Environment and Social Monitoring Report
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Environment and Social Monitoring Report Project Number: 42007-018 Reporting period: January - December 2019 December 2020 Republic of Uzbekistan: Small Business Finance Project Prepared by JSICB Ipak Yuli Bank, JSCB Hamkorbank, JSCB Davr Bank, and JSILC Uzbek Leasing International for the Ministry of Finance, Republic of Uzbekistan and for the Asian Development Bank ABBREVIATIONS ADB - Asian Development Bank CBU - Central Bank of Uzbekistan DVB - Davr Bank Joint-Stock Commercial Bank ESMS - Environmental and Social Management System FIL - Financial Intermediary Loan GAP - Gender Action Plan HKB - Hamkorbank Joint-Stock Commercial Bank IYB - Joint Stock Innovation Commercial Bank “Ipak Yuli” MOF - Ministry of Finance PFI - Participating Financial Institution PIAL - Prohibited Investment Activities List SPS - Safeguard Policy Statement TA - Technical Assistance ULC - Joint Venture “UzbekLeasing International A.O.” This environmental and social monitoring report is a document of the borrower. The views expressed herein do not necessarily represent those of ADB's Board of Directors, Management, or staff, and may be preliminary in nature. In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area. Table of Contents PART I - INTRODUCTION ......................................................................................................... 4 1.1. SHORT DESCRIPTION OF THE PROGRAM .............................................................................. 4 1.2. SUMMARY OF ACTIVITIES AND PROJECT PROGRESS DURING THE PREVIOUS 12 MONTHS. ........ 4 1.3 PROJECT ORGANIZATION AND ENVIRONMENTAL MANAGEMENT TEAM, INCLUDING ORGANIZATIONAL RELATIONSHIPS WITH PFIS, SUB-BORROWERS ETC........................................... 5 PART II – ENVIRONMENTAL ISSUES ..................................................................................... 7 2.1. ENVIRONMENTAL ISSUES IN THE PREVIOUS 12 MONTHS ........................................................ 7 2.2. EXPLANATIONS OF INSTANCES IN WHICH ENVIRONMENTAL STANDARDS OR GUIDELINES WERE EXCEEDED OR ENVIRONMENTAL INCIDENTS HAPPENED ............................................................... 7 2.3. REQUIRED RECOMMENDATIONS .......................................................................................... 8 PART III: COMPLIANCE WITH ADB’S SOCIAL PROTECTION REQUIREMENTS AND ADB’S PROHIBITED INVESTMENT ACTIVITIES LIST ........................................................................ 8 3.1. ASSESSMENT ON THESE TWO SETS OF REQUIREMENTS ........................................................ 8 3.2. A BRIEF DESCRIPTION OF THE TAKEN MEASURES ................................................................. 8 3.3. SUMMARY OF ACTIONS TAKEN TO ENSURE COMPLIANCE OR CORRECTIVE ACTIONS TAKEN IN CASE OF NON-COMPLIANCE ....................................................................................................... 8 PART IV: ESMS OPERATIONS (FOR PFIS WHICH ARE FINANCING B-CATEGORY SUB- PROJECTS) .............................................................................................................................. 9 4.1 SITE INSPECTIONS AND AUDITS – TO SUMMARIZE THE NUMBER AND TYPE OF SITE VISITS ERROR! BOOKMARK NOT DEFINED. 4.2 NONCOMPLIANCE CASE – TO SUMMARIZE THE DETAILS, INCLUDING THE NUMBER OF NOTICES GIVEN OUT BY THE PFIS OR BY THE LOCAL GOVERNMENT TO THE SUB-BORROWERS, HOW AND HOW MANY ISSUES COVERED. ..........................................................................................................10 4.3 CORRECTIVE ACTION PLANS – TO REPORT ON TIMELINESS OF PREPARATION AND COMPLETION ..............................................................................................................................................10 4.4 CONSULTATION AND COMPLAINTS – TO REPORT ON ANY CONSULTATIONS UNDERTAKEN AND LIST ANY COMPLAINTS RECEIVED AND HOW THEY WERE HANDLED OR RESOLVED. ........................10 PART V: CONCLUSION AND ACTION PLAN .........................................................................11 5.1 CONCLUSIONS ...................................................................................................................11 5.2 SUMMARY OF ACTIONS TAKEN DURING THE PREVIOUS REPORTING PERIOD ............................11 5.3 ACTION PLAN FOR THE NEXT REPORTING PERIOD .................................................................11 ANNEXES .......................................................................ERROR! BOOKMARK NOT DEFINED. ANNEX 1: PFI’S ANNUAL ENVIRONMENTAL AND SOCIAL PERFORMANCE REPORT FROM JSCB HAMKORBANK ................................................................................................... 