The challenges facing Islamic finance in Uzbekistan

The growth of Islamic finance in Commonwealth of Independent States (CIS) countries generally is slower in the Central Asia region compared to other regions in the world. With its population of more than 34 million, Uzbekistan is probably one of the most promising markets for Islamic finance in Central Asia. Therefore, the emergence of intensive public debates around this matter and officially announced plans of the government to create an infrastructure for Islamic finance prompt that the relevant authorities are taking a drastic U turn regarding the sector because the country has not clasped the potential of Islamic finance. This research aims to examine the challenges facing pioneering Islamic finance in Uzbekistan. Specifically, it attempts to explore the current state of Islamic finance within the country, identify the current obstacles it faces and recommend practical ways to resolve the obstacles identified. Apart from that, the research investigates the Islamic financial products and services suitable in Uzbekistan. The findings of this research suggest some specific challenges facing the country in this regard. Inexistence of robust legislation and transparent regulatory framework coupled with lack of talents and those who are ready to contribute to the development of the new financial system in Uzbekistan are the major challenges, followed by public awareness and fully understanding the new financial system, that the country is facing. Introduction of the Banking Act that will suit the implementation of the Islamic finance for all three segments and talent acquisition with necessary skills and knowledge are practical recommendations to solve the challenges. This will in turn provide better promotion of the new system, increase demand from the population and diversify the range of products offered. It is therefore anticipated that the outcome of this research would assist government officials, policymakers, all other stakeholders as well business leaders to deeply understand and review the results and findings.