ADA extends its investment advisory services to Uzbekistan

21 December 2022 News
Sitora Usarova in her greenhouse. Copyright: Arnur Credit

In addition to its existing investments in Kazakhstan, Kyrgyzstan and Tajikistan, ADA has now advised the Luxembourg Microfinance and Development Fund (LMDF) to venture into Uzbekistan for the first time. 

As a result, LMDF will support the Uzbek microfinance institution (MFI) Renesans with a total of 500 000 EUR. ADA suggested Renesans as an LMDF investee as it is committed to providing affordable microfinance to small and medium-sized businesses, individual entrepreneurs, the self-employed, and individuals in need of microfinance services.

The long-term development strategy of the organisation is focused on introducing best practices, improving the quality of services, building a stable and profitable organisation through the development of regional networks and further strengthening the prosperity and stability of the economy of Uzbekistan.

Overall, Renesans has provided more than 6300 customers with microfinance services worth more than 70 billion UZS (Uzbekistani Sums, around 6 million EUR in total assets). 80% of all loans finance revenue-generating activities.  

A growing number of IMF investees in Central Asia

ADA first started prospecting possible LMDF investees in Central Asia in 2017 and has been steadily expanding its activities in this dynamic region ever since. Central Asia is an attractive region for investors as it is rich in commodities and enjoys a relatively large social and economic stability. At the same time, local governments are exploring ways of diversifying the economy by moving away from traditional heavy industries to greener solutions such as hydropower. They are also attempting to attract more investments from Europe. 

The Central Asian region is also particularly attractive for impact investors as the quality of life of the population remains relatively low despite an abundance in natural resources and strong agricultural sectors. 

Btissam Derdari, Investment Manager, explains that “Over the past five years, we have steadily increased our investment activities in Central Asia. Despite having relatively prosperous, middle-income economies, much of the population remains underbanked. In addition to the LMDF loan disbursements, ADA regularly provides technical assistance to local MFIs to optimise their internal management, develop new products and increase client protection.”

ADA’s technical assistance programmes aim to strengthen the institutional setup, digitalise services, improve the risk management and update the business plan of MFIs. Other projects implemented by ADA over the past years in Central Asia helped MFIs to obtain financial ratings and to strengthen their HR procedures.  

A broad range of beneficiaries

All MFIs supported by LMDF have an excellent social and financial track record. For example, the Kazakh MFI Arnur Credit recently benefited from a second LMDF loan disbursement of 2,5 million EUR. 

In addition to the LMDF credit, the MFI also received support from ADA to integrate a change management approach in its HR procedures. LMDF and ADA support these Central Asian MFIs to strengthen the autonomy of vulnerable people and improve their living conditions with inclusive finance.
Babirzhan Zairov is a good example of a beneficiary of Arnur Credit. He is a cattle farmer and has been a client of Arnur Credit since 2016. When he took out his first loan of 10 million KZT (Kazakhstani Tenge, around 21 500 EUR) to grow his business, he had 20 cattle. He now produces both milk and beef from 50 dairy cows and 40 cattle and is further investing in his business thanks to a second loan of 20 million KZT (around 43 000 EUR).

Similarly, Sitora Usarova (pictured) has benefited from two loans from Arnur Credit since 2010 to enlarge her vegetable farm. She produces cucumbers, tomatoes and bell peppers in greenhouses.