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“We saw a disconnect between how bene ciaries were selected and how
the programs were actually managed,” says Marro. “Then we went to visit some banks and saw not one brochure on mortgage products. They didn’t o er them. It turned out that mortgage loans accounted for only 3% of the balance sheet of banks in Uzbekistan while they account typically for over 50% of a bank’s balance sheet in Western countries.”
This led to some uncomfortable discussions with the local and then national governments about how many such housing projects they had (21), and how much it was costing the government to subsidize developers, material suppliers, and banks (over $4 billion over 2020–2022). When he got on the plane back to Manila, Marro realized that what was needed wasn’t another $1 billion loan: it was a complete overhaul of the country’s housing nance system.
“We calculated the cost of these housing programs which showed that up to 80% of the price of an individual house built under the government programs was being shouldered by the government,” Marro recalls. “So, we told them this is
a waste of money. You need to bring in the private sector, mobilize money from commercial banks, and streamline your own programs.”
Over the next 2 years, with countless meetings with the government and other stakeholders, including the country’s central bank, the team developed a sector development program with both a policy loan and a project loan. Unusually for ADB, a nancial intermediary loan was used to start up a new nancial institution to provide banks with long-
term loans, enabling them to o er mortgage nance to homeowners.
“The Central Bank was hard to convince, as were all the di erent ministries involved. We needed to be persistent, convincing. And we needed data. So,
we showed them how it’s being done in neighboring countries such as Russia, Armenia, Kazakhstan, and convinced them they were losing out compared with the neighboring countries. It took ve trips to the Central Bank for them to say yes, but then things started to happen very fast,” says Marro.
The new nancial institution has been set up, the government has been making all the various policy changes needed, and the project is coming to life.
Marro still looks forward to his visits
to Uzbekistan, but he has to shrug o one thing: “The end result for me is that I might not be the most popular man in Uzbekistan anymore as the developers don’t like me, and the banks and construction companies don’t like me. But over the medium to long term, it’s the right thing to do, and it’s really going to make a meaningful impact in Uzbekistan.”
Watch Peter Marro’s talk at the 2020 ADB Innovation Fair
Trailer / Full talk
Find out more: Uzbekistan: Mortgage Market Sector Development Program https://www.adb.org/projects/51348-001/ main
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