From Reform to ROI: Why Uzbekistan is Gaining Ground as a Top Destination for Global Investors

Author: Bekhzod Botirov, fintech expert, co-owner and member of the PayWay Supervisory Board

In recent years, Uzbekistan has emerged as a key destination for international investors in Central Asia. The country’s economy is experiencing rapid growth: in 2024, GDP expanded by 6.5%, reaching $115 billion. The government's ambitious goal is to increase it to $200 billion by 2030 — surpassing earlier projections of $160 billion.

Uzbekistan's strategic geographic location plays a vital role in its economic ascent. Situated between China, Russia, the Middle East, and South Asia, the country serves as a natural logistics hub. Major international projects are underway to enhance transport infrastructure and trade corridors. Notably, in September 2024, Uzbekistan became a co-founder of the Eurasian Transport Routes Association alongside Austria, Azerbaijan, China, Kyrgyzstan, Tajikistan, and Turkey.

A large, young, and dynamic population is also a key driver of economic development. The number of Uzbekistan's residents exceeds 37 million. The average age is around 28.5 years for men and 30 years for women. More than 56% of the population is of working age, with purchasing power to drive demand for goods and services. A significant portion of the youth are multilingual — fluent not only in Uzbek but also in Russian, English, and even Chinese — enabling them to consume content across various languages.

Nonetheless, despite all these factors, the rapid progress would not have been possible without the active involvement of the government and the reforms introduced in recent years.

From Closed Markets to Open Doors

The turning point came with the 2017 currency liberalization reform, which allowed legal entities to freely purchase foreign currency from commercial banks. This move significantly boosted foreign exchange transactions and trade volumes. That same year, Uzbekistan introduced online business registration. The entire process — from obtaining founding documents and paying state fees to receiving registration certificates in real time — can now be completed in less than an hour. Entrepreneurs no longer need to meet face-to-face with regulatory officials, enhancing transparency across the system.

A special legal regime known as the “regulatory sandbox” was also introduced. It allows businesses to test innovative technologies and services under relaxed regulatory conditions. Within a defined area and timeframe, companies can bypass certain legal requirements, operate without licenses, and skip standard approval procedures.

Uzbekistan has also actively pursued integration into the global economy by joining numerous international agreements. A major focus has been on accession to the World Trade Organization (WTO). Recently, the country has concluded part of its negotiations with the European Union. WTO membership would send a strong signal to global partners and investors about Uzbekistan’s commitment to economic openness.

Beyond WTO efforts, the country is collaborating with the key international institutions. For example, Uzbekistan and the European Bank for Reconstruction and Development (EBRD) are working on initiatives to improve energy efficiency and promote sustainable development. Moreover, Uzbekistan is partnering with the International Finance Corporation (IFC) to improve the regulatory framework and attract greater volumes of foreign direct investment.

These organizations are also supporting Uzbekistan in adopting international financial standards related to anti-money laundering (AML), know your customer (KYC) practices, and other compliance measures.

Privatization and Innovation in Uzbek Banking

Uzbekistan’s financial sector is one of those undergoing a major transformation. It is driven by government-led reforms that have created favorable conditions for the registration and growth of private banks, microfinance institutions (MFIs), payment systems, and pawnshops. At the heart of these reforms is a large-scale overhaul of the banking system, which includes the privatization of leading state-owned banks and bringing them in line with international standards.

A key milestone came in 2023, when Hungary’s OTP Bank acquired a 73.71% stake in Ipoteka Bank, becoming the principal shareholder and supervisory authority of Uzbekistan's fifth-largest bank. The remaining shares are expected to be purchased by 2026. Privatization not only attracts foreign capital but also strengthens investor confidence and proves Uzbekistan’s commitment to ongoing market liberalization.

The emergence of digital players such as TBC Bank and Uzum Bank, as well as domestic payment systems like Humo and Uzcard, marks another leap forward. The state-owned share of Humo was recently acquired by Paynet — one of Uzbekistan’s largest payment operators. The country’s digital finance ecosystem is rapidly evolving, with e-wallets and online payment solutions gaining traction. Leading the pack is Click, which accounts for 33% of all online transactions. QR code payments are also on the rise.

At the same time, global systems like Visa and Mastercard are fully integrated into Uzbek banks. They support the expansion of contactless payments, P2P transfers, and other digital services. These international leaders are also playing a key role in financial education. In 2023, Visa and the Central Bank of Uzbekistan launched World of Finance, an interactive online project that helps citizens develop practical money management skills. Once again, the participation of international financial giants in such initiatives sends a powerful message to the global investment community: Uzbekistan is open for business and ready for modern financial innovation.

The population, in turn, has embraced new tools with enthusiasm. High mobile penetration is a major enabler: as of 2025, there are 33.9 million mobile connections in Uzbekistan — covering 92.2% of the population. At the same time, around 35% of adults still lack access to banking services, largely due to the sector’s historical underdevelopment. This creates a wide-open market for banks, fintech startups, MFIs, and insurance providers eager to fill the gap.

