Feature story

Cooking up capitalism: Uzbek baker wins small business prize

An 18-month-old Tashkent bakery set up by an Uzbek lawyer-turned-entrepreneur has won the first Uzbekistan Small and Medium Enterprise (SME) Competition, beating out 17 other finalists. The contest was organised in conjunction with the EBRD annual meeting which gets underway in the Uzbek capital on Sunday 4 May.

In just over a year of operation the NANOSH bakery has already cornered 9% of the cake and biscuit (cookie) market in Uzbekistan. “We have not taken off yet,” said the ebullient bakery owner, Shukurulla Faizullaev, Friday. He led EBRD President Jean Lemierre and foreign and Uzbek journalists on a tour of his biscuit and cake factory, housed in a failed ice cream plant dating from the soviet era. As the guests brushed flour from their clothing and sampled traditional Russian-style spice cakes (pryaniki) hot out of the industrial-sized ovens, Mr Faizullaev spoke of his ambitions to increase automation using European technology, capture more of the domestic market and start exporting to nearby Kazakhstan.

Much of the work making and packing the baked goods is done by hand, partly to ensure quality and partly because Mr Faizullaev has not yet been able to acquire more automation machinery. His goal? “To have $1 million in production a year,” said Mr Faizullaev who learned the food business working for international firms, including Coca-Cola.

“Small businesses are the economy’s lifeblood”

Mr Lemierre said small businesses such as NONASH are the economy’s lifeblood. But he said it is still difficult for many entrepreneurs to find the support they need to make their businesses work. The EBRD plans to work closely with Uzbek authorities and their counterparts across Central Asia to help change that and to develop the region’s enterprise sector.

NONASH produces 800 kilos of various biscuits and spice cakes daily; these are sold in more than 550 outlets across Tashkent. NONASH will soon receive a 4½-year, $125,000 loan from the National Bank of Uzbekistan via the EBRD Small and Medium Enterprise Credit Line. As its reward for winning the contest, NONASH will get EUR 20,000 worth of office equipment, a reduction of the front-end loan fee, and free insurance policies from Uzbekinvest National Export-Import Insurance Company. Mr Faizullaev will use the loan to buy new German equipment to produce a variety of filo pastries (croissants, strudels, etc.) that are not widely available in the Uzbek market. His expansion should mean more jobs, particularly for women; the staff now numbers 39.

Regional cooperation could unlock huge potential

NONASH represents both the potential and challenges facing small and medium sized firms in Uzbekistan in particular and Central Asia in general. Trade barriers seriously impede regional economic growth by increasing the cost and difficulty of importing equipment needed for enterprises to expand, and making it very difficult for businesses to export to neighbouring countries. The EBRD views cross-border trade and other aspects of regional cooperation as vital to improving the economy of Central Asia, the poorest part of the EBRD region.

Mr Lemierre said Mr Faizullaev “certainly could export but if Uzbek companies are going to export, they must also permit imports…Uzbekistan could unlock its huge potential by working in cooperation with its neighbours.” The President will push for greater trade cooperation when he meets the presidents of Central Asian and Georgia on Sunday.

Jury impressed by fast-growing production

NONASH is one of thousands throughout Central Asia to benefit from the combined support of the EBRD and donor countries including Switzerland, Germany and the United States. To date, the EBRD has invested about $180 million in micro, small, and medium-sized enterprises in Uzbekistan.

NONASH was selected for the award by a five-person jury including representatives from Uzbekistan’s State Property Committee, the Swiss State Secretariat for Economic Affairs, the EBRD and its Business Advisory Service programme. Jury members were impressed by NONASH’s fast-growing production and sales of baked goods which, under the brand name ‘Slavyanskie’ are gaining in popularity. Local banks involved in the SME programme and the award are Asaka Bank, National Bank of Uzbekistan, Pakhta Bank, Uzpromstroybank and Uzjilsbebank, along with Uzbekinvest National Export-Import Insurance Company.

EBRD is considering a third credit line for Uzbek SMEs

At the award ceremony Friday evening, EBRD first vice president Noreen Doyle's opening speech highlighted that the two credit lines provided to fund Uzbek SMEs have been so successful “we are considering a third credit line”. Ms Doyle added that “coming from an international banking background, I do enjoy the thrill of signing big, multi-million dollar deals. But it’s more impressive to see small businesses and the products they produce and their enthusiasm.”

The second prize winner was Pekin-Chirchik, a joint venture between Uzbek and Chinese businessmen. They produce woven polypropylene bags. Third prize went to UzXerox, a black-and-white photocopying business that is about to expand into colour reproduction.

Contact: Financial Institutions

2 May 2003