Tashkent, Uzbekistan (UzDaily.com) -- As earlier reported, IFC Director for Europe and Central Asia Wiebke Schloemer conducted a virtual visit to Uzbekistan at the end of September, during which she met with the leadership of ministries, state agencies, the Central Bank and client banks IFC to discuss further assistance to the country and ongoing large-scale economic reforms. Wiebke Schloemer, following the results of her virtual visit to Uzbekistan, in an interview, shared her opinion on the current state of cooperation between IFC and Uzbekistan.

What was the purpose of your virtual mission to Uzbekistan? What issues did you discuss with the government?

The main objective of my virtual visit was to emphasize that IFC is standing by Uzbekistan and will continue to do so during these challenging times and that a strong private sector is critical to restoring economic stability and preserving jobs. We also updated the Uzbek leadership about the progress of our common projects – how IFC, through both its investment and advisory services, is helping Uzbekistan increase private sector participation in the economy, improve access to finance, support the privatization program, promote public-private partnerships, while helping businesses deal with the economic impact of COVID-19. 

The country’s leadership shared their strategic priorities and we discussed challenges posed by the pandemic. We agreed we would continue to collaborate on a wide range of issues, including banking, chemicals, cotton, energy, and telecom. Uzbekistan is an extremely important country for IFC, and we are proud of the strong relationship we share. I’m grateful for our counterparts’ perspectives on how we can work together towards shared goals. And I look forward to continuing seeing the fruits of our ongoing partnership as the country continues its ambitious economic reforms.

You mentioned you updated the government about IFC programs’ results in Uzbekistan. Can you please tell us about those results? 

During IFC’s fiscal year 2020, ending June 30, our investments focused on helping improve access to finance for thousands of micro, small and medium-sized enterprises (MSMEs). We provided support for the country’s chemical sector, while increasing private sector participation in the economy. Those investments added up to $60 million. We also kept accompanying the country on its economic transformation journey through advisory projects. This included assistance to modernize and privatize state-owned banks, and to transform the cotton sector with the introduction of modern, sustainable and responsible production practices. In addition, IFC also helped further develop and diversify the country’s financial market, increasing access to finance, and piloting public-private partnership (PPP) in the energy and health sectors. This contributed to catalyze both capital and international expertise into the Uzbek private sector.

Supporting inclusive financial services is a key part of IFC’s work with Uzbekistan. Our work with financial intermediaries has helped strengthen financial institutions and the overall financial system. It has also allowed us to support a bigger number of small and medium enterprises (SMEs). In March, we signed an agreement that allows Ipak Yuli Bank to better manage its currency risks and extend local-currency finance for SMEs. We also provided trade finance-guarantee facilities to Ipak Yuli Bank and Ipoteka-bank to support Uzbekistan’s exporters and importers. We are currently finalizing a loan of up to $5 million to DAVR-BANK to expand financing for micro, small, and medium enterprises (MSMEs) and women-owned businesses to help them grow and create jobs.

We are also helping develop a competitive and well-capitalized private banking sector that will provide a wide range of lending services and much-needed finance to businesses. This supports the government’s program to increase the competitiveness of Uzbekistan’s economy by introducing new technologies and corporate-governance best practices. For example, in June we signed a landmark agreement with Ipoteka-bank to provide a pre-privatization loan of up to $35 million to expand its financing to SMEs in the country. 

Since 2018, together with the World Bank, we advised the government on how to open up the power sector to private investment by implementing the first-ever competitive PPP solar project in the country, the plant coming up in the Navoi region. Last October, Masdar Clean Energy of the United Arab Emirates was awarded the project with a bid to supply solar power at just 2.67 U.S. dollar cents per kilowatt hour, one of the lowest tariffs in emerging markets. The PPP, tendered under the World Bank Group’s Scaling Solar program, will soon add 100 MW of clean, renewable energy to the country’s energy mix. And that’s not all —more PPPs for a total of 1000 MW of solar power to follow. Given the success of the first tender, the government of Uzbekistan launched another tender with IFC’s support for an additional PPP for 400 MW. We are also helping the government structure a transparent and competitive tender process for the PPP to develop a 1,200 - 1,500 MW gas-fired power plant in Syrdarya region. 

To support the country’s important chemical sector, we recently provided a $12.5 million long-term loan to JSC Indorama Kokand Fertilizers and Chemicals to finance the modernization of its fertilizer plant in Uzbekistan, which will create jobs and benefit the country’s agriculture sector.

As you mentioned PPP projects, can you please also tell about IFC-supported PPPs in the health sector? 

We are advising the government on the nation’s first healthcare PPP, which will provide life-saving dialysis treatment to patients with kidney failure in the city of Tashkent, the Republic of Karakalpakistan, and the Khorezm region. There is a high demand for dialysis care across the country with at least 3,000 patients who need this treatment. The project will help citizens of all income levels including rural residents and children, receive equal access to better quality, safe dialysis care. 

The project is currently in the final stage of the tender process and has attracted interest from some of the world’s largest dialysis operators. On August 21, the Ministry of Health issued a Request for Proposals to applicants who meet the pre-qualification requirements. Four international companies that are currently participating in the tender can now submit their technical and financial proposals by November 11.

You mentioned the transformation of Ipoteka-bank. Can you please provide more details about this project and about the role of IFC?

In 2016, IFC was asked by the government to lead the pre-privatization process of selected state-owned banks, Ipoteka-bank and Uzpromstroybank in particular. IFC has been providing Ipoteka-bank advisory services since 2017, to help with its pre-privatization. We developed a comprehensive institutional transformation plan that calls for significant institutional changes, including corporate governance, risk management, and operational policies and procedures. All these changes aim to ensure the Bank operates commercially, with a sound business model and an emphasis on growing its MSME and retail-banking franchise. 

IFC’s advisory intervention has resulted in tectonic shifts at Ipoteka-bank – the bank’s pre-privatization process has already become a best-practice model. And I am delighted that IFC could play such an important role in this process. With a new investment, we would like to foster further improvement and provide incentives for the Bank’s full commercialization and privatization. Beyond increasing lending to MSMEs, the transformation of Ipoteka-bank will encourage greater participation of private investors in Uzbekistan’s banking sector.