New SME development strategy: a turning point
Uzbekistan’s small and medium sized enterprises (SME) development strategy represents a promising and forward-looking step toward strengthening the country’s private sector. Drawing on international best practices, it expands the range of support instruments, fosters greater coordination, and introduces more tailored measures for different SME segments. Notable strengths include improved access to finance, public procurement, and export opportunities. The accompanying action plan focuses on preparatory work such as legal drafting and analysis, laying important groundwork. Moving forward, a shift toward more concrete implementation will be key to unlocking the full potential of Uzbekistan’s SME sector.
Background
On 19 March 2025, the Government of Uzbekistan approved its new Strategy for the Development of Small and Medium-sized Enterprises. This reflects a growing recognition of the private SME sector’s pivotal role in driving inclusive economic growth, employment, and innovation. Framed around international best practices and shaped in collaboration with development partners, the strategy marks a promising shift in how Uzbekistan approaches private sector development.
Official statistics indicate that SMEs account for 74% of total employment. However, this figure includes self-employed individuals operating in the subsistence economy. Using international standards—which define SMEs as formal enterprises—the actual employment share is closer to 31%.
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This underscores the significant untapped potential of the SME sector in contributing to formal job creation and productivity.
Key features of the new strategy
Elevating the political status of SME development
The strategy assigns SME promotion a central role across government agendas. A newly established Republican Council for the Development of SMEs, chaired by the Deputy Prime Minister and head of the Ministry of Economy and Finance, underscores this elevation. The council includes eight ministers and vice ministers, five parliamentary committee chairs, and a deputy governor of the Central Bank—signalling high-level political commitment and cross-sector coordination.
Expanding the policy toolbox
Uzbekistan is moving beyond its traditional reliance on tax incentives and subsidised credit to support the sector. The new strategy broadens the range of policy instruments, incorporating access to industrial premises, public procurement, export promotion, and innovation support.
Differentiated support within the SME ecosystem
The strategy acknowledges that SMEs are not a monolithic group. It introduces targeted measures tailored to different segments, ranging from promoting rural self-employment as a poverty alleviation tool to the promotion of export-oriented enterprises. International experience shows that such a differentiated support approach is likely to be more effective than applying the same measures uniformly across all types of businesses.
Strong development partner engagement
The strategy was developed with input from a wide range of national stakeholders and international financial institutions, including the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD) and the World Bank Group among others. At the SME Strategy Conference on May 27, 2025, both the government and development partners presented aligned initiatives, reflecting a high level of policy coordination and mutual reinforcement.
Alignment with international best practices
The overall framework is consistent with international benchmarks and incorporates recommendations from the German Economic Team. Several proposed reforms mirror successful international models.
High-impact, low-cost measures
Among the 100 proposed initiatives, some stand out for being cost-effective, easy to implement, and likely to produce measurable results by 2030. These include:
- Enhanced access to finance for SMEs through diversified funding channels
- Repurposing unused state-owned properties into affordable business premises
- Easing participation in public procurement
- Revision of formal tax preferences that disincentivise business growth
- Helping SMEs enter export markets, including support for meeting international technical standards and certification
Remaining challenges
Despite the significant progress, we still see some shortcomings in the strategy.
Broad scope
The strategy sets out 22 sub-goals and 100 individual measures, which—while comprehensive—risk overextending institutional capacity and diluting impact. A more focused and prioritised approach would improve both feasibility and effectiveness. Moreover, several measures extend beyond the conventional scope of SME policy. Proposals such as the privatisation of state-owned enterprises, though potentially sound from an economic standpoint, pertain to broader structural reforms that require distinct policy frameworks and implementation tracks.
Gaps between strategic intent and implementation
Many actions of the action plan for the current year 2025 are vaguely defined or lack clear implementation pathways. The majority of these actions call for further analysis or preparatory work. Only a limited number are concrete implementation actions, mainly in the areas of training and education.
Crucially, no specific financial or programmatic support for medium-sized enterprises has been articulated. At the same time as the SME strategy a presidential decree was issued, which includes targeted measures to support medium-sized enterprises. This element could have been integrated into the SME strategy.
Responsibilities and resource allocations
The measures of the strategy and the actions of the action plan for 2025 assign responsibilities to multiple institutions, however, without designating a clear lead agency, which risks fragmentation and weak coordination. For example, the initiative to develop a unified digital platform for SME support involves more than four entities yet lacks defined leadership.
At the same time, several measures imply substantial financial and human resource commitments—such as supporting start-ups in artificial intelligence, green technologies, and smart industries through venture capital—without specifying budget allocations or capacity-building plans.
Conclusion
Uzbekistan’s new SME development strategy is a forward-looking document that sets the stage for more inclusive and dynamic private sector growth. It reflects an understanding of international best practices, embraces differentiated policy instruments, and has benefitted from broad stakeholder consultation.
While the strategy document demonstrates strong progress, the accompanying action plan could be further strengthened to fully reflect the scale of the challenge. To maximise impact—especially for medium-sized enterprises that play a key role in export growth and value chain integration—greater emphasis on timely, concrete implementation would be beneficial.
The success of the strategy will ultimately depend on how determined and impact-orientated it will be implemented.
