers, reforms in recent months have focused on measures to further decrease regulatory and tax burdens, overhaul visa and registration requirements for foreign citizens visiting Uzbekistan and reduce the state’s footprint in the economy. Simultaneously, reforms have also focused on strengthening human capital, reforming the labor market, and enhancing social safety nets.

The following are the most important World Bank projects in Uzbekistan in 2019:

Ferghana Valley Enterprise Development Project

Micro, small and medium enterprises (MSMEs) across Uzbekistan’s Ferghana Valley benefited from a new rural enterprise development project approved by the World Bank’s executive directors. The project was supported by a $200 million loan from the International Bank for Reconstruction and Development on March 21, 2019.

The Government of Uzbekistan has recognized the need to reform its economy and find new drivers of economic growth and is placing emphasis on accelerating private sector development to create jobs and increase income levels. In 2017, around 78 percent of all employed individuals worked in small enterprises and more than 27 percent of all employment was in the agriculture sector. The MSME sector plays a significant role in Uzbek economy, representing close to 50 percent of the national GDP.

The project supported the delivery of technical and financial services to MSMEs across three regions of Ferghana Valley – Andijan, Ferghana and Namangan. The project also provided technical support to groups of enterprises in rural areas for strengthening linkages in supply chains and facilitating greater market access to urban areas across Ferghana Valley, other economic clusters in other parts of Uzbekistan and Central Asia.

The project targeted rural entrepreneurs in high potential sectors such as agriculture, food processing, handicraft, rural services, tourism, and small manufacturing. The expected development results include an increase in business activity, higher rates of employment (particularly among youth and women), an increase in access to financial and advisory services for MSMEs, as well as improved supply chain linkages in targeted areas.

Support to Public Financial Management and State-Owned Enterprises Reforms to Benefit Uzbekistan’s Citizens and Economy

A project approved by the World Bank’s Board of Executive Directors advances Uzbekistan’s transition into a market-oriented economy by creating more economic opportunities and better jobs for its citizens. The $33 million credit from the International Development Association (IDA) on May 24, 2019 supported the Institutional Capacity Building Project.

The project implemented by the Government of Uzbekistan as a critical part of its comprehensive economic reform agenda is supported by the World Bank Group. As part of the Government’s public finance management the project strengthened budgeting capacity, investment management, treasury systems, accounting practices, internal controls, and audit functions.

The project also focused on creating capacity and tools for the effective management and oversight of state-owned enterprises, the development of a pipeline of public-private partnerships (PPPs) and the updating and drafting of relevant laws and regulations, as well as preparing privatization and PPP transactions.

Finally, the project supported the activities of the Economic Council, created under the President of Uzbekistan in January 2019 for the high-level coordination of the Government’s economic reforms.

Uzbekistan – Institutional Capacity Building Project

The World Bank’s Board of Executive Directors approved a project that helped to increase access to and improve the quality of early childhood education in Uzbekistan on May 29, 2019.

The $73.8 million Promoting Early Childhood Development Project is financed through a $59.5 million credit from the International Development Association (IDA) and grants from the Global Partnership for Education (GPE) and the Global Partnership for Results-Based Approaches (GPRBA) in the amount of $14.3 million.

Despite high levels of public investment in preschool education in Uzbekistan, only about 29 percent of children aged 3 to 7 were enrolled in preschools in 2017– an extremely low percentage compared to other countries. Teaching conditions in preschools across the country are not optimal, with high student-teacher ratios and the majority of preschool teachers holding only a secondary vocational education degree.

Moreover, there is no system in place to assess the quality of preschool education – an important measure for evaluating whether small children are being adequately prepared to enter primary schools. Public preschools also lack the necessary infrastructure, equipment and furniture required to create safe and comfortable conditions conducive to learning and for promoting children’s development.
To address these issues, the Promoting Early Childhood Development Project financed a number of activities to improve the quality of preschool education, including improving access to good quality early learning environments, promoting partnerships with the private sector and enabling the systematic measurement of education quality for informed policy making, strategic planning and monitoring.

The project anticipates that by the end of its completion in 2024, about 40 percent of children aged 3 to 7 will be enrolled in preschool educational facilities, and that more than 1 million children will be attending preschools equipped with improved learning environments, including modern child-friendly and age-appropriate equipment and furniture, teaching and learning materials, toys, recreation zones, computers and better-trained teachers.

The project also supported development and implementation of alternative models of early childhood education, including remote learning that will increase access to preschool education for children living in rural and underserved areas. This approach helped disadvantage children and contribute to addressing the current inequalities of opportunities in the system.

The project was expected to stimulate public-private partnership development through a social impact bond – an innovative financing mechanism –- that ties financial returns and payments to rigorously measured results. Under this scheme, 140 private preschools located in urban areas of Uzbekistan will deliver appropriate educational services so that the Government can concentrate funds in rural areas.

Sustaining Market Reforms in Uzbekistan – Development Policy Operation

Uzbekistan’s ongoing economic transformation and market reforms, aimed at increasing jobs and prosperity for all its citizens, received further support through a $500 million Development Policy Operation (DPO), approved on June 14, 2019 by the World Bank’s Board of Executive Directors.

The DPO helped sustain Uzbekistan’s economic reforms to reorient the economy towards greater private sector-led growth and job creation. Guided by the Government of Uzbekistan’s 2017-2021 Development Strategy, the DPO supports the authorities in implementing reforms in two critical areas: increasing the role of markets and the private sector in the economy and strengthening social inclusion.

According to the World Bank’s “Listening to Citizens of Uzbekistan” survey involving over 4,000 households across the country, 95 percent of survey participants were optimistic about the future of the country. This Development Policy Operation, which builds on a first DPO from June 2018, supported the Government of Uzbekistan in deepening and sustaining the reforms that started in 2017.

The goal was to support the Government’s efforts to increase trade and investment, strengthen financial sector efficiency, and implement key institutional changes that are critical to the country’s economic transition.

The DPO also aimed to help the Government ensure greater social inclusion during the transition, through reforms that increase formal jobs in the economy, strengthen skills, improve social safety nets, and increase the voice and participation of citizens in the budgeting process.

Strengthening the Social Protection System Project

The World Bank’s Board of Directors approved a loan to Uzbekistan in the amount of $50 million to reduce unemployment and strengthen the system of social benefits in the country on July 1, 2019.

Loan funds were provided from the resources of the International Development Association, which is a part of the WB structure. In particular, it aimed at creating a single registry for citizens who need social benefits.

The bank noted that it helped to ensure that social protection programs cover low-income and socially vulnerable groups of people who are adversely affected by rising prices for essential goods and utilities.

Profile courses for staff training and new jobs in the private sector were created as well. A specialized labor information system of the Ministry of Employment and Labor Relations of Uzbekistan developed and put into operation.

Prosperous Villages Project

The World Bank’s Board of Executive Directors approved a $100 million credit from the International Development Association (IDA) for the Prosperous Villages Project in Uzbekistan on November 14, 2019. The project improved the quality of basic infrastructure, including schools, roads and internet service, with village residents deciding collectively which priorities will receive funding.

The representative noted that participating rural communities may select small-scale rehabilitation or construction projects of facilities including kindergartens, schools, health clinics, tertiary roads, street lighting, bus terminals and stops, and even antennas for wireless internet. They can also make improvements to water supply and sanitation or solid waste management among others.

Approximately 300 villages in Andijan, Ferghana, Namangan, Jizzakh, and Syrdarya regions of Uzbekistan will receive funding for community-level projects. In each of these villages, community members will collectively decide on the types of projects based on village priorities and resources.