Usbekistan
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In Brief
The FinTech industry in Uzbekistan is experiencing rapid growth, driven by several key factors:
Increasing smartphone and internet penetration, growing demand for convenient and secure payment solutions, and the emergence of local and foreign fintech players offering innovative products and services.
The government’s efforts to digitize services and payments, including initiatives like the “Digital Uzbekistan – 2030” strategy, which aims to increase digital literacy and funding for the sector.
The rise of digital payments, which account for 97% of total transaction value in 2021. Leading players in this space include Uzum, CLICK, and Payme, which are competing for market share by offering features like mobile wallets, QR codes, and bill payments.
The growth of e-commerce, which is one of the fastest-growing fintech segments in Uzbekistan. However, challenges remain, such as low internet penetration, lack of trust in online transactions, and regulatory barriers.
Government Initiatives:
1. Digital Uzbekistan – 2030 Strategy: The government has approved this strategy, which aims to digitize government services and payments, provide funding, and increase digital literacy among the population.
2. E-commerce Strategy: The government has developed this strategy to support the growth of small and medium-sized enterprises in the digital economy.
3. Specialized License for Digital Banks: The government is considering creating a specialized license category for digital-first banks and neobanks, with lower minimum capital requirements to make it more accessible for startups.
4. State Support Program for Fintech: There are plans to initiate a state support program for fintech as a standalone industry, including encouraging open dialogue with industry leaders and conducting research on market dynamics.
5. The “Zero Risk” program by IT Park Uzbekistan is designed to encourage and support IT and BPO (Business Process Outsourcing) enterprises to minimize financial risks of setting up new office by providing comprehensive compensation plan for enterprises: ZeroRisk
Regulatory Initiatives:
1. Fintech “Sandbox” Initiatives: The government is exploring fintech “sandbox” initiatives and special economic zones to nurture innovation and encourage investment.
2. Crypto Licensing: In 2022, the government made licensing available for crypto players, enabling the growth of digital currencies in the country.
3. Reducing Regulatory Barriers: The government is working to adapt the regulatory framework to accommodate digital banks and neobanks, with simplified requirements compared to traditional banks.
4. Enabling Payment Companies: The government has passed laws to foster fintech growth, enabling around 50 payment companies to operate in the Uzbekistan market.
Uzum – a prominent digital services ecosystem in Uzbekistan, which includes various services such as Uzum Market, a marketplace with a broad product range and nationwide one-day delivery, Uzum Tezkor for fast delivery from cafes, restaurants, and groceries, Uzum Nasiya providing installment services, and Uzum Bank, a user-friendly digital bank. In March 2024, Uzum secured over $100 million in funding, making it the first tech company in Uzbekistan to achieve unicorn status.
Payme – A popular e-wallet and digital payment service. In 2019, TBC Bank Group PLC acquired a controlling stake of 51% in LLC Inspired, which operates under the brand name Payme in Uzbekistan, and later acquired the remaining 49% stake, making TBC PLC the 100% shareholder of Payme.
TBC Bank Group PLC – a UK-based company, is the parent company of JSC TBC Bank, operating primarily in Georgia’s financial sector. The company also offers non-financial services through TNET LLC in Georgia and has expanded into Uzbekistan. TBC Bank is a leading universal banking group in Georgia, holding a significant market share in customer loans and deposits.
Click – A Uzbek FinTech company that is steadily gaining traction and has the potential to become a leading digital-first banking solution provider in the country.
ZoodPay – A FinTech company providing direct consumer lending services in Uzbekistan, helping to fill the void left by traditional financial institutions.
Billz – A software company offering embedded finance services.
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Market Summary
Economy
Uzbekistan has a growing economy with a GDP of $90.8 billion in 2023 and an average real GDP growth of 6% over the last decade. The country’s economic structure is dominated by services (43% of GDP), followed by manufacturing (20%), agriculture (25%), and other industrial activities (12%).
Key economic indicators for Uzbekistan in 2023 include:
– GDP per capita of $2,468, compared to the global average of $10,589
– Inflation rate of 8.76%
– Exports of $24.4 billion and imports of $30.1 billion.
