The Islamic Corporation for the Development of the Private Sector (ICD) has more than tripled its average financing line size to Uzbekistan’s Agrobank, underscoring the IsDB’s private sector arm’s commitment to support SMEs in the landlocked Central Asian nation.
Five years since its last financing, the ICD this week confirmed it will extend a US$25 million Shariah compliant line of financing to Agrobank, an agent for state-sponsored subsidized lending to SMEs and retail clients in rural regions, to finance private sector businesses. The multilateral financial institution previously granted three financing agreements to the bank in 2018, 2012 and 2010 totaling US$21 million, or an average financing amount of US$7 million each.
“The lines enabled the bank to support several SMEs by financing projects in various vital economic sectors,” shared Azamat Turaev, the deputy chairman of the management board of Agrobank, adding: “We are grateful to the ICD for extending this fourth line of financing in challenging times during the post-COVID-19 pandemic recovery, when banks need to support their clients, especially SMEs. We believe that further we will expand and strengthen our mutual and beneficial cooperation between our institutions.”
The latest agreement was signed in the backdrop of challenging economic conditions in Uzbekistan due to regional volatility. Since Russia’s invasion of Ukraine, the World Bank predicts economic growth in the former Soviet republic will contract to 3.6% this year, after a solid 7.4% expansion in 2021. The negative growth projection is driven mainly by a halving of remittance inflows; record global oil and food prices; and disruptions to trade, investment and banking; among others.
Uzbekistan is a rising Islamic finance star in the Commonwealth of Independent States region. Home to at least three Islamic banking windows, the jurisdiction is attracting Islamic fintech players as market enablers push forward an Islamic capital markets and Shariah banking agenda.