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EU/UNDP Project «Enhancement of Living Standards in Karakalpakstan and Namangan region of Uzbekistan”

Income Generation Component

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Overall Objective

• Improve the livelihood of local communities in the republic of Karakalpakstan and Namangan region

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Three components • support the authorities and local communities to

develop and implement regional/local development strategies

• empower local communities to engage in their socio-economic development

• increase and diversify access of low income population/farmers to finance.

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Income Generation Component specific objectives

• Strengthen institutional capacity of partner micro-finance institutions in Namangan and Karakalpakstan

• Local MFIs handle micro-credit operations efficiently • Develop loan products based on men and women’s

needs. • Increase number of small scale entrepreneurial

projects and micro-enterprises• At least one pilot agricultural cooperative in each

region established and document experiences

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Selection Process of the potential partners

• Phase I – Selection of partners by the ELS’s microfinance committees in KKP and NMG

• Phase II – Performance and capacity assessment of the selected partners to implement the ELS’s MF component

• Phase III – Signing of the Memorandum of agreement with the selected partners

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Partner Institutions

In Namangan• MFP FV-Mard, ACDI/VOCA

• Business Incubator “Kosonsoy”

In Karakalpakstan• NGO “Daulet”• Karakalpak branch of Business Women

Association• NGO “Parwaz”

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MC funds disbursement proposal

Assumptions:• The objective of the ELS’s Component 3 is to

increase and diversify access of the poor and farmers to micro – finance services

• The distribution of funds will provide fair access to financial products to potential clients in six districts

• The distribution of funds is based on the proposal received from the assessed MFIs

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Funds disbursement proposal in Namangan

Allocation of funds/ MFI FV Mard BIC K Total $

Chortoq rayon 105.745 0 105.745

Mingbuloq rayon 45.722 0 45.722

Kosonsoy rayon 0 23.565 23.565

Total 151.467 $ 23.565 $ 175.032 $

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Funds disbursement proposal in Karakalpakstan

Allocation of funds/ MFI Parwaz BWA Davlat Total $

Karauzeak rayon 60.718 0 0 60.718

Kegeyli rayon 0 80.389 24.012 104.402

Shumanay rayon 0 0 56.322 56.322

Total 60.718 $ 80.389 $ 80.335 $ 221.442 $

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Proposal for the ELS’s Exit strategy

I. Grant the funds to the Partners: based on the results of performance assessment at the end of MOA.

II. Reallocation of funds among the Partners: if some of the selected Partners will not meet the performance criteria established for each of them individually

III. Total withdrawal of funds and utilization as grants under the ELS’s component 2 – Social investment fund: if none of the selected Partners will meet the performance criteria established

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Activities undertaken

• Regional Microfinance Committees set up to select partner institutions

• Review of current micro-credit environment initiative

• 5 MFI’s selected as partner institutions in the third component of the ELS

• Benchmarking report of MFI’s in KK and comparison with peers in ECA region

• Proposals from MFI’s for new products using ELS funds• MOUs for disbursement of funds allocated to micro-credits

with five MFI-partners drafted to launch micro crediting schemes in 100 communities

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Activities undertaken

• Agricultural sector review • 15 farmers focus groups to identify problems

and needs to be incorporated in the agricultural review report

• 1 template business plan developed for farmers associations,

• 1 training conducted on business planning • International consultants identified for support

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www.els.uz