– Public external debt of $31.5 billion and gross international reserves of $34.1
billion
Exports of IT-related services and products increased from $140 million to $344 million from 2022 to 2023. In 2023 the export of software development services increased to $68.9 million, which indicates the realization of the hidden potential of this sector.
The number of foreign companies has increased to 464 units as of 1 January 2024, compared to 165 companies in 2022. This indicates an improvement in business conditions in this area. Looking ahead, Uzbekistan aims to become a regional IT hub, increasing IT service and software exports to $5bn by 2030.
The country plans to train over 300,000 skilled IT professionals. By the end of 2024, Uzbekistan targets $1bn in IT exports to bolster its global digital presence.
Insights
The investment management landscape in Uzbekistan is evolving, driven by the
country’s strategic initiatives and government support aimed at transforming the
economy and fostering a business-friendly environment.
Key developments include:
1. Digital Transformation and E-commerce:
Digital Uzbekistan 2030 Strategy: Launched in October 2020, this strategy aims to transform Uzbekistan into a digitally advanced economy by 2030, focusing on creating a developed digital economy and technology-based society.
Government Support for E-commerce: The “Law of Electronic Commerce” regulates and facilitates online business activities, and the “Open Digital Ecosystem” was launched in July 2022 to support the infrastructure for e-commerce. The Ecommerce Strategy (2023-2027) was initiated with the support of the EU’s Ready4Trade Central Asia project. The IT Park was established with significant incentives such as a 0% corporate tax rate for residents, promoting a conducive
environment for e-commerce growth.
2. International Partnerships and Initiatives:
Belt and Road Initiative (BRI): Uzbekistan is a partner of the BRI and a member of the Asian International Investment Bank (AIIB) since 2015. The BRI enhances geographical connectivity and economic influence, promoting crossborder e-commerce and market expansion.
3. Economic Diversification:
Investment Opportunities: Favorable policies, tax incentives, and a supportive ecosystem present substantial opportunities for investors in the digital and ecommerce sectors. Strategic partnerships and initiatives such as the IT Park and the BRI enhance the investment appeal of Uzbekistan, particularly in technology and ecommerce.
International Presence
Uzbekistan holds a significant position among Central Asian countries due to its membership in international organizations such as the United Nations, the Commonwealth of Independent States, the Shanghai Cooperation Organization, and the Organization for Security and Cooperation in Europe, as well as free trade agreements with the United States and other countries.
The country actively participates in regional initiatives and develops relations with Turkey, the Republic of Korea, Japan, the European Union, and European countries. Uzbekistan possesses rich natural resources and is a major producer and exporter of cotton and textiles. The country invests in the development of energy and transportation infrastructure, which contributes to its economic growth and international recognition. Uzbekistan’s accession to the World Trade Organization (WTO) has been ongoing for several years.
During the 13th WTO Ministerial Conference held in Abu Dhabi on February 26-29, the negotiating team for Uzbekistan’s membership in the World Trade Organization announced the signing of market access protocols with Japan, Israel and the Dominican Republic, as well as the completion of negotiations with Thailand.
Additionally Uzbekistan is a member of the European Union’s Generalized System of Preferences (GSP+). This membership allows Uzbekistan to receive additional economic benefits compared to the standard GSP due to the complete cancellation of tariffs.
Fast facts
Population: 35.65 million
Languages: Uzbek and Russian
Currency: Usbek Sum (UZS)
Political System: Presidential Republic
Legal System: Civil Law
IA Partner & FinTech Hub
The Ministry of Digital Technologies of the Republic of Uzbekistan (MDT)
is a government agency responsible for implementing a unified state policy in the field of information technology and communications.
Key areas of activity:
– Telecommunications infrastructure development
– Digital-government implementation
– Export of IT services
– Investment on digital infrastructure
– Providing coordination and support for the development of domestic
software and IT services, including the implementation of information
systems and resources in the real economy.
– International cooperation
