In 2020, Strides and Setbacks in Uzbekistan’s Battle Against Poverty

In late January, Uzbek President Shavkat Mirziyoyev addressed the Oliy Majlis, Uzbekistan’s Parliament, with an optimistic speech in which he summarized the recent successes of his reformist agenda and introduced ambitious financial goals for the future. Reflective of the largely positive atmosphere surrounding Uzbek leadership at the time, the president also reiterated the need for his government to keep cultivating a transparent economy in order to effectively compete in the globalized market.

While the majority of the speech consisted of similar, widely known attitudes of the Mirziyoyev administration, there was one notable exception.

“Poverty reduction requires the implementation of a comprehensive economic and social policy,” he said. That made him the first Uzbek president to admit to the existence of poverty in Uzbekistan and prioritize its reduction.

Following this declaration, Mirziyoyev announced his decision to create a new government institution – the Ministry of Economic Development and Poverty Reduction – and proposed they partner with international organizations, such as the World Bank and the United National Development Program. Previously barred from accessing in-depth information about the state of economic affairs in Uzbekistan, these organizations were now being asked to collaborate with the Uzbek government to “develop a new methodology [to reduce poverty], including a definition, the criteria and methods for assessing it.” 

Several factors led up to this historic stride toward transparency and progress. For one thing, Mirziyoyev inherited a nation where 12 to 15 percent of the people live below the poverty line, as defined by the World Bank, meaning that 4 to 5 million people in Uzbekistan today live on an income less than $1.90, a mark of national shame for a country that’s globally being recognized as an emerging market.

Acknowledgement of poverty was also a political move for Miziyoyev’s administration – it stood in concordance with the ongoing effort to gain foreign and domestic trust through transparency. Furthermore, it cemented the president’s role as a reformer, and distanced the new administration from the previous Uzbek leadership’s attitude toward poverty. Uzbekistan’s first president, Islam Karimov, refused to acknowledge the problem of poverty by its true name in an effort to minimize its gravity.

“Before, we’ve even had to refer to [poverty]… as ‘individuals in need of financial support’” said Jamshid Qochqorov, the head of the newly formed Ministry of Economic Development and Poverty Reduction, in an interview. “It was like word play.”

Ahmadjon Buzrukov, an Uzbek journalist, commented that prior to the change in leadership, there had also been “real fear” of speaking out about poverty.

“It was just something you didn’t say,” he told The Diplomat.

Vague language surrounding poverty in Uzbekistan had real life consequences. For one thing, it made it harder for officials to identify people in need of aid. Neighborhood or mahalla committees, formerly non-governmental institutions, relied on qualitative measures to decide which community members they entered into their temir daftar, the official notebook that contained names of individuals who were approved for government aid. 

Amriddin Salohiddinov, a mahalla leader of 40 years in the city of Samarkand, shared that while he did try to standardize how he evaluated households, for example by referencing minimum wage, back then, he said “seeing” who needed help was evidence enough for some community leaders.

“You walk into their home, you see broken windows, or doors. No car, no substantial meal on the table, and you compare it with the family with all the cars and feasts,” he said.

Worldwide, the poverty line is determined by set parameters and is often the value at which a person’s minimum needs can be met in that country. While the World Bank’s definition at $1.90 is one of the most recognized markers, it’s not necessarily applicable or useful for every country. 

“The ministry’s [of poverty reduction] first task will be to come up with appropriate criteria to define [poverty] for us” said Buzrukov. 

He also commented that while there hasn’t been an announced working definition for poverty yet, the government has already made some important decisions to help standardize the process of identifying people in need. Buzrukov attributed this to the creation of the Ministry for Support of Mahalla and Family, as it allowed for neighborhood committees to become part of an official government institution, where they implement proper oversight and protocol for collecting data.

Despite this somewhat strong, though late, start to Uzbekistan’s battle against poverty, efforts soon waned in the face of the pandemic. A concrete plan, much anticipated, has yet to be delivered by the new ministry.

When Qochroqov was questioned on the topic of a plan in the same interview, he responded by saying, “We have to solve problems with the pandemic first.” He then added that his ministry was avoiding “staging fake markers” and wanted to conduct an “open and transparent” research investigation before proposing a plan.

While a step-by-step plan is largely absent at this time, the adopted approach for reducing poverty in Uzbekistan has been made clear by both the president and members of the Ministry of Economic Development and Poverty Reduction.

