Central Asia’s economic promise is growing, with foreign investors taking note, unlocking the potential of Small and Medium Enterprises (SMEs). However, systematic issues remain a stumbling block. 

SMEs play a critical role in Central Asia’s economic development. In 2023, they contributed 33.7% to Kazakhstan’s GDP and 54.5% in Uzbekistan. Yet, securing necessary capital remains a major challenge. 

Access to finance is a key obstacle in emerging markets, with SMEs creating 7 out of 10 jobs. Loan approval processes are often tedious and complex, ending in rejection. High lending rates deter businesses from seeking additional funding, hampering growth. Many SMEs rely on internal funds or cash from friends and family. The International Finance Corporation estimates the global MSME finance gap at $5.7 trillion, which rises to $8 trillion with informal enterprises included. Without SMEs, Central Asian economies struggle to meet development goals. 

How can the International Islamic Trade Finance Corporation (ITFC) support SMEs in securing sustainable access to finance and unlocking capital for economic growth? 

Islamic finance follows Shariah law, forbidding interest, encouraging risk-sharing, and allowing only ethical, asset-backed investments. A subset, Islamic trade finance, focuses on short-term trade transactions, offering solutions to economic challenges. 

One key instrument is Murabaha, where the seller and buyer agree on the cost and markup of an asset. This allows businesses to buy products at a deferred price with predictable costs, enabling better operational planning. 

A significant example is the $300 million Murabaha financing between ITFC and Uzbekistan, contributing to food security and agricultural sustainability by ensuring a stable wheat supply. 

Since initiating financing in Central Asia, ITFC has allocated $2 billion, including $1.38 billion to support the private sector and SMEs. This includes $530 million in Uzbekistan, $810 million in Kazakhstan, $25 million in Turkmenistan, and $23 million in Kyrgyzstan. 

These facilities have targeted women-led SMEs and promoted green financing, boosting SME contributions to economic development. Under the Uzbekistan-ITFC Framework Agreement (2024–2026), ITFC will expand ESG-compliant financing solutions for SMEs. 

ITFC is also extending its reach. In Kyrgyzstan, partnerships with microfinance institutions aim to meet Islamic finance needs among MSMEs. In Tajikistan, collaborations with local banks are underway to provide Islamic trade finance solutions. Similarly, efforts are ongoing in Azerbaijan and Kazakhstan to offer both funded and non-funded interventions for SMEs to benefit from cross-border trade. 

In 2025, ITFC will expand trade development services to SMEs in Azerbaijan and Central Asia as part of the recently launched Trade Connect Central Asia+ (TCCA+) Program. This initiative promotes economic growth and integration among the six Organisation of Islamic Cooperation (OIC) member countries in Central Asia. 

Islamic trade finance aligns with the goal of fostering sustainable economic growth in Central Asia. By creating resilient financing structures and addressing SMEs’ challenges, this instrument is poised to drive significant regional development. With growing adoption, it is only a matter of time before all member countries fully reap the benefits. 

Author: Eng. Hani Salem Sonbol, CEO of the International Islamic Trade Finance Corporation