In 2009, the government of Uzbekistan launched the Rural Housing Scheme (RHS), involving the construction of new houses for the rural population throughout the country. The RHS was designed to reduce the disparities between urban and rural populations by channeling rural savings into housing investments to improve living standards and utilizing local contractors and construction materials to generate jobs and stimulate the construction industry. Under the scheme, commercial state-owned banks were to provide mortgage loans to homebuyers for the purchase of houses in rural areas.
To expand the scheme over 2011–2015, the government requested for assistance from the Asian Development Bank (ADB) that approved a $500 million multitranche financing facility (MFF) for the Housing for Integrated Rural Development Investment Program in August 2011. While the program had three components, the MFF focused on providing housing loans for targeted creditworthy borrowers and from four tranches originally, it was reduced to three tranches. This report covers tranche 3 project, approved in August 2015 for a loan of $100 million. Consistent with the MFF, the project’s expected impact was improved rural housing for targeted beneficiaries. Its intended outcome was down-streaming of the RHS to moderate- and lower-income beneficiaries, with a focus on women.
At completion, the project funded 7,851 mortgage loans. Women received 26.6% of the loans, which was slightly below the 30% target. The loans financed the construction of houses in 212 sites in rural areas throughout the country, most of which were near existing communities.
On average, homebuyers made down payments equal to 29.1% of the purchase price, with the remainder funded by a 15-year loan. With an interest of 7% for the first 5 years and the Central Bank of Uzbekistan’s refinancing rate for the remaining 10 years, the loan amounts were identical for all loans issued in 2015. As with previous tranches, the government made the homes more affordable by exempting homeowners from property tax, and income tax on interest and principal payments during the loan duration.
Three designs were provided: a 3-room house, with 134 square meters (m2) of floor area; a 4-room house, with 143 m2 floor area; and a 5-room house, with 181.75 m2 floor area. All were situated on 600 m2 lots provided free of charge to the homeowners.
Successful implementation of the tranche 3 project enabled the government to complete its rural housing program for 2015. Moreover, it ensured the inclusion of moderate to lower-income households in the housing program that, prior to ADB’s involvement in the RHS, comprised less than 1% of the loan beneficiaries. Under tranche 3, the proportion of borrowers in the lowest three income quartiles reached 66%. This was made possible by a massive public awareness campaign and the use of beneficiary selection criteria, both of which were also outcome targets.
Due to an effective public information campaign, the actual demand for housing loans in 2015 far exceeded the supply. Nearly 4 applications per constructed house, and more than 42,000 applicants were received during the year. To respond to the unmet need, ADB has extended its support for the RHS through another policy-based loan and technical assistance grant approved in June 2017.
The project had Uzbekistan’s Ministry of the Economy as executing agency. Two state-owned commercial banks served as implementing agencies for the ADB−financed component.