World Bank Supports Job Creation and Climate Resilience in the Agriculture Sector in the Republic of Uzbekistan

June 12, 2014

WASHINGTON, June 12 , 2014— The World Bank’s Board of Executive Directors today approved financing totaling US$410.3 million for two projects in the agriculture sector of Uzbekistan: the Horticulture Development Project and the South Karakalpakstan Water Resources Management Improvement Project.

The two new projects will contribute to achieving the World Bank Group’s twin goals to end extreme poverty and boost shared prosperity.  They are part of the Bank Group’s Country Partnership Strategy for Uzbekistan for 2012-2015 which aims to help the country to:  (i) diversify agriculture to high value crops; (ii) intensify agricultural yields and productivity; (iii) increase the efficiency of infrastructure; and (iv) enhance the economy's competitiveness.

The Horticulture Development Project (IBRD loan of US$150 million) will contribute to poverty reduction in Uzbekistan by assisting horticulture farmers, many of whom are small and poor, to increase their farms’ productivity and incomes. At the same time, the project will promote shared prosperity by supporting the growth and development of small and medium enterprises in the rural areas, creating more and better paying jobs in the agro-processing, trading and export sectors, and increasing the value added of the agricultural sector.

“Having more jobs and better paying jobs is critically important for the well-being of people living in the rural areas of Uzbekistan,” said Saroj Kumar Jha, World Bank Regional Director for Central Asia. “The new Horticulture Development Project will help create much-needed jobs by improving access to technologies, knowledge and markets, strengthening technical and managerial capacity in the farming and agri-business sectors, and introducing new financial products in the financial sector.” 

The project has three components: (i) Agricultural Support Services, (ii) Access to Credit, and (iii) Project Management, and will be implemented in eight regions of Uzbekistan, namely Andijon, Jizzak, Ferghana, Kashkadarya, Karakalpakstan, Namangan, Samarkand, and Tashkent.

This is the first project in the World Bank Group portfolio in Uzbekistan where the World Bank and the International Finance Corporation (IFC) will join efforts in implementing the project.

The South Karakalpakstan Water Resources Management Improvement Project (IDA credit of US$242.50 million and IBRD loan of US$18.22 million) aims to restore irrigation and improve water management in a sustainable and financially efficient manner in one of the poorest areas in Uzbekistan.. The project will remove the current dependence of the farmers in the project area on energy-inefficient pumping by developing a gravity off-take from Tuyamuyun reservoir and dismantling all lower Amu Darya pumping stations currently serving the project area.  It will strengthen institutions and capacities, and improve performance of public irrigation and drainage service delivery.

“Better water management and irrigation will lead to increased farm productivity and climate resilience, and thus help farmers in South Karakalpakstan build their assets and improve their living standards. We estimate that 41,000 water users will be provided with new or improved irrigation and drainage services under this project,” said Saroj Kumar Jha, World Bank Regional Director for Central Asia. “The project will bring other remarkable results as well – improved irrigation efficiency will lead to net water savings of 10 million m3 per year, and reduced energy costs will result in as much as US$2.39 million savings per year.”

The project consists of the following components: (i) Modernization of Irrigation Network; (ii) Modernization of Agriculture; and (iii) Project Management, Monitoring and Evaluation.

Both new projects will help the Government of Uzbekistan in its strategy to modernize agriculture in the country, including support for cotton harvest mechanization, promotion of agricultural diversification away from cotton by improving farmer access to new technologies, finance and markets, measures to mitigate state intervention in cotton production, and, together with IFC, assistance for cotton certification to capture the premium on cotton that is produced in compliance with international labor standards. The independent monitoring and feedback mechanisms which are built into the project design will monitor progress of adoption of international labor standards, in collaboration with and support from other development partner agencies and governments.

Uzbekistan joined the World Bank in 1992. The World Bank’s mission in the country is to improve people’s livelihoods through being a partner in economic reforms, supporting the modernization of the country’s social sectors and infrastructure, and sharing its knowledge and experience with the government and the people of Uzbekistan. Current World Bank commitments to Uzbekistan amount to over US$1.4 billion.

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