IFAD–EU Programme Uses Remittances to Unlock Rural Credit in Uzbekistan

The initiative targets nearly 4,000 remittance-receiving households and returning migrant workers, helping them convert money sent from abroad into business investments and sustainable livelihoods.

The International Fund for Agricultural Development (IFAD), the European Union (EU), and Uzbekistan’s Hamkorbank have launched a new programme aimed at expanding financial inclusion and boosting rural entrepreneurship by using migrant remittances as a basis for credit access.

The initiative targets nearly 4,000 remittance-receiving households and returning migrant workers, helping them convert money sent from abroad into business investments and sustainable livelihoods.

Remittance-Based Credit Scoring Model Introduced

At the heart of the programme is an innovative remittance-based credit scoring system that recognizes money sent home by migrant workers—and the savings of returnees—as proof of repayment capacity.

This approach addresses a long-standing barrier faced by rural families who often lack formal income documentation or credit histories required by banks.

“Recognizing remittances as a reliable source of income to prove creditworthiness can be transformational for rural families,” said Pedro de Vasconcelos, Manager of the Financing Facility for Remittances at IFAD.

The pilot initiative is being implemented within the Central Bank of Uzbekistan’s regulatory sandbox, allowing financial institutions to test innovative lending models under controlled conditions.

Officials say the approach could become a scalable model for financial inclusion across Central Asia.

EU Support Through Global Gateway Strategy

The programme is co-financed by the European Union through the REMIT PRIME Central Asia Programme, which focuses on leveraging remittances for economic development and entrepreneurship.

“The European Union is proud to support efforts that make financial systems more inclusive and responsive to the realities of migrant families,” said Christos Marazopoulos, Head of Cooperation at the EU Delegation to Uzbekistan.

He noted that the initiative aligns with the EU’s Global Gateway strategy, which promotes sustainable investments and economic opportunities in partner countries.

By recognizing remittances in credit assessments, the programme aims to turn household income flows into productive investments that support local businesses and job creation.

Hamkorbank’s Role in Expanding Rural Finance

Hamkorbank, one of Uzbekistan’s largest financial institutions, plays a key role in implementing the programme.

The bank currently serves nearly 900,000 remittance recipients—about 20 percent of Uzbekistan’s remittance market—and maintains a strong presence in rural regions.

“As one of Uzbekistan’s leading banks serving remittance clients, we see first-hand the potential of migrant families to become rural entrepreneurs if they are given access to the right financial tools,” said Hikmatullo Alikhonov, Chief Risk Officer and Deputy Chairman of Hamkorbank.

The initiative will allow the bank to expand financial services to underserved rural communities while piloting innovative credit models.

Remittances Remain Key to Uzbekistan’s Economy

Remittances play a crucial role in Uzbekistan’s economy and rural livelihoods.

In 2024, remittance inflows reached $14.8 billion, accounting for more than 10 percent of the country’s GDP.

However, despite these significant inflows, many rural households still face barriers to accessing formal banking services and credit, often relying on informal employment or considering migration again.

The new initiative aims to break this cycle by helping returnees and remittance-dependent families build sustainable businesses in their home communities.

Training and Mentorship for Rural Entrepreneurs

In addition to financial support, the programme includes a capacity-building component to strengthen entrepreneurial skills.

Key activities include:

• Business and financial literacy training for 900 rural residents, at least half of whom will be women

• Individual mentorship for 100 entrepreneurs to launch or expand businesses

Participants will receive support to develop enterprises in sectors such as:

• Agriculture and agro-processing

• Transport services

• Rural service industries

Supporting Uzbekistan’s National Development Strategy

The programme supports Uzbekistan’s National Development Strategy 2030, which prioritizes the economic reintegration of returning migrant workers and rural development.

By turning remittances into investment capital and expanding financial inclusion, the initiative aims to strengthen local economies, reduce poverty, and create new employment opportunities in rural areas.