The European Bank for Reconstruction and Development has approved a loan of up to $50 million for an Uzbek bank, aimed at financing young entrepreneurs. The measure responds to the fact that small businesses generate more than half of the country's GDP, but face barriers such as a lack of collateral and formal records. The goal is to reduce these credit obstacles and promote youth employment.
Fintech and digital records as a technical solution 🚀
The financing scheme relies on digital platforms to assess risks without requiring physical collateral. The Uzbek bank will use credit scoring algorithms based on mobile and payment data, reducing dependence on formal records. Additionally, smart contracts will be implemented to streamline disbursements. This approach allows reaching young people without a banking history, a segment that represents 60% of applicants rejected in traditional systems.
The bank discovers that young people do pay, just in cash 😅
Of course, because the solution for a young person without collateral to access a loan is not to ask for a mortgage, but for the bank to accept that their guarantee is the promise to pay with the profits from their future samsa delivery business. Now we just need the bank to understand that cash under the mattress also counts as liquidity, even if it doesn't appear on any balance sheet.