1. Introduction
A lack of finance remains one of the most frequently cited obstacles to business operations and growth. Even before recent global shocks, small and medium-sized enterprises (SMEs) in 119 emerging markets were estimated to face a finance gap of around US$5.7 trillion, with the majority of viable firms either completely excluded from formal credit or served only partially by banks and other financial institutions. (1) For many firms, especially outside high-income economies, investment decisions are driven less by the profitability of projects and more by the availability of internal funds or informal borrowing networks.
Nowhere is this tension between growth ambitions and financial constraints more visible than in Central Asia. Countries such as Uzbekistan and Kazakhstan are undertaking a difficult triple transition: diversifying away from commodity dependence, modernizing their productive base, and integrating into global value chains, all while reforming legacy banking systems and state-directed credit practices inherited from the Soviet period. (2) In such settings, access to stable and reasonably priced external finance is not just a micro-level convenience; it is a macro-critical ingredient for structural transformation, export upgrading, and job creation.
At the same time, the global narrative on finance has shifted from a narrow focus on “access to credit” toward a broader concept of financial inclusion, the use of a wide range of responsible financial services by households and firms. From this perspective, it is not enough to ask whether firms can obtain a loan. We need to know whether they have transactional accounts, whether loan conditions are predictable and affordable, how often applications are rejected, and which types of firms are systematically left out. Central Asian economies provide an instructive contrast: Kazakhstan has near-universal account ownership among firms but surprisingly low use of credit lines. On the other hand, Uzbekistan continues to face limited banking penetration and stringent collateral requirements. (3)
This report uses firm-level data from the World Bank Enterprise Surveys (WBES) 2024 (4) to situate Uzbekistan and Kazakhstan within the broader global landscape of credit constraints and firm-level financial inclusion. The WBES collects firm-level information from over 1000 formal private enterprises using a harmonized questionnaire and stratified sampling by firm size, sector, and location, thereby enabling cross-country comparisons. From the finance section we draw a focused set of indicators: (i) measures of credit constraints (shares of fully and partially constrained firms, loan application and rejection behavior), (ii) indicators of financial inclusion (use of bank accounts and loans/credit lines), and (iii) loan conditions and deterrents (collateral requirements, time to approval, and reasons for not applying). By benchmarking these two Central Asian economies against the global distribution of economies, and by exploring heterogeneity by ownership, firm size, and gender of the top manager, we explain:
- How severe are credit constraints at the firm level?
- How widely do firms use formal financial services, and what conditions do they face?
- How does credit access vary by ownership (foreign vs. domestic), firm size, and the gender of the top manager?
Though the analysis is descriptive, it highlights where Central Asian economies diverge from global patterns and where policy efforts could be targeted.
2. Severity of Credit Constraints
Firms in both Kazakhstan and Uzbekistan experience much tighter credit constraints than the global benchmark. Figure 1 indicates that the share of fully credit-constrained firms is 14.4% worldwide. Still, it rises to 37.2% in Kazakhstan and 34.0% in Uzbekistan, indicating that Kazakh firms are more than two and a half times as likely as the global average to be fully credit-constrained, and Uzbek firms are more than twice as likely.
For partially credit-constrained firms, the global average is 16.1%, compared with 31.2% in Kazakhstan and 15.4% in Uzbekistan. Kazakhstan again stands out, with nearly twice the global rate, whereas Uzbekistan is close to the worldwide average. Taken together, full and partial constraints affect roughly two-thirds of firms in Kazakhstan and about half in Uzbekistan, compared with around 30% globally, indicating that financial frictions are a systemic obstacle to firm financing in Central Asia, particularly in Kazakhstan.
3. Access to Financial Services and Loan Conditions
3.1 Use of Accounts and Credit Lines
On fundamental financial inclusion, Kazakhstan performs well in terms of account ownership but much worse on credit use, while Uzbekistan is behind on both dimensions. Globally, 89.7% of firms have a checking or savings account, compared with 96.0% in Kazakhstan and 67.8% in Uzbekistan, indicating that almost all Kazakh firms are banked. In contrast, approximately one-third of Uzbek firms still operate without formal business accounts (Figure 1).
With respect to actual borrowing, both countries fall short of the global benchmark. Worldwide, 34.7% of firms have a bank loan or line of credit; in Kazakhstan, the figure is 23.9%, and in Uzbekistan, 12.3%. This indicates that Kazakh firms, despite being well integrated into the banking system, are relatively reluctant or unable to use bank credit, and Uzbek firms are less likely to borrow at all.
3.2 Collateral Requirements and Application Costs
Loan conditions in Central Asia are notably stricter than the global norm, particularly with respect to collateral. Globally, 68.2% of loans require collateral, compared with a very high 88.7% in Kazakhstan and 72.8% in Uzbekistan, indicating that collateral requirements are almost universal in Kazakhstan and slightly above average in Uzbekistan (Figure 1). This creates a higher entry barrier for firms with limited assets to pledge.
