How Uzbekistan reduces poverty and increases incomes of the population

In Uzbekistan, special attention is paid to consistent work to increase the incomes of the population and combat poverty. To this end, a number of reforms have been carried out aimed at identifying poor citizens and subsequently providing them with targeted assistance. 

The work is carried out within the framework of the tasks outlined in the Development Strategy of the New Uzbekistan for 2022-2026 and the Strategy "Uzbekistan-2030". In a Message to the Oliy Majlis dated January 24, 2020, the President identified the fight against poverty as a priority task. It is noted that solving this problem requires the implementation of a comprehensive economic and social policy — from stimulating entrepreneurial activity to mobilizing the abilities and potential of the population, creating jobs. 
In 2020, after the first cases of covid infection were detected, strict measures were introduced to prevent the spread of infection, measures were taken to isolate people, and the mobility of citizens was limited. The country has urgently adopted several anti-crisis packages.
The first was related to the improvement of the health care system, the technical equipment of medical institutions, and the provision of medicines to the population. The second is aimed at minimizing the negative impact of the coronavirus on the economy in the equivalent of one billion dollars. Work has begun on the formation of databases of socially vulnerable groups of the population in order to provide targeted support. 
At the initiative of the head of state, the institute of assistant khokims for the development of entrepreneurship, employment and poverty reduction has been introduced in the country. A system of prevention and prevention of poverty in the field on the principle of "mahallabay" has been launched. Since 2021, a mechanism for accounting for low-income citizens has been introduced by entering them into the information system "Unified Register of Social Protection". As a result, the scale of targeted social protection of the poor has expanded. For example, if 500 thousand low-income families received social assistance in 2017, then coverage has more than quadrupled since 2021, the amount of funds allocated has increased sevenfold and reached 11 trillion soums per year. Since 2018, budget transfers to the social sector have tripled — from 35 trillion soums to 106 trillion soums in 2022. 
In cooperation with major international organizations — UN institutions, in particular with the UNDP office in Uzbekistan, a large-scale development of long-term poverty reduction measures has been carried out, which are reflected in the Development Strategy of the New Uzbekistan for 2022-2026. In the first direction, the goal is to improve the well-being of the population and join the group of countries with a level of development above the World Bank's average qualification by ensuring macroeconomic stability. 
The second direction provides for the improvement of the system of social protection and services for those in need, the creation of a separate public administration body, the integration of social protection and employment programs, a phased increase in the level of benefits, a stable state pension system, a barrier-free environment for people with disabilities.
 The implementation of consistent measures will ensure that the scale of coverage of those in need with social benefits and financial assistance reaches 85 percent. The social packages allocated in 2022 amounted to almost 19.4 trillion soums, which is 78 percent, or 8.5 trillion soums, more than in 2021. The phased indexation of salaries of budget employees increased by 21 percent. The indexation of pensions and social benefits amounted to 4 trillion 458 billion soums. The one—time payment to pensioners and vulnerable segments of the population is over 6 trillion 117 billion soums. One-time payments were received by 4.1 million pensioners, 263 thousand survivors and the disabled since childhood, one hundred thousand people included in the "iron notebook", 4.4 million children from families receiving financial assistance and under the age of 18. 
In the third direction, aimed at improving the effectiveness of the education system, measures are envisaged to expand the coverage of preschool education for at least 80 percent of children, and the creation of early development centers. In general secondary education, it is planned to build 246 and reconstruct 1,015 schools, create 1.2 million student places. Provision of free meals for primary school students and additional classes for children from low-income families. Bringing the coverage of higher education to 50 percent, including an increase in the number of non-state universities to 50. 
Within the framework of the fourth direction, improvement of the health care system, more comprehensive coverage of those in need with medical services is provided, improvement of preventive work and patronage, development of the system of public health insurance and private healthcare. 80 percent of the domestic market of pharmaceutical products and medical equipment will be provided by local production. 
For the implementation of the fifth direction aimed at the development of entrepreneurship and small business, it is planned to lease 200 thousand hectares of cotton and grain fields to the population on the terms of an open tender, the construction of 300 thousand compact greenhouses, an increase of 4,250 in the number of mahallas on the principle of "one district, one product". By 2026, it is planned to create 200 industrial zones and develop business incubators in the regions. 
In the sixth direction, it is planned to provide employment for the poor, it is expected that the unemployment rate among women will decrease by 9 percent, the employment rate of people with disabilities will increase by 19 percent, and jobs abroad will increase by 300 thousand. It provides for the legalization of informal employment for 2.5 million people, the creation of 163 thousand jobs for the disabled, the training of at least 300 thousand specialists in demanded qualifications before leaving abroad, the opening of branches of vocational schools in Turkey, Germany, and South Korea.
 The seventh direction, poverty reduction through balanced regional development, provides for an increase in the standard of living and incomes of people, accelerated development of entrepreneurship, lagging behind in the development of cities and districts, the creation of family cooperatives, tax and business benefits for 60 districts. 
Another important factor in poverty reduction is infrastructure development, which is reflected in the eighth direction. In the next two years, the level of provision of clean drinking water to the population will be brought to 67 percent, jobs will be created through the development of roadside infrastructure, measures have been taken to stimulate the use of alternative energy sources by those in need, new criteria have been developed for identifying low-income families when purchasing housing. 
In order to implement the tasks within the framework of the ninth direction to achieve environmental stability by 2026, it is planned to reduce by 11.7 percent the number of industrial enterprises that emit pollutants by 11.7 percent, and restore one million hectares of land in the Aral Sea region. The share of farmers participating in climate change risk insurance programs will increase by 51 percent. In the next two years, household waste collection will amount to one hundred percent, and the level of recycling will increase from 21 to 50 percent. 
To implement the planned plans, work has begun this year within the framework of regional poverty reduction programs in Kashkadarya and Bukhara regions. Programs in this direction are also being developed in 15 districts of nine regions of the country. At the same time, integrated surveys on multidimensional poverty are conducted with household surveys on monetary poverty. Randomized studies are being conducted to analyze the effectiveness of measures to reduce child poverty in two regions of the country. It is planned to introduce social cards for vulnerable segments of the population. Starting from October 1 of this year, all social assistance will be financed through them. As part of the planned activities, all 74 types of social assistance and benefits are being transferred to the card: it will be possible to take advantage of benefits in the field of transport and housing and communal services.  
The successful implementation of the tasks set will significantly increase people's incomes and reduce poverty in the country by 2026.

Mukhsin Kholmukhamedov, 
associate Director
The Center for Economic Research and Reforms.