Portfolio Spotlight: Hamkorbank in Uzbekistan


Uzbekistan has a population of over 30 million people, approximately 46% of Central Asia’s total population. One of the most difficult challenges facing the country today is a lack of employment opportunities, with a large disparity between rural and urban regions. As a result, about 16% of people in Uzbekistan live below the poverty line, 75% of whom live in rural areas. The country’s high unemployment rate and low wages have caused a mass labor migration to Russia and Kazakhstan, presenting another obstacle to Uzbekistan’s economic and social development. In an effort to combat these issues and alleviate poverty in Uzbekistan, MCE is expanding its geographical presence to the region in a partnership with Hamkorbank.

Hamkorbank is a medium-sized bank operating throughout Uzbekistan, providing over 50 types of financial services to a wide range of clients that include corporations, SMEs, and microbusinesses. Its microfinance portfolio represents 20% of Hamkorbank’s gross loan portfolio, and it aims to expand this to 25%. The bank is strongly backed by its shareholders, including the International Finance Corporation (IFC) and the Netherlands Development Finance Company (FMO). In the last few years, the bank has expanded its microfinance activities as well as its geographic outreach, which now covers all districts in Uzbekistan.

Zamin Textile, a client of Hamkorbank, is a family-run, textile production business started by three brothers. Between their first loan from Hamkorbank of US$440 in 2008 and today, the company has grown from 5 to 80 employees and increased its revenues and assets 20-fold. Zamin Textile’s current loan from Hamkorbank is US$160K, which has allowed them to create 10 new jobs, expand their factory, and support their efforts to export to European customers. Approximately 80% of the company’s employees are women, working 8-hour shifts with full benefits. Zamin Textile has received high recognition from Uzbekistan, with a personal visit from the country’s President. See their factory pictured below.


MCE’s partnership with Hamkorbank marks MCE’s first loan to a bank, and similarly Hamkorbank’s first loan from a U.S. investor; although MCE’s portfolio is normally comprised of microfinance institutions and small and growing businesses, the peculiar context of Uzbekistan justifies investing in microfinance through Hamkorbank instead of the typical avenues of investment. The Uzbek government encourages lending to the microfinance and SME sectors to foster economic development, but microfinance is still nascent in Uzbekistan; few organizations have the capacity and resources to deliver quality financial services like Hamkorbank, which has consistently positive, semi-annual ratings from Moody’s, IFC and FMO (its shareholders), and the Asian Development Bank (a lender).

With these factors in mind, MCE has determined that investing in microfinance through Hamkorbank is the most effective way that it can tackle the high unemployment rate, low wages, and geographic disparity in employment opportunities that hinder Uzbekistan’s economic development today. MCE’s loan to Hamkorbank will support the bank’s growth by expanding its footprint in Uzbekistan’s microfinance market and strengthen Hamkorbank’s potential to become a leader in the country’s economic development.

(Images courtesy of Hamkorbank and Zamin Textile.)

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