Strong Future Predicted for Uzbekistan’s Credit Unions

Uzbekistan’s fledgling credit union movement has become one of the fastest-growing in the world, and Sardor Normukhamedov has come to the United States looking for ways to help increase that positive trajectory.

Normukhamedov is deputy director of the Central Bank of the Republic of Uzbekistan, which has developed a specialized department to regulate the former Soviet satellite county’s credit union movement. He arrived at World Council of Credit Unions’ (WOCCU) Madison headquarters Monday with 11 Central Bank colleagues to explore best practices and other strategies to help Uzbekistan’s credit unions grow rapidly and soundly.

“WOCCU is the leading organization when it comes to providing credit union development assistance worldwide,” Normukhamedov said. “When credit unions first emerged in Uzbekistan, WOCCU was there to work with the Central Bank to establish the law making credit unions possible.”

WOCCU began credit union development efforts in Uzbekistan in 1998, assisting with the policy development framework that led to a set of guidelines governing credit union development, operations and oversight. In 2002, the first credit union law was passed with the assistance of WOCCU and guidance from its Model Law for Credit Unions publication. The country’s first three credit unions formed that same year.

The Credit Union Association (CUA) of Uzbekistan was established by 11 credit unions in 2005 as the first phase of WOCCU’s development program in the Central Asian nation came to an end. CUA became a WOCCU member in 2009. Today, Uzbekistan is home to 111 credit unions that serve more than 153,000 members. The institutions hold US$140 million in assets.

“This is a success story for WOCCU and exactly what we like to see,” said Dave Grace, WOCCU vice president of association services. “Despite being only an eight-year-old movement, Uzbekistan’s credit unions have excellent capital, very little delinquency and an extremely strong structure. They’re helping bring a solid middle-class tier to the country’s economy.”

In 2009, assets held by Uzbekistan’s credit unions grew 74% , placing it among the fastest-growing systems in the world. Much of the success of Uzbekistan’s credit unions appears to be in their ability to address the growing public demand for affordable, easily accessible financial services, according to Normukhamedov.

“Credit unions have become so popular because they are responding to people’s needs,” the Central Bank executive said. “Credit unions have developed their own market, paying higher interest on savings and providing more immediate access to loans. Banks offer those same services, but not quite as easily.”

The biggest challenges facing Uzbekistan’s credit unions currently are similar to those in other developing countries. Lack of credit union access to deposit insurance, the clearing and settlement system, card networks and liquidity sources will make further growth challenging, according to Grace. Despite their existing strengths, the country’s credit unions will need greater liquidity in order for the system to expand, he added.

Fortunately, access to those services may be easier to come by than in other countries. The relationship between credit unions and banks in Uzbekistan is a positive one, with each industry gaining from having a well-defined market, according to Normukhamedov.

“Banks and credit unions have a good relationship,” he added. “There is a healthy competition between the two markets.”

The Central Bank delegation spent Tuesday visiting Westby (Wis.) Co-op Credit Union to talk about agricultural loans, a growing need in Uzbekistan.

World Council of Credit Unions (WOCCU) is the global trade association and development agency for credit unions. WOCCU promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. WOCCU advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions’ financial performance and increase their outreach.

Worldwide, 49,000 credit unions in 97 countries serve 184 million people. In 2009, WOCCU’s technical assistance programs reached 5.9 million people in 16 countries. Learn more about WOCCU’s impact around the world at


Contact: Mike Muckian
Organization: World Council of Credit Unions
Phone: +1-608-395-2080

More News