Mirziyoyev Orders Overhaul of Poverty Reduction System

Tashkent, Uzbekistan (UzDaily.uz) — President Shavkat Mirziyoyev has ordered a fundamental overhaul of Uzbekistan’s poverty reduction system, with regional authorities, banks and mahalla-level officials to take greater responsibility for creating jobs and raising household incomes.

The order was issued at a meeting chaired by the president to discuss taking efforts to reduce poverty and increase incomes to a new level.

At the beginning of the year, Uzbekistan’s poverty rate fell to 5.8%, with 2.2 million people classified as in need. The number has since declined to 1.5 million.

Officials noted that effective work has turned 49 districts and 3,429 mahallas into areas free of unemployment and poverty. At the same time, the president criticized insufficient results in the remaining 159 districts and cities and 5,536 mahallas.

Mirziyoyev said all regions had been given equal powers, resources and opportunities and stressed the need to use them effectively.

The meeting examined the main reasons for the lack of results at the local level. It was noted that officials responsible for the “mahalla seven” do not provide specific instructions to employees at the regional, district, city and mahalla levels on implementing decisions.

Some managers were also criticized for being unable to properly use the conditions created for them or objectively assess the work of the “mahalla seven.” Officials responsible for reducing poverty and unemployment were said to be hesitant to take responsibility for decisions.

The president noted that even China, with 50 years of experience in poverty reduction, continuously brings specific instructions down to the grassroots level in response to changing conditions.

“Over the past three years, 314 trillion soums in resources have been directed to entrepreneurial projects in mahallas. However, the impact of loans on poverty reduction is not felt equally in all districts,” Mirziyoyev said.

The meeting compared the effectiveness of credit resources allocated across districts.

The Sharof Rashidov and Karshi districts each received 2.3 trillion soums in credit resources. In Sharof Rashidov district, 30,000 people were lifted out of poverty using these funds, with an average of 78 million soums allocated per person. In Karshi district, living conditions improved for 13,000 people in need, with an average of 176 million soums spent per person.

The Kamashi and Pskent districts each received 1.1 trillion soums. Kamashi lifted 28,000 people out of poverty, while Pskent achieved the same result for only 4,500 people.

Similar disparities were observed in the Guzar, Nishan, Mubarek, Yangikurgan, Tashlak, Baysun, Altynsay, Bandikhan, Besharyk and Ferghana districts, as well as in the cities of Nurafshan, Bekabad and Yangiyul.

In Pskent district, 250 million soums in credit resources are being spent to lift one person out of poverty. The president noted that the same amount in another region is enough to create a permanent, well-paid industrial job.

Mirziyoyev criticized leaders of some regions for lacking the knowledge or ability to use available resources effectively to provide people with jobs. He said they did not fully understand the fluctuations and rapid changes taking place in the modern economy.

Over the past year, 86,000 small enterprises were established in the regions, but 15,000, or 17%, subsequently ceased operations. Another 62,000 people who received bank loans but failed to establish viable businesses are facing difficulties repaying them.

One reason identified was that only the mahalla assistants to hokims and mahalla bankers in 1,000 mahallas know how to work using a “project-based approach.”

At the president’s instruction, all economic-sector leaders remained in Khorezm region to analyze the situation and develop new approaches to poverty reduction.

Over two weeks, officials studied the situation of 81,000 low-income residents, or 19,000 families, in the region. They found 12,000 unemployed people and 10,000 people with low incomes among these families.

At the same time, entrepreneurs in Khorezm are currently seeking 4,000 workers for construction, 3,000 for services and 2,500 for industry.

Officials were instructed to use these opportunities to provide vocational training for unemployed and low-income people based on companies’ needs and subsequently help them find employment. Existing vacancies and training opportunities could increase the incomes of 10,000–15,000 residents from low-income families.

The study also found 48,000 children living in the low-income families examined in Khorezm. Officials currently lack a special program for individualized work with these children and their early involvement in vocational training.

Each district in the region has at least one or two technical colleges and four or five training centers. Youth leaders, mahalla assistants to hokims and women’s activists were instructed to organize additional clubs at schools, technical colleges and training centers for children from low-income families.

More than 10,000 women from low-income families in Khorezm are engaged in childcare, while preschool coverage among children from such families remains below 75%.

A further 646 college and university students have opportunities to improve their professional skills through dual education in line with new projects being implemented in the region.

The meeting also noted that stronger social assistance for 526 elderly people and people with disabilities from low-income families could allow family members who care for them to generate income through employment.

The president said the findings from Khorezm were relevant to all regions and decided to introduce a fundamentally new poverty reduction system.

Under the new system, officials responsible for the “mahalla seven,” regional and district hokims, and banks will move to an intensified working regime.

Headquarters will be established in every region and district under the leadership of the hokim. Banks and employment-support agencies will assist the headquarters in resolving local issues.

Regional, district and city hokims, together with the entire economic sector, will devote three days a week exclusively to poverty reduction and employment.

