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UZBEKISTAN COTTON FARMING BACKED
- By The Financial District
- May 29, 2021
- 2 min read
The European Bank for Reconstruction and Development (EBRD) is supporting the modernization of agriculture and enhanced economic opportunities for the local population in Uzbekistan with a financing package of up to US$ 70 million to Indorama Agro (Indorama).
The package will consist of a US$ 60 million capital expenditure loan and a US$ 10 million working capital loan in Uzbek sum equivalent. It will support the operations of Indorama, an established cotton industry player engaged in rotational crop farming, a systematic approach to selecting locations and cycles of crop planting.
Following the political transformation in the country, the Uzbek government decided to introduce cotton farming “clusters”, which are designed to attract local and international private investment and best business practices into this state-dominated sector.
The approach is supported by the International Labour Organization and international lenders such as the EBRD and the International Finance Corporation (IFC), which have been supporting the initiative through technical assistance and lending programs.
The EBRD financing will be accompanied by a parallel loan of the same size from the IFC, a member of the World Bank Group.
The EBRD loan is also supported by the EBRD’s Finance and Technology Transfer Centre for Climate Change (FINTECC) program, which helps companies in participating EBRD economies to implement innovative climate technologies and is financed by the Global Environment Facility Trust Fund.
A grant of US$ 140,800 will contribute to the introduction of GPS/laser leveling technology, that is used to address the issue of uneven soil surfaces, which can affect the yield of crops, the use of water, and associated resources.
Indorama Agro will be the first company to introduce this technology that is widely recognized as a good agronomic and crop management practice but which is a novelty to Uzbekistan’s agricultural sector.
Technical assistance of around €305,000 is provided by the government of Japan, Indorama Corporation, and the EBRD Shareholder Special Fund. It will be used to promote gender and economic inclusion activities such as training programs for women and the rural population. The funds will also be used to assess the environmental and social impacts of the project.