“We must give people a hook not a fish,” said Mirziyoyev in a video conference on February 27, explaining that poverty reduction goes hand in hand with stimulating the job market, which he proposed should happen mainly by encouraging entrepreneurial endeavors in Uzbekistan. He also proposed systematic reform through “vocational training, financial literacy, entrepreneurship, infrastructure, education of children, quality treatment, [and] targeted benefits” to implement long-term solutions.

Many challenges lie ahead for such systemic change. For example, deep-seated economic problems have plagued the job market in Uzbekistan since its independence. 

Abdulla Abdukadirov, an economist and former deputy minister of finance in Uzbekistan, pinpointed the tumultuous political atmosphere of the 1990s as the beginning of problems for the job market in Uzbekistan. The newly independent Republic of Uzbekistan, at the brink of conflict, with a civil war raging next door in Tajikistan, and having to support an increasing population with limited domestic production, plunged into economic depression.

“As a result [of this atmosphere], in the second half of the ‘90s, the hardworking population [of Uzbekistan] were left unemployed and Uzbek people left the country en masse…labor emigration began,” Abdukadirov described. 

In the decades that followed, Uzbekistan experienced labor force shortages, especially in sectors requiring high skilled workers, leading to inadequate development of the labor market.

Furthermore, though Uzbekistan was officially a market economy following its independence, demand didn’t dictate everything, as rampant corruption and an ossified bureaucracy stifled the natural flow of capital, inhibiting domestic growth and repelling foreign investment.

This is the reason many experts suggest systemic reforms of the Uzbek economy, such as a full transition to a truly open economy.

“You need to let the private sector take care of most things,” stated Farhod Inogombaev, a Wall Street financier with a focus on emerging markets. “The government needs to provide policies and regulations and step aside… let the market do the work.”

Transition to an open economy has been a long-time goal of the current Uzbek administration, a project that they are now undertaking with the World Bank. Experts, like Inogombaev, believe that limited interference from the Uzbek government will lead to healthy competition among businesses and a more stable currency.

Efforts for this transition have already been set in motion. Uzbekistan issued its first Eurobond in 2019, marking its entrance into the international bond market, and reforms were implemented domestically to fight against corruption and to stimulate entrepreneurial activity. To endorse the latter, the government passed initiatives that included tax cuts and incentives, and easier, less bureaucratic processes to set up and maintain business. Uzbekistan also partnered with China to stimulate its tourism sector, another effort at reducing poverty through the generation of jobs.

But Uzbekistan has some ways to go to reach its goal of eradicating poverty, especially given the current crisis. More Uzbeks are expected to become impoverished because of the pandemic, and while some government mandates like strict nationwide lockdowns have been praised, the country’s inadequate economic preparation for a disaster, and lack of sufficient aid to the people, have been criticized.

Furthermore, Abdukadirov highlights the need for the Uzbek government to ensure widespread material support, in the form of clean drinking water, electricity, gas, and other basic infrastructure, in conjunction with the systemic changes it plans to enact to reduce poverty.

Experts also cite that citizens have to be willing to work together with the government to successfully reduce poverty. Regaining the trust of Uzbek citizens after the Karimov era and convincing them to actively participate in government-initiated programs might be another hurdle for the current Uzbek administration.

For example, citizens like Nafisa, who did not want to use her real name and who lives in Uzbekistan under the poverty line, say she and families like hers rarely look into government aid.

“There is just so much paperwork,” she said in an interview with The Diplomat. “I wouldn’t put myself through that.”

To make ends meet now, she said that she depends on goodwill from her extended family.

At the same time, other Uzbek citizens have been actively engaged in recent discussions surrounding poverty and are holding officials accountable for their words. When the director of the Center for Economic Research and Reforms misstated the current exchange rate for the dollar, and implied that a person in Uzbekistan could survive on 5,600 Uzbek som (roughly $0.54) a day, the comment sections of various social media sites where the video was posted were flooded with harsh criticisms.

“I can’t believe these are the people entrusted with helping people,” one viewer wrote on YouTube.

Undeniably, the Uzbek government is set to face many challenges when it comes to reducing poverty. And arguably, the challenges have become all the more difficult due to the pandemic. While it’s still unclear exactly how the Mirziyoyev administration’s stated intentions will be translated into real action, in an era of more transparent government it is clear that many eyes will be watching.