Affordable housing in Uzbekistan is in high demand in rural areas, with the quality of existing rural housing stock low. The new program will continue the ADB’s support to the rural housing in Uzbekistan implemented during 2012-2015. Over 41,500 houses were constructed, and significant employment was generated through the first program.

Approximately 64% of Uzbekistan’s population lives in rural areas. Agriculture remains the dominant sector, although its contribution to gross domestic product (GDP) has declined from 26% in 2008 to 18% in 2010. Living standards in rural areas have not kept pace with those in urban areas. Poor employment opportunities (including lower wages) and insufficient rural housing lower rural living standards.

The project will support the construction of up to 29,000 new affordable housing units in nine regions across Uzbekistan.

Most rural housing dates from the Soviet period and is occupied by growing multigenerational families. Although increasing, new housing construction is not keeping pace with population growth (1.5% per year) and the over 200,000 young families and adult children ready to leave the parental home each year. The government estimates that 1.5 mln households need new housing or major renovation. Land for constructing houses is in short supply and is not readily obtained. Where land is available, single family home construction in rural areas is mainly handled by individuals on their own initiative and homes and built by temporary unregistered construction workers. New rural housing development is constrained by unavailability of large tracts of land with ready access to basic utilities, and limited to contractors who build houses for local governments or individuals on land made available by local governments.

ADB estimates that investment in affordable rural housing will have a further substantial impact on employment, as the program is expected to generate up to 220,000 jobs in the economy. The Affordable Rural Housing Program will specifically target women, with a goal that 30% of all mortgages are issued to women over the course of the program duration.

ADB estimates that the program over a 5-year period (2017-2021) would significantly increase new piped water connections and sanitary facilities in rural areas while the energy-efficient components incorporated in the new dwelling units will reduce energy consumption. Similarly, modern heating and cooking facilities with natural gas will ease the burden faced by women and enable them to avoid harmful solid fuels, which are linked to respiratory diseases. Encouraging women’s ownership of dwelling units is likely to increase the participation of women in economic activities and contributes to their empowerment.

Ministry of Economy of Uzbekistan will administer the program which will be implemented through three Uzbek banks (Ipoteka Bank, National Bank of Uzbekistan, and Qishloq Qurilish Bank) and by the state engineering company Qishloq Qurilish Invest. ADB’s assistance will be implemented on a results-basis, with disbursement of funds over a five-year time horizon based on the completion of construction and other program implementation milestones.

Since joining ADB in 1995, Uzbekistan has received 63 loans totalling $5.7 bln, including two private sector loans totalling $225 mln, $6 mln in equity investment, $200 mln in guarantees, and $74 mln in technical assistance grants.

Uzbek Government’s Strategy

Rural development. The government’s rural development policies are set forth in the WIS. In 2009, the government initiated the RDP under the WIS. The RDP focuses on stimulating rural economic activities in agriculture, as well as nonagricultural sectors, and other initiatives to support creation of rural jobs. To improve rural living conditions, the RDP includes the RHS. Under the RHS, during 2009 and 2010 the government built 7,647 new modern houses and, through a low-cost credit line provided to Qishloq Qurilish Bank, financed the acquisition of these houses by rural residents at a concessional interest rate. In 2011, a 5-year extension of the RHS was launched, under which an additional 40,800 houses will be built.

To improve rural living standards and build on ongoing achievements under the RHS and other related programs and strategies that impact rural development, the government’s Housing for Integrated Rural Development Strategy, a multisector strategy and road map (supplementary document 13), was adopted. Under this strategy, the 5-year extension of the RHS will be downstreamed with improved targeting of moderate- and low-income households, closely coordinated, and better integrated with related government strategies and programs to leverage synergies and improve outcomes, and focus more on achieving results.

Housing finance. Under the Housing for Integrated Rural Development Strategy, over the medium term the government will improve the enabling environment for housing finance to address legal and regulatory constraints. Immediate priorities include improving laws which govern the exchange of credit information among lenders, registering pledges of collateral (to streamline such procedures), developing and implementing prudential standards for mortgage lending, improving the public electronic registry for immovable property, and publicly disseminating additional data on the real estate and housing finance markets.