Uzbek start-ups in fintech, e-commerce and software are benefitting from foreign investment thanks to green economy strategies, the privatisation of Uzbek banks and public-private partnership laws.
International investment in Uzbekistan has increased tenfold in the last six years. Extensive government reforms which started in 2017 have opened up the economy and are attracting foreign capital to the Central Asian country and the number of investor taking notice is growing.
An American-Uzbek joint venture, Silverleafe, is growing cotton in the Jizzakh region, northeast of Samarkand. The whole process from seeding to harvest is 100 per cent automated.
This year Silverleafe is introducing new technology in Uzbekistan which will provide a digital footprint for tracking and tracing machine-harvested cotton, all the equipment was brought from the US.
“This is the GPS that’s keeping the tractor online, so we have the auto track, tied to the satellite system, and this is within one or two centimetres of accuracy,” said Dan Patterson, the General Director at Silverleafe International, pointing to a screen displaying how the machinery is monitored.
“These yellow domes on top are a very important part of precision agriculture and digital agriculture. We are able to gather information, verify our harvest information, and send that to a satellite, we can track and trace the field for cotton harvest” explained Patterson.
The director was invited to Uzbekistan in 2018 by President Shavkat Mirziyoyev to modernise agriculture and take part in these reforms. In total Silverleafe invested approximately 40 million US dollars (€36.23 million) in Uzbekistan.
“People are looking to see if the reforms are real or if they are just speech, but I can tell you after being here for the last five years, the reforms are actually real.
"They are creating the infrastructure and environment for foreign capital to come in and take advantage of the natural resources or the labour market, where 60 per cent of the population is 30 years of age or younger so it’s a great opportunity when you are looking demographically around the world where to relocate the business and make future investment" Patterson added.
Over the last five years, the European Bank for Reconstruction and Development has committed over €3 billion to key sectors within the Uzbek economy, this was spread over 100 projects and the amount invested each year has exceeded the previous one.
Sustainable energy is a top priority. The EBRD gave a loan to one of the first privately owned solar stations in Uzbekistan. The country has been the leading recipient of the ERDB’s funding in Central Asia over the last three years and the plan is to invest even more.
Public-private partnership law reforms, Uzbekistan's green economy strategy for 2030 and the privatisation of state-owned banks are all reasons why investment is going from strength to strength, as Alkis Drakinos, the Director of Uzbekistan's EBRD division explained: "All these reforms are sending a strong signal to international investors about Uzbekistan’s potential and its appetite and commitment to reform.”
Uzbekistan's tech scene is now very attractive to foreign investors. London-based investment firm Sturgeon Capital was the first to invest in Uzbekistan’s start-ups and digital infrastructure through a dedicated €22.65 million fund in 2020.
“The three areas that we focus on are one, fintech; two, marketplaces, typically e-commerce marketplaces, and software. Since we have invested, on average these companies have seen their revenue grow nearly three times in that period and we believe that there is still a long runway to go” assured Kiyan Zandiyeh, Sturgeon Capital's Chief Investment Officer.
BILLZ was the first Uzbek start-up to secure investment from Sturgeon Capital.
This company creates software that helps manage and grow retail businesses. It has already expanded to four countries and has attracted more investors.
“Five years ago, it was very difficult for us to find investors and this process took a very long time, simply because there were none. It is now much easier to find funding and potential offers are also much larger than they were five years ago. All of this gives us opportunities for future scaling and development” said Rustam Khamdamov, the co-founder and CEO of BILLZ.
Visa-free travel, lower taxes, and a growing educated population are all reasons why one might want to attract foreign capital. The volume of foreign investment in Uzbekistan has increased significantly in recent years, and the state aims to attract more than €100 billion over the next four years.
According to Laziz Kudratov, the Minister of Investment, Industry and Trade in Uzbekistan, the government wants to make the business environment and the investment climate in the country even more attractive.
"The most important thing for us is to ensure the quality of investments to ensure the sustainable, long-term development of Uzbekistan’s economy, to make it competitive,” he said.