Karakalpakstan Empowers Startups and Entrepreneurs with $200 Million Soft Loan Initiative and Youth Center

Karakalpakstan, a region in Uzbekistan, outlines plans to allocate $200 million in soft loans to support companies and establish a Youth Socio-Economic Center in the Khojaili district, with an investment of 1 trillion soums. The city unveiled its plans to support local startups and nurture entrepreneurship with a series of new initiatives under the guidance of President Shavkat Mirziyoyev. 

This center is envisioned as a comprehensive hub, encompassing an IT park, a technology park, startup support groups, cultural and spiritual centers, libraries, a sports complex, and housing facilities for employees and resident entrepreneurs.

The signing of the Decree took place titled “On additional measures to create favorable conditions for entrepreneurs in the Republic of Karakalpakstan.” 

The financing framework for the projects includes offering loans for investment endeavors at a low-interest rate of 5% p.a. in foreign currency and 12% p.a. in national currency. These loans extend over ten years, accompanied by a 5-year grace period. Additionally, the bank’s margin for these loans is set at 1% for foreign currency loans and 2% for loans in the national currency.

Further, Karakalpakstan is enhancing its support infrastructure for businesses. Investment companies are joining forces with banks to develop projects that are then presented to entrepreneurs as fully formulated endeavors. 

Facilitating this process, banks are extending loans tailored for investment projects, encompassing a 10-year timeline and a 5-year grace period. These loans are strategically designed to stay within the primary rate stipulated by the Central Bank.

Additionally, the State Fund for Entrepreneurship Support will raise its level of involvement by offering guarantees for loans up to 75% of the loan amount, not exceeding 5 billion soums. The is contingent upon the condition that guarantee agreements are not unilaterally terminated. 

Entrepreneurs who fulfill their investment commitments within small and youth industrial zones are set to gain an opportunity to privatize allocated land, buildings, and structures. 

Moreover, the provision extends to entrepreneurs acquiring state property through competitive means in cases where state-owned assets from public auctions remain unsold for 3 months. 

Karakalpakstan has charted a comprehensive plan for the years 2023-2024. This plan encompasses a multifaceted approach to strengthening local businesses and promoting youth education, with a strong focus on strategic investments.

In the financial sector, starting from 2024, a substantial allocation of at least 2 trillion soums will be directed towards commercial banks to create credit funds. These funds will be instrumental in propelling the growth of family businesses within the region. 

The initiative further adds that small businesses in Karakalpakstan, Tashkent, and various regions will receive compensation for their investments in solar panels. These businesses operating in electric charging, public catering, gas stations, and trade sectors will be eligible for compensation as determined by the State Fund for Supporting Entrepreneurial Activities. 

The compensation will be granted under the terms specified for the loans allocated for procuring and installing solar panels. This forward-looking measure aligns with the region’s commitment to entrepreneurship and environmental consciousness.

Spanning an expansive 100-hectare area, this center will encompass a range of facilities designed to foster innovation and support startups. The plans for the center include creating an IT park, project offices, and a technology park tailored explicitly for startups. 

Furthermore, designated “innovation groups” will offer essential guidance and mentorship to budding entrepreneurs, ensuring a nurturing environment for their projects.

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