The perceived cost and complexity of credit also strongly discourage loan applications. As per Figure 1, while 23.0% of non-applicant firms globally cite unfavorable interest rates, collateral, or procedures as the main reason for not applying, this share rises to 38.1% in Kazakhstan and 42.7% in Uzbekistan, indicating that more than a third of firms in both countries are deterred before approaching a bank. By contrast, loan processing times are not the main issue: decisions take on average 25 days globally, but only 10.3 days in Kazakhstan and 21.7 days in Uzbekistan. This suggests that stringent collateral requirements and unfavorable terms, rather than speed, constitute the real bottleneck for firm financing in the region.
3.3 Loan Rejections and “No Need for Loans”
Loan rejection rates in Central Asia are extremely high relative to global benchmarks. Worldwide, only 8.0% of recent loan applications are rejected, but this rises sharply to 49.8% in Kazakhstan and 27.0% in Uzbekistan (Figure 1). These figures align with earlier evidence of severe credit constraints and indicate that many firms in the region are being denied formal finance even when they actively seek it.
Patterns of reported “no need for loans” further highlight unmet demand. Globally, 51.8% of firms report not needing external finance, but this share drops to 25.2% in Kazakhstan, suggesting strong credit demand that is largely unsatisfied. Uzbekistan lies between, with 43.4% of firms reporting they do not need a loan, yet still exhibiting high rejection and constraint rates. Together, these indicators point to a financing environment in which many Central Asian firms either cannot obtain the credit they seek or are discouraged from applying in the first place.
4. Heterogeneity by Ownership, Size, and Gender
4.1 Foreign vs Domestic Ownership
Ownership patterns differ significantly between Central Asia and the global sample. Globally, foreign-owned firms are less likely to be fully credit-constrained than domestic firms (9.8% vs. 14.8%), and this pattern also holds in Kazakhstan (26.6% vs. 38.7%) and Uzbekistan (25.3% vs. 34.2%). This suggests that foreign-owned firms have relatively better access to finance, either because they can tap into parent company funding or because banks perceive them as lower-risk clients. However, when examining the use of bank loans or credit lines, the picture becomes more nuanced. Figure 2 illustrates that, globally, loan usage is similar between foreign and domestic firms, but in Kazakhstan, foreign-owned firms use bank credit less (14.9% vs. 25.1%), whereas in Uzbekistan, they use it far more (35.7% vs. 11.8% for domestic firms). This indicates a dual system in Uzbekistan, in which foreign firms are well integrated into formal finance, whereas local firms rely much more on internal funds.
Collateral patterns add another layer of complexity. In Kazakhstan, collateral is required for 71.8% of foreign-owned firms’ loans compared with 90.1% for domestic firms, implying that domestic firms face particularly stringent collateral conditions. In Uzbekistan, the pattern is reversed: collateral is required for 90.9% of foreign-owned firms’ loans, compared with 71.5% for domestic firms, suggesting that banks impose stricter conditions on foreign borrowers, perhaps due to perceived risk or loan type. Overall, foreign ownership tends to reduce the likelihood of being fully credit-constrained. Still, the channels differ: in Kazakhstan, foreign firms may rely more on group or external financing than on local banks, whereas in Uzbekistan, domestic firms remain much more financially excluded.
4.2 Firm Size
Firm size strongly shapes access to finance, but in different ways across Central Asia (Figure 3). Globally, smaller firms are more likely to be fully credit constrained (6.9% of large, 10.7% of medium, 16.2% of small firms), and Kazakhstan follows this pattern at much higher levels: 21.2% of large, 25.2% of medium, and 38.5% of small firms are fully constrained. Uzbekistan, however, deviates: 40.2% of large, 33.1% of medium, and 33.9% of small firms are fully constrained, making large firms the most constrained group, possibly reflecting state-owned or legacy enterprises under tighter bank scrutiny or burdened with old debts.
Loan usage is also low across all size categories in Central Asia compared with the global benchmark. Worldwide, 50.8% of large, 42.4% of medium, and 30.3% of small firms use bank credit; in Kazakhstan, the figures are 16.8%, 36.5%, and 22.9%, respectively; and in Uzbekistan, 15.9%, 15.7%, and 10.1%, respectively. This suggests that even large firms in both countries are far less integrated into formal credit markets than their global peers, and that, in Uzbekistan, firms of all sizes rely heavily on retained earnings or informal finance.
Figure 4 highlights the reasons for not applying underscore how costly and difficult firms perceive bank credit to be: globally, 13.2% of large, 20.3% of medium and 24.7% of small firms cite unfavorable rates, collateral or procedures as the main deterrent, compared with 9.6%, 24.2% and 39.7% in Kazakhstan and a striking 50.3%, 39.8% and 43.4% in Uzbekistan. In Uzbekistan, half of the large firms and more than 40% of the small firms are discouraged by loan conditions, underscoring the overall prohibitive nature of credit terms.
