“A chance to promote financial inclusion”

In 2021, Finnfund decided to join forces with I.D. Inspiring Development, a management consulting company, and with Sturgeon Capital, a private equity fund, to establish a new microfinance company in Uzbekistan.

“It is not typical for us to jump on greenfield opportunities in this sector”, says Antti Urvas, Head of the Financial Institutions portfolio at Finnfund. “But this was an opportunity we did not want to miss.” The plan is to build a groundbreaking international micro and small business lender in Uzbekistan, the largest market with a population of nearly 36 million in Central Asia now opening to global financial investments. “At the time, credit to the private sector and retail customers was less than 20% and only 8% of micro business customers had access to credit, so we definitely saw this as a chance to promote financial inclusion”, says Urvas.

In Uzbekistan, the majority of businesses save and borrow informally, and only a few use digital finance products. High cost is the top reason for not using formal finance, followed by complex application procedures and high collateral requirements.

Long way to finally opening the doors

Fast forward to 2022: At the end of August, Oasis Credit became the first officially approved, internationally-owned MFI on the market. The first loan was disbursed on 11 October, and the company is now focused on building up its operations and expanding its customer base.

“It was crucial to have Finnfund on board”, says Mahmudali Guseynov, CEO of Oasis. “Without Finnfund and the other shareholder Sturgeon Capital, we may not even have received the registration. The support from the Finnish Ambassador and Finnfund’s participation in our meetings with the Central Bank were of real help”, he continues. Guseynov is a business banker, and he was aware that the process with all the documentation would be long and thorough. “The fast response from Finnfund was amazing. We went through the seed capital and licensing process quickly. Whenever we needed support, Finnfund came through.”

As an international MFI, Oasis hopes to bring new standards to the micro credit market and build its own corporate culture around effective teamwork, reputation and trust. The company is focused on hiring and training its staff. Most of the new employees come from outside the banking or MFI sector. Oasis aims to build an active and dynamic finance team passionate about entrepreneurship. Most of the new hires will be recent graduates receiving several months of internal training at Oasis.

The company wants to ensure gender balance among the employees as well. Currently, 40% of the staff members are female, although such numbers are not easy to achieve. Mr Guseynov had to speak to the families of some of the female staff members to provide reassurance about the company and explain the open-plan offices where all employees share working space and the lack of hierarchy.

Oasis Credit staff at the new office

Customers appreciate trust and simplicity

Building a greenfield startup in a new country is not easy. How is Oasis planning to win over customers? “We have a very simple message”, says Guseynov. “We are affordable, fast and simple. We don’t ask for collateral. We want to be where the customers are, and that is why our loan officers are out there, talking to the business owners”, he continues. The Oasis team did market research to find out about business credit. “A typical market practice is to ask if the client has gold or a car. Without collateral, you won’t get anywhere.”

The first Oasis customer was a woman running her stationary shop near the Oasis office for a decade. The relationship started when Oasis employees started to buy paper from her shop to the office. In the past, she used consumer loans to expand her business. She says she never thought about approaching a bank or a microfinance company to receive a business loan. Oasis was her first – and so far the happiest  – experience.

For marketing, Oasis relies on social media. Telegram is a key platform in the country, followed by Instagram and Facebook. Oasis team believes that building trust is the most important task. “Our customers are testing us now and asking around for recommendations”, says Guseynov. “We want to be where they are and have an open dialogue. Our credit system is partially based on discussion – we speak with customers to find out what their situation looks like.”

It is still very early days, but the company has ambitious goals. Within the next years, Oasis wants to grow and develop into a leading business creditor in the country.

“As an economy, Uzbekistan is in a very interesting development phase”, says Antti Urvas from Finnfund. “Now, with the operations running, with our partners and the Oasis staff, we see a very big potential in offering financial services for MSMEs.” Mahmudali Guseynov concurs: “If we manage to keep our promise to local businesses about affordable, fast and simple loans, there is no limit to our growth possibilities.”

Read more about Finnfund’s investments in financial institutions

Country: Uzbekistan
Sector: Financial institutions
Year of investment: 2022