The president also criticized the project-related skills of mahalla bankers and hokim assistants. Many, he said, do not understand who needs credit or which projects should be financed through leasing, factoring, guarantees, insurance, working capital or contractual arrangements.

The practice of bankers and hokim assistants asking “Is there collateral?” before a project has even been prepared was also criticized.

Mirziyoyev said bureaucratic barriers remained in lending to entrepreneurs and that repayment schedules were not adapted to the specifics of individual businesses. Loan repayment periods should take into account the characteristics of agriculture, trade and other business activities, he said.

District headquarters will receive authority to manage preferential credit resources intended to develop family and youth entrepreneurship. They will independently determine who receives loans and in what amounts, whether funds are provided in cash or non-cash form, whether repayment periods should be extended and how payment schedules should be adapted to specific businesses.

The headquarters will also receive powers related to inclusive financing.

There are currently 1.37 trillion soums in resources for family entrepreneurship and 450 billion soums for youth entrepreneurship. District headquarters will be authorized to make financing decisions based on local conditions and project effectiveness.

If a leading entrepreneur establishes cooperation with 10 families, the entrepreneur will be able to receive an unsecured loan of up to 500 million soums. Cooperation with 100 families will allow access to loans of up to 5 billion soums.

Preferential financing will also be made available to needy citizens with overdue credit histories based on individual assessments.

District headquarters will receive 240 billion soums from the Poverty Reduction Fund, 100 billion soums from the Employment Fund and 760 billion soums from three “notebooks” used for targeted social support.

From now on, district headquarters will also independently decide on subsidies and interest-free loans.

The remaining 300 billion soums earmarked through the end of the year for compensation payments to entrepreneurs will also be distributed through the headquarters.

In total, 3.2 trillion soums in resources will be placed at the disposal of districts, with particular emphasis on achieving concrete results from their use.

The practice of setting conditions for providing loans, subsidies and compensation directly through presidential decrees and resolutions will be discontinued. The Ministry of Economy and Finance and the Central Bank will instead update financing mechanisms quarterly, taking regional potential into account.

District headquarters will transfer mahalla hokim assistants to a project-based working system.

For this purpose, 8,992 mahalla hokim assistants will be appointed in an acting capacity. Conscientious and proactive employees will be reappointed, while those who do not meet the requirements will be replaced.

Officials were instructed to establish a training center within two months and invite foreign specialists to participate. Hokim assistants will be trained there to work according to the project-based approach.

At the end of the year, regional headquarters will send the two best hokim assistants from each district to China, Japan and Türkiye for advanced training.

The most successful hokim assistants will receive a special qualification category and an additional payment of up to 50%.

Mahalla bankers will receive similar training and opportunities for overseas internships.

The General Prosecutor’s Office was tasked with helping remove factors that prevent mahalla bankers and hokim assistants from making independent decisions.

The system for implementing entrepreneurial infrastructure projects at the local level will also be revised. Such issues are currently handled mainly at the regional level, which causes delays.

Giving districts the status of project clients and directing funds directly to the local level will accelerate implementation, the meeting noted. It was proposed to allocate two to three times more resources from the state budget for projects financed from local funds and aimed at creating jobs in challenging mahallas.

From now on, the head of the district headquarters will be responsible for developing projects financed through resources allocated to districts for entrepreneurial infrastructure.

District headquarters will be allowed to outsource project design, construction and quality control to the private sector. The head of the headquarters will remain responsible for commissioning facilities on time and in compliance with quality requirements.

The meeting also outlined new approaches to strengthening social protection for families in need.

The National Agency for Social Protection was instructed to revise by the end of the year the system for including people in need in the “Social Register.”

A multidimensional assessment system will be introduced, taking into account not only household income but also factors such as chronic illnesses, disabilities, large family status and whether a family member works abroad.

Although the national poverty rate has fallen to 3.9%, the average rate among families with children under three years old is 6.5%.

“We will create a system that will allow parents engaged in childcare to work and earn income without leaving home or directly within the mahalla,” the president said.

Working mothers will receive benefits from the Social Insurance Fund until their child reaches one year of age.

This year, 300 billion soums has been allocated for a social package providing “passive income” to families in need whose members are unable to work.

It was noted that incomes had increased significantly in half of the 11,000 families that received such assistance. Officials were instructed to submit within a week a draft decision to continue the system.

“Starting next year, the costs of kindergarten — public or private — training center education, transportation and dormitory accommodation for children from families included in the register will be reimbursed through vouchers,” Mirziyoyev said.

The voucher will be issued for 12 months and will remain valid even after a family is removed from the Social Register.

The president stressed that regional and district hokims must organize the headquarters’ work effectively and make full use of the new opportunities.

From September through December, they must provide permanent employment to 350,000 people and increase the incomes of another 1 million residents.

They were also tasked with lifting 230,000 families out of poverty by the end of the year.

Officials were instructed to develop specific mechanisms and action algorithms for each area and identify responsible personnel at the mahalla level.

Drawing on China’s experience, clear instructions will be developed for employees working directly with residents at the district and mahalla levels.

The meeting concluded with reports from responsible officials and regional leaders.