4.3 Gender of the Top Manager
Gender patterns in access to finance exhibit both similarities with global trends and unexpected variations in Central Asia. Figure 5 presents that, globally, the share of fully credit-constrained firms is nearly identical across male- and female-managed businesses (14.4% vs. 14.2%). In contrast, Kazakhstan reports 39.3% of male-managed and 32.5% of female-managed firms as fully constrained, whereas in Uzbekistan the figures are 35.5% and 23.9%, respectively. In both countries, firms led by women are less likely to be fully credit-constrained than those led by men, which runs counter to common expectations and may reflect sectoral composition; women managers may be more prevalent in less capital-intensive or lower-risk sectors.
However, when examining partial constraints, Uzbekistan presents a different picture: 13.7% of male-managed firms and 25.0% of female-managed firms are partially constrained. Taken together, this implies that women-managed firms in Uzbekistan face similar overall levels of constraint, but a larger share falls into the “partial” rather than the “full” category (Figure 5). In terms of loan usage, gender gaps are relatively slight: in Kazakhstan, 22.6% of male-managed versus 26.7% of female-managed firms have a loan or credit line, whereas in Uzbekistan the figures are 12.6% versus 10.3%. Overall, gender differences in access to loans are much more minor than those associated with firm size or ownership, suggesting that gender-focused credit policies should be targeted and evidence-based rather than assuming a uniform disadvantage for women-led firms.
5. Policy Discussion and Conclusion
The World Bank Enterprise Survey evidence indicates that firms in Uzbekistan and Kazakhstan are substantially more credit-constrained than their global peers, despite relatively high levels of fundamental financial inclusion in Kazakhstan.
Key patterns and implications:
- Systemic credit tightness – high rates of full and partial constraints, especially in Kazakhstan, point to structural issues in banking systems: risk-averse lending, weak collateral registries, limited competition, or macroprudential constraints.
- High collateral and perceived costs – both countries report much higher collateral requirements and a greater role of “unfavorable rates/collateral/procedures” in discouraging loan applications. In this instance, reforms to collateral law, credit information systems, and SME-targeted guarantee schemes could help.
- Dualism between foreign and domestic firms – foreign-owned firms, particularly in Uzbekistan, enjoy much better access to credit, indicating informational advantages and stronger balance sheets. Policies aimed at improving creditworthiness and transparency of domestic SMEs, for example, through financial reporting support or cluster-based lending, are crucial.
- Firm size dynamics – small firms are predictably more constrained, but Uzbekistan’s high constraints among large firms signal unresolved legacy or governance issues in the corporate sector. To overcome the limitations of small firms, tailored instruments for restructuring and long-term investment finance are essential.
- Gender gaps are secondary but not negligible – while women-managed firms do not appear systematically worse off, they show different patterns of full vs partial constraint. Gender-sensitive diagnostics at the sector level would deepen understanding.
These indicators open several avenues for research, such as econometric work linking credit constraints to productivity, employment, and export performance in Central Asia, comparative studies of policy regimes, such as state development banks, directed lending, or credit guarantee funds, and their effectiveness in easing constraints, and micro-level case studies on how Uzbek and Kazakh firms adapt to tight credit, including informal finance, supplier credit, and internal cash-flow management.
Based on the analysis, the message for policymakers is straightforward: unlocking firm-level finance is central to diversifying and modernizing Central Asian economies. Combining regulatory reforms with targeted financial instruments and closely monitoring progress using datasets such as the WBES can help Uzbekistan and Kazakhstan converge toward global standards of financial inclusion and support more dynamic private sectors.
Appendix
The WES financial module provides harmonized indicators across countries, including:
- Percent of firms that are fully credit constrained (fin23) – firms that either were discouraged from applying or had applications rejected.
- Percent partially credit constrained (fin24) – firms that obtained only part of the financing they sought or faced other limitations.
- Use of financial services: share of firms with a checking/savings account (fin15) and a bank loan/line of credit (fin14).
- Loan conditions: proportion of loans requiring collateral (fin11), share of firms citing unfavorable interest rates, collateral, or procedures as the main reason for not applying (bready_fin26), share not needing a loan (fin20), average days to get a loan decision (bready_fin27), and rejection rates for recent applications (fin21).
All indicators are available for all economies, Kazakhstan (2024), and Uzbekistan (2024), and are further disaggregated by ownership, firm size, and gender of the top manager.
Footnotes:
- World Bank – 2025, https://www.worldbank.org/en/topic/smefinance
- OECD – 2024, https://www.oecd.org/content/dam/oecd/en/publications/reports/2024/06/diversifying-kazakhstan-s-exports_6db7322e/7f9cd8aa-en.pdf
- ADB – 2022, https://www.adb.org/sites/default/files/publication/776381/financial-inclusion-smes-kazakhstan.pdf
- World Enterprise Survey – 2025, https://www.enterprisesurveys.org/en/data