EBRD Says Frontier Markets Attractive with Reform Trust

Tashkent, Uzbekistan (UzDaily.com) — Perceptions of political and investment risks in frontier markets have changed significantly over the past decade, with investors developing a deeper understanding of their potential where trust in corporate governance, transparency and reforms is present.

This view was expressed by Francis Malige, Managing Director and Head of Financial Institutions at the European Bank for Reconstruction and Development (EBRD), during a session of the Tashkent International Investment Forum on 17 June.

Malige said one of the key and unchanged conditions for success in frontier markets remains the investor’s physical presence on the ground. According to him, assessing markets from London or other distant financial centres tends to exaggerate risks.

“The further away you are, the bigger the risk seems,” he said, adding that the EBRD maintains an office in Tashkent with nearly 70 staff members, and that the reality on the ground is often significantly different from external perceptions. Investors who understand this “reversed perspective” tend to achieve better results than those who do not.

He stressed that core requirements for any market remain transparency, predictability, strong corporate governance, equal conditions for private and state players, and liquidity in equity and debt markets. Governments with a clear reform strategy and consistent implementation are able to attract significantly more investment.

Commenting on changes over the past decade, Malige noted a deterioration in the global geopolitical environment, saying the world has become “much more dangerous.” He said armed conflicts between states, disruptions in trade and supply chains, and renewed discussions on economic, commodity and financial sovereignty have all become relevant factors in investment decisions.

At the same time, he highlighted improvements in the quality and availability of market data, linking this trend to the period of low yields in developed markets during the 2010s, when investors increasingly searched for opportunities in new markets.

Malige also pointed to the importance of listing companies on reputable stock exchanges as a tool for attracting international capital, citing the inclusion of the National Investment Fund of Uzbekistan (UzNIF) on a stock exchange as an example.

He said Uzbekistan has rapidly positioned itself on the global investment map but noted structural constraints, particularly in the financial sector. According to him, the sector remains largely dominated by state-owned banks, while private banks are still small and none have significant stock exchange listings.

To attract large-scale international investors, he said Uzbekistan needs to expand domestic capital markets, strengthen long-term savings institutions such as insurance and pension funds, and broaden company listings.

Malige also emphasized Uzbekistan’s demographic advantage, noting that a high share of working-age population creates favourable conditions for developing modern pension and investment infrastructure.

He cautioned against repeating mistakes made in some European countries that developed pension systems without considering demographic factors, urging the development of efficient and modern capital markets.

Advisor to the Minister of Economy and Finance, Jasurbek Karshibaev, agreed with the recommendations, saying the government is already working in this direction by updating market benchmarks and encouraging state enterprises to improve corporate governance and access capital markets.

“If we are missing something, we are very open to discussion,” he added.