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Theme 3: Microfinance for protecting the vulnerable in rural Uzbekistan

This study explored vulnerability to poverty and the financial needs of vulnerable populations in rural Uzbekistan in order to allow microfinance practitioners to develop risk-management financial services (savings, insurance or emergency credit) for vulnerable populations.

Both qualitative and quantitative research methods were applied in 4 pre-selected villages. 16 focus group discussions driven by participatory rapid appraisal tools were run mostly with participants from households vulnerable to poverty. Quantitative survey of 500 household heads was conducted using face to face interview technique.

Main conclusions are the following:

  • Rural households in Uzbekistan are vulnerable. But the picture of vulnerability challenges the common view that the most threatening risk in rural areas is bad weather. Actually, more threatening perils for vulnerable populations in rural Uzbekistan included illness, organizing a wedding, building a house, death of a young person, divorce, and the structural risks related to unemployment and delayed salary payments.
  • In the absence of effective coping mechanisms risk-management financial services provide an opportunity to further deepen outreach in rural areas by reducing the vulnerability of low-income households. This pushes significantly the microfinance frontier as reduced vulnerability puts individuals and households in a better position to take advantage of promotional financial services, like micro-enterprise credit.
  • Last but not least, developing risk-management financial services does not necessarily mean overcoming regulatory hurdles or the need for big investments in new delivery channels. The risk-management financial services form a wide menu of options and different types of services will be more adequate for different contexts. The case of rural Uzbekistan proves that a livestock loan is a good solution for the MFI and for its clients. It uses an existing delivery channel with low-investment add-ins and fits very well socio-cultural context of rural Uzbekistan.

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