Although the poverty rate in Uzbekistan is only 14 percent, the standard of living and GDP per capita are low. The government of Uzbekistan has partnered with the World Bank to undertake a massive economic transformation. It hopes to develop its economy, spur investment and improve livelihoods. The government is improving infrastructure efficiency and social services to achieve high-middle-income status for its residents by 2030. This is a part of the development strategy called Uzbekistan Vision 2030. The World Bank, International Finance Corporation, Asian Development Bank and the European Union have worked cooperatively to facilitate Uzbekistan’s economic transformation.
Massive World Bank Loan
The World Bank has worked with Uzbekistan since 1992 and funded more than 20 projects, totaling $3.6 billion. The bank recently approved a $500 million loan to stimulate private sector growth and job creation. Uzbekistan’s transformation into a successful market economy will ultimately result in a higher quality of life for its citizens. Currently, Uzbekistan’s GDP per capita stands at $6,900, almost one order of magnitude lower than the United States’ GDP per capita of $54,541. Uzbekistan believes that poverty levels will shrink as a direct result of developing its private sector economy and boosting GDP per capita.
Cyril Muller, World Bank Vice President for Europe and Central Asia, said that the loan will “boost growth, promote transparency and accountability and improve services for citizens.” In 2018 and 2019, Uzbekistan reduced trade and investment barriers, decreased strict business regulations, loosened its currency and opened markets to spur investment and boost imports and exports. These recent changes to its economic policy show Uzbekistan’s commitment to loosening its controls on prices, production and foreign investment.
Livestock Sector Receives Support
The European Union and the World Bank jointly funded a five-year project in 2019 aimed at developing Uzbekistan’s livestock sector. More than $150 million will go towards addressing supply chain problems such as low productivity, substandard animal health services, financial constraints on research institutions and poor access to markets for smallholder farmers. The Minister of Agriculture of the Republic of Uzbekistan, Jamshid Khodjayev, said that this project aims to increase the efficiency of the livestock sector by increasing the number of small farmers participating in commercial value chains, improving productivity and ensuring the sustainability of incomes.
The project will also support credit lines for farmers and other workers in the livestock industry. The agriculture industry employs about a quarter of the population. Livestock is an important agricultural product in Uzbekistan. About 90 percent of “livestock production relies on small farm holdings” and about 4.7 million smallholders depend on livestock for a living.
Energy Sector Boosts Agribusiness
“More than 126,000 MWh of electricity and 50 million cubic meters in natural gas” are available for use every year thanks to $50 million of project financing to improve energy sector performance and competitiveness. Since 2012, more than 560 farms and agribusinesses received credit lines made available through six financial institutions. Investment portfolio assets include agricultural machinery, greenhouses, livestock, orchards, vineyards and vegetable farming.
The poverty rate in Uzbekistan declined from 27.5 percent in 2001 to 14 percent in 2016 as a result of strong economic growth. GDP growth was a robust 8 percent for 2015 and 2016. The business environment has improved significantly due to a more open economic policy. Uzbekistan’s economy will continue to see improvement from internal changes to business-related statutes, like reducing the number of days to register businesses and property. Support from multilateral banks like the World Bank will further promote Uzbekistan’s economic transformation.
– Lucas Schmidt