2 ANNEX 2: PFI’S ANNUAL ENVIRONMENTAL AND SOCIAL PERFORMANCE REPORT FROM JSC “UZBEK LEASING INTERNATIONAL A.O.” ......................................................... 2 ANNEX 3: PFI’S ANNUAL ENVIRONMENTAL AND SOCIAL PERFORMANCE REPORT FROM JSICB “IPAK YULI” ......................................................................................................10 ANNEX 4: PFI’S ANNUAL ENVIRONMENTAL AND SOCIAL PERFORMANCE ANNUAL REPORT OF PJSCB “DAVR BANK” .................................................................................... 400 I. INTRODUCTION 1.1. Short description of the program 1. The financial intermediation loan (FIL) of $100 million will provide USD and sum credit to sustain operations of and employment by small businesses. Specifically, the loan will provide funding to participating financial institutions (PFIs)1 to provide investment and working capital loans to small businesses. In addition, a $0.5 million technical assistance (TA) will strengthen credit origination and management of selected PFIs to better serve small businesses by expanding credit service outreach to the smaller borrowers through financial literacy and in the regions. The loan will be provided to the PFIs which will relend the loan proceeds to qualified PFIs that meet selection criteria agreed with ADB, and pursuant to subsidiary loan agreements entered into between MOF and each PFI, on terms and conditions satisfactory to ADB. Each PFI will use the ADB loan proceeds to finance eligible subprojects. The project’s impact will be improved contribution of small businesses to economic growth and employment. The outcome will be increased sustainable provision of PFIs’ financing to small businesses. 2. The output will be expanded capacity of the PFIs for financing to small businesses. At project completion, at least 20% of the eligible sub-loans are expected to be made to women-owned small businesses, and at least 60% of the eligible sub-loans are expected to be made to rural small businesses outside the capital. The capacity development TA will complement this output by focusing on measures for strengthening PFIs’ credit underwriting policies and procedures, developing a credit scoring system as well as financial literacy training to small businesses. The output will also include an established environmental and social management system (ESMS) embedded in each PFI’s operations for adequate management of environmental and social issues in compliance with the ADB’s Safeguard Policy Statement (2009) and national laws and regulations. 1.2. Summary of activities and project progress during the previous 12 months 3. In the course of project implementation, 431 subprojects were financed within 12 months. All subprojects underwent preliminary environmental screening by the PFIs strictly following the Environmental and Social Management System (ESMS) procedures of which 102 subprojects classified as "B" and 329 subprojects classified as “C”. 4. For each sub-project, a State Environmental Expertise (SEE) was carried out on the basis of a draft EIS (Environmental Impact Statement) and obtained approvals (Environmental Conclusions) of the State Committee for Ecology and Environmental Protection, which is in compliance with national safeguards requirements. Control over observance of the requirements of environmental legislation at the enterprises of each sub-project is assigned to the regional department for ecology and environmental protection. 5. The PFIs prepared and submitted their annual Environment and Social performance reports for financial year 2019 to the Ministry of Finance. All submitted reports are provided in annexes 1-4. 1 PFIs include Ipak Yuli Bank, Hamkorbank, Davr Bank and Uzbek Leasing. Table 1: Summary of activities and project progress for 2019 PFIs ESMS Number of sub-loans by Sub-loan approval environmental amount date categories (million USD $) B C Total 1 JSICB “Ipak Yuli” 24.05.2017 86 130 216 7.3 2 PJSCB “DAVR BANK” 15.05.2017 6 - 6 0.4 3 JSCB “Hamkorbank” 29.05.2017 - 74 74 5.1 4 JSC “Uzbek Leasing 12.05. 2017 - 135 135 2.7 International A.O.” Total: 102 329 431 15.5 1.3 Project organization and environmental management team, including organizational relationships with PFIs, sub-borrowers etc. 6. The Ministry of Finance (MOF) is the executing agency. The MOF is responsible for: (i) executing subsidiary loan agreements with the PFIs; (ii) monitoring PFIs’ performance and compliance with project agreements against design and monitoring framework; (DMF) targets; (iii) ensuring timely disbursement of ADB loan funds to PFIs; (iv) submitting project completion report to ADB within 6 months from