Where to Deploy Capital: Top Opportunities in Finance

Microfinance stands out as one of the most promising entry points for international investors. As of the end of February 2025, there were 116 registered MFIs in Uzbekistan — 11 of which were licensed that month alone. The regulatory environment is relatively flexible, with a low minimum capital requirement of 2 billion sums (approximately $155,000). This makes it relatively easy to access the market and offer loans at significantly higher interest rates than traditional banks — up to 50% in some cases.

Looking ahead, investors can consider transforming MFIs into a new, emerging structure within Uzbekistan: microfinance banks (MFBs). With a higher capital requirement of 50 billion sums, MFBs are permitted to accept deposits of up to 200 million sums and issue loans of up to 5 billion. While they are currently restricted from conducting foreign trade operations, market players anticipate regulatory clarification regarding the full range of permitted activities. These may include issuing bank cards, managing payroll and pension services, student accounts and others.

Should MFBs gain access to such offerings, it would unlock an even greater opportunity for international investors. Even without these additions, MFBs represent a strategic stepping stone toward launching a full-scale digital bank focused on B2C or B2B lending.

Another high-potential segment is Buy Now, Pay Later (BNPL). The gross merchandise value (GMV) of BNPL and point-of-sale (POS) financing in Uzbekistan is projected to grow 4.1 times between 2023 and 2027. Some BNPL services are already operated through microfinance institutions, or they are securing MFI licenses. These licenses allow providers to offer installment plans not only for physical goods but also for services — an option currently limited to niche providers such as travel agencies.

Entry Points for Foreign Investors

Foreign investors can engage with Uzbekistan’s fast-evolving financial sector through several key entry points.

1. Joint Ventures
One of the most straightforward routes is through the creation of joint ventures. Foreign investors can register a business in Uzbekistan even without being physically present in the country; still, a local representative or legal proxy is required to interact with authorities and handle official documentation. Depending on the size of the foreign capital involved, companies may qualify for various tax incentives — such as reduced land tax. For fintech (and other tech) startups, Uzbekistan’s IT Park offers the most comprehensive package of benefits.

2. Capital Markets
Another emerging path is through Uzbekistan’s stock market. One major hurdle for foreign investors is the lack of custodial infrastructure — many international players are unsure how and where to store locally acquired securities. That said, steps toward improvement are already underway. The government bond market is expanding, and several large state-owned enterprises are already planning to issue their own eurobonds.

In addition, a “Sandbox” initiative was launched in 2024 to facilitate investors’ access to Uzbekistan’s local securities market. Under this regime, foreign nominee holders can open securities accounts, depository accounts, and both sum and foreign currency accounts with the Central Bank of Uzbekistan.

3. Venture Capital and Startup Ecosystem
Foreign investors are also increasingly entering Uzbekistan through venture capital. Although still in its infancy, the market is growing. In 2024, the country recorded 38 venture deals totalling $17.5 million — up 2.7 times from the previous year. The average deal size more than doubled, which signals a shift toward more confident investments.

According to KPMG, this growth has been driven by increased activity from both public and private funds, as well as a rise in angel investment. The government is actively supporting this momentum. In October 2024, the president approved a detailed roadmap to strengthen the legal and institutional framework for both venture capital and startup development through 2026.

Several local startups have already attracted foreign investment. Among the most notable is Alif, a fintech company offering BNPL, a digital wallet, an online marketplace, and other services. Alif has raised over $150 million to date, including a recent $20 million round led by U.S.-based private debt fund manager Accial Capital. Shortly before that, Alif secured funding from the UK’s Cur8 Capital, a platform offering Sharia-compliant wealth management.

Another standout example is Uzum, which has raised over $100 million and, according to the company, became Uzbekistan’s first unicorn. Its Series A round was led by global venture fund FinSight Ventures, with participation from India’s Xanara Investment Management. Uzum combines a digital marketplace, express delivery, traditional and digital banking, BNPL services, and more — all within a single platform.

Putting Uzbekistan on the Global Map: What Comes Next

These examples highlight Uzbekistan’s potential to attract investment from a wide range of regions. Countries in the Middle East — such as the UAE, Qatar, and Saudi Arabia — may find promising opportunities in Islamic finance. India, with its demographic similarities and behavioral parallels, is well-positioned to export cost-effective lending and payment solutions. And Western investors have an opportunity to support sustainability-driven initiatives — especially in green microfinance. Other promising areas include P2P lending, regtech, open banking, and crypto infrastructure. Uzbekistan is one of the few countries in the region offering licenses for crypto asset management.

Still, several structural improvements are needed to further boost foreign interest. These include:

• Strengthening legal protections for investors

• Ensuring the independence of courts in economic and investment-related disputes

• Launching a centralized, multilingual portal with all current laws and regulations 

• Simplifying IPO procedures for fintechs and banks

• Creating a legal framework for SPVs and private equity funds to support investor exits

Just as crucial is strengthening the workforce within public institutions. While national-level reforms are underway, regional implementation often lags behind. To bridge this gap, Uzbekistan should prioritize training civil servants — especially those outside the capital — on topics like investment climate and financial regulation.

Finally, the country must continue promoting itself on the global stage. New international agreements and ongoing liberalization efforts are critical to reinforcing Uzbekistan’s message: it is a gateway to Central Asia, with demographic and logistical advantages, low entry thresholds, high returns, and a government that is actively pursuing transformation through strategic partnerships and technology transfer.