IFC Backs $100 Million MSME Lending Programme in Uzbekistan

The CFLG is part of IFC’s $4 billion MSME Platform and is designed to encourage financial institutions to increase lending by reducing the risks associated with smaller business loans.

The International Finance Corporation (IFC) has launched the first investment under its new Catalytic First Loss Guarantee (CFLG) Program, partnering with Uzbekistan's Ipak Yuli Bank to expand access to finance for micro, small and medium-sized enterprises (MSMEs). The initiative will support a local currency loan portfolio worth around $100 million, with a strong focus on microenterprises, women-owned businesses and climate-related projects.

The investment is expected to improve financing opportunities for businesses that often struggle to secure credit, helping them grow, create jobs and contribute to Uzbekistan's economic development.

Innovative Guarantee to Unlock More Business Lending

The CFLG is part of IFC's $4 billion MSME Platform and is designed to encourage financial institutions to increase lending by reducing the risks associated with smaller business loans.

Under the arrangement, IFC will provide $18 million in risk-sharing coverage, split into two tranches. The first consists of $9 million in first-loss protection, fully backed by the IDA-20 Private Sector Window, while the second provides an additional $9 million in senior tranche coverage for Ipak Yuli Bank.

This structure is expected to mobilise around $82 million in additional lending, allowing the bank to build a total MSME loan portfolio of approximately $100 million.

Expanding Finance for Small Businesses

MSMEs account for more than half of Uzbekistan's gross domestic product, yet many continue to face major barriers when seeking finance. The country's unmet demand for MSME credit is estimated at $10.5 billion, limiting business expansion, investment and job creation.

Ipak Yuli Bank Chairman of the Management Board Umidjon Khakimov said becoming the first bank in Uzbekistan to join the CFLG Programme marks an important step in expanding access to finance for businesses with limited borrowing opportunities.

He said the guarantee will help increase lending to microenterprises, women-led businesses and climate-focused enterprises while supporting entrepreneurship and inclusive economic growth across the country.

Partnership Builds on Years of Cooperation

The latest investment strengthens a partnership between IFC and Ipak Yuli Bank that began in 2018. Since then, IFC has provided $87 million in financing to the bank, including a $67 million syndicated loan, supporting lending to small businesses, women entrepreneurs and firms involved in trade.

IFC Regional Industry Director for the Financial Institutions Group for the Middle East and Central Asia, Momina Aijazuddin, said the partnership reflects IFC's commitment to promoting sustainable and inclusive growth throughout Uzbekistan by directing more private capital towards underserved businesses beyond the country's capital.

Advisory Support to Strengthen Banking Services

Alongside financial backing, IFC will also provide advisory support to help Ipak Yuli Bank strengthen its products and services for MSME customers.

The assistance will focus on improving the bank's ability to serve small businesses more effectively while encouraging sustainable growth and expanding access to finance for entrepreneurs across Uzbekistan.