ANALYSIS-With Uzbekistan open for business, investors watch reform staying power

When Nika ​Kurdiani began to plot London-listed Georgian lender TBC Bank's expansion into Uzbekistan around 2018, ‌he ​had to bring plastic bags full of banknotes to pay restaurant bills.

The country of nearly 40 million people — Central Asia's most populous — had long been largely closed to foreign investment by strict capital controls. Its currency, the sum, was artificially overvalued and credit cards rarely accepted, forcing consumers to carry wads of cash for everyday purchases. But after almost a decade ‌of economic reform that has helped growth outpace that of most ex-Soviet peers, digital payments are ubiquitous. TBC Uzbekistan, one of few foreign lenders operating in a still mostly state-owned banking sector, is considering an initial public offering (IPO) separate from its Georgian parent.

"Now there is no need whatsoever to carry cash anywhere in the country," Kurdiani, CEO of TBC's Uzbekistan business, told Reuters in an interview at the bank's Tashkent headquarters. The changes have begun to attract international investors.

In May, Uzbekistan's National Investment Fund, a portfolio of minority ‌stakes in state-owned companies managed by Franklin Templeton, raised $690 million in the London Stock Exchange's biggest IPO since 2021, drawing over $2.8 billion in orders. "The reforms have been meaningful in our view, and they are much more open towards ‌market practices," said Leonard Kwan, a fixed-income portfolio manager at T. Rowe Price, which is overweight Uzbekistan.

But as the government says it will push ahead with further privatisations, investors say the next test is whether business-friendly changes can become embedded in a country where market-oriented policies remain relatively new and their staying power unclear. "The biggest risk the country has is the sustainability of all those reforms and the consistency of their implementation," said Kurdiani.

FAST-GROWING Policies launched since President Shavkat Mirziyoyev took office in 2016 have opened up a country that had largely shunned the outside world following independence in 1991.

Capital controls have been ⁠lifted, the currency ​has been floated and visa rules eased for most Western visitors. "The ⁠country was effectively closed. It was closed to investors, to visitors," Laziz Kudratov, Uzbekistan's investment minister, told Reuters.

The reforms "led foreign investors, who are seeking new markets and new growth opportunities, to turn their attention to Uzbekistan and begin actively expanding their operations here," Kudratov said. The Uzbek economy has grown by ⁠an average of around 6% over the last five years, faster than most of its neighbours.

Foreign direct investment rose to $4.4 billion in 2025 from $2.3 billion in 2021, according to World Bank and United Nations data, although it remains relatively modest as a share of gross domestic ​product. State-owned enterprises still dominate key sectors like banking, energy and mining. Their assets amounted to more than 100% of GDP at end-2024 according to the International Monetary Fund — a very large footprint by international standards.

Some — including ⁠the national gold and uranium miners — have said they may explore London listings following May's National Investment Fund IPO, without giving specific timelines. Fintech group Uzum, supermarket Korzinka and Uzbekistan Airways have also said they might pursue foreign IPOs.

BUREAUCRATIC INERTIA Investors see little risk of a return to the isolationist policies of the past. ⁠Instead, ​many are focused on whether reforms can become institutionalised and continue despite resistance from parts of the bureaucracy.

"There is strong commitment to reform and economic liberalisation at the highest levels in Uzbekistan," said Dakota Irvin, an analyst at London-based consultancy Lamplighter. "But there are issues with implementation. Uzbekistan's state bureaucracy remains conservative and averse to change, and there are signs that some investors are experiencing delays or difficulty in getting projects off the ground."

Ratings agency Moody's said in June that any slowdown ⁠in reforms was among factors that could put pressure on Uzbekistan's credit rating. Irvin said much of the privatisation programme has been driven through presidential decrees rather than a developed legislative framework, leaving some investors concerned about legal protections and the long-term ⁠durability of reforms.

Political authority remains concentrated around Mirziyoyev, with his daughter, ⁠Saida — who has served as the public face of the reform agenda — heading the presidential administration and overseeing a special economic zone launched in Tashkent this year. Business leaders also cite a shortage of skilled workers, saying the education system is struggling to keep pace with private-sector demand despite the country's youthful population. Even so, executives argue that a generation that has ‌known only a more open Uzbekistan makes any ‌return to the past increasingly unlikely.

"There is a line after which there is a point of no return," said TBC Uzbekistan's ​Kurdiani. "I think Uzbekistan crossed that line already." (Editing by Catherine Evans)