Entrepreneurship Development Company being established in Uzbekistan

On November 10, Shavkat Mirziyoyev signed a decree on expanding support for small and medium-sized businesses. The document was published in the Lex.uz database.

The preamble notes the lack of resources for medium-sized enterprises. The presidential decree is intended to outline measures to introduce alternative financial instruments – in particular, equity financing and service mortgages.

The State Fund for Support of Entrepreneurship will be transformed into the Entrepreneurship Development Company (EDC). Its founder, as before, will be the Ministry of Economy and Finance.

The EDC will be able to independently implement tools for comprehensive support for small and medium-sized enterprises. It will be given the right to raise funds on local and foreign capital markets, including from international financial organizations.

Another area of work of the EDC will be promoting industry and regional projects aimed at creating new jobs. It will also support the initiatives of self-employed people.

Separately, the company’s task is to support innovation activities. In addition, it will promote the implementation of green and energy-saving solutions.

In 2023-2024, the company’s authorized capital will amount to 300 billion soums. It is also planned to attract $100 million in resources for business lending.

Support programs from the EDC are planned to launch on March 1. Thus, for production and service projects of medium-sized businesses the following will be available:

•  equity participation – contribution to the authorized capital of the initiators in the form of real estate, equipment, etc., a share in the amount of 15% of the cost of projects (up to 20% of the authorized capital or 3 billion soums);
•  service mortgage – payment of 70% of the cost of real estate and equipment (up to 10 billion soums) with transfer to the initiator on credit for a period of up to 7 years, at a rate based on the main rate of the Central Bank plus 4%.

These types of assistance will be provided on a competitive basis. Companies that have been operating for at least two years and have a permanent staff of at least 50 people are allowed to join them.

A guarantee for loans worth up to 5 billion soums will also be available for small and medium-sized businesses. In the case of a bank loan, the size of the guarantee may be higher if there is an intermediary agreement between the bank and the EDC.

Also, from 2024 to 2026, the company will compensate part of the interest payments (up to 40% of the main Central Bank rate) on loans in national currency up to 5 billion soums. The loan rate must be at least 4% higher than the Central Bank rate, but not exceed it by more than 1.75 times.

Compensations are provided in the “1+2” mode. Initially, they are valid only for the first year; to renew for the next two years, they must fulfill the target for the number of new jobs and increase sales revenue by at least 15%.

For these purposes, the EDC will receive 600 billion soums from the state budget before July 1 and the same amount until the end of 2024.