From livestock to lifelong savings: Improving financial inclusion in Uzbekistan
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"We don't use banks much because that's how things work here. We save in other ways: we buy livestock, raise them, and sell them. Or we buy foreign currency—it never goes down in value," says a woman in Uzbekistan's Fergana region.
Financial inclusion in Uzbekistan has long been neglected. The banking sector was dominated by state-owned commercial banks (SOCBs) that historically served mostly state-owned enterprises in priority sectors at below-market rates. What’s more, while Uzbekistanis save as much as people in other developing countries, most of them — especially women — don’t use banks or other financial institutions to deposit their savings. As a result, most women follow the example of friends and relatives, investing in livestock, gold, foreign currency, and even cars, whose value doesn’t depreciate because of limited supply.
That’s starting to change amid the financial sector restructuring initiated in 2017 by the government. Expanding financial inclusion in the use of formal savings is crucial for enhancing people’s access to economic opportunities as well as for upgrading human capital, resilience to shocks, and shared prosperity.
Development strategy and legal framework for financial services
FIRST), a multi-donor grant program. The plan focuses on five key policy areas: basic financial services, access to finance for micro, small and medium-sized enterprises, digital financial services, financial consumer protection, and financial literacy.In June 2021, Uzbekistan adopted its first National Financial Inclusion Strategy for 2021-2023 (NFIS) with the support of the World Bank and the International Finance Corporation (IFC) and technical assistance funded by the Financial Sector Reform and Strengthening Initiative (
Digital payments are a key element of the strategy. Uzbekistan updated its legislation for payment services to enable transactions using electronic money and digital wallets. The legislation brought the previously unregulated sector under the supervision of the Central Bank of Uzbekistan. Around 50 payment system companies received new licenses, and digital banks emerged. In response to this competition, commercial banks innovated in digital access to finance.
In April 2022, Uzbekistan adopted a new law “On Nonbank Credit Organizations and Microfinance Activities” developed with support from the World Bank and FIRST. The measure establishes a unified legal framework that encourages the development of the nonbank credit organizations (NBCO) sector through a proportional regulatory regime, removal of unnecessary constraints, and protection of consumers using NBCOs.
Access to and usage of financial services
In 2017, the availability of financial access points began to increase. This was largely driven by a surge in the number of automated teller machines from just 445 in 2017 to more than 11,000 in 2022. The number of point-of-sale terminals doubled since 2017 to more than 430,000, and their annual volume doubled to 120 trillion soms ($10.6 billion), or 20 percent of GDP. The COVID-19 crisis provided a strong impetus for innovative contactless payment technologies: around 100,000 business entities have been issued QR codes while another 2,000 use Near-Field Communication (NFC).
Banks added 300 branches to increase their regional outreach and opened more than 1,000 “centers of bank services” — a more flexible and cost-efficient access point developed by the Central Bank. The distribution of financial access points remains uneven, however. (See Figure 1.)
Figure 1: Significant variation in financial access points exists across Uzbekistan’s regions
(Financial access points per hundred thousand people)
Uzbekistan almost doubled the share of adults with bank accounts from 23 percent in 2011 to 44 percent in 2021, according to Global Findex. The number of debit cards in circulation rose almost 60 percent from 19 million in 2017 to 30 million by July 2022. At the same time, the number of users of the remote banking system grew sixfold — reaching about 25 million users.
While retail deposits have been rising in response to high interest rates, they still stood at just 10 percent of GDP in 2021, and only 3 percent of the adult population saved at a bank. That was the second-lowest share in Europe and Central Asia behind Tajikistan’s 1 percent. It largely reflects the low trust of Uzbekistanis in the financial system. Figure 2 illustrates that it is not about encouraging citizens to save more, it is about transforming informal savings into formal ones at financial institutions.
Figure 2: Uzbekistanis save as much as the rest of the developing world and more than any other populous country in ECA—but too little at financial institutions
(Formal and informal saving, Adults saving any money in the past year in %)
Source: The Global Findex database: financial inclusion in Europe and Central Asia (En). Findex notes no. 6. World Bank Group.
Reform priorities and implementation support
Formal savings can improve Uzbekistan's access to economic opportunities, its human capital, its resilience to shocks, and its shared prosperity. The World Bank Group with the help of donors will continue supporting financial inclusion reforms led by the Central Bank of Uzbekistan. This will focus on implementing changes outlined by the National Financial Inclusion Strategy. Efforts will include enhancing financial consumer protection, the deposit insurance framework, and financial literacy—especially among women.
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