With its 37mn inhabitants, Uzbekistan is the most populous country in Central Asia – a landlocked region that is comprised of five countries formerly part of the Soviet Union. Until 2017 Uzbekistan was a relatively underdeveloped country, frequently seen as isolated from the outside world. Currently, with roughly two thirds of its population comprising young people and an ever-growing internet access rate, Uzbekistan has emerged on the radar of investors, particularly in the Middle East.

In recent years, President Shavkat Mirziyoyev has carried out extensive reforms, creating conditions for the development of private business, international trade and attracting foreign investments. His efforts helped diversify the economy's structure, which until recently was dominated by agriculture (cotton, fruit and vegetables) and mining (uranium and gold).

Uzbekistan has launched extensive development of the IT sector as part of its modernisation efforts. In 2019, an IT park was opened in Tashkent, the nation’s capital, which provides tech companies with tax incentives and low-rent premises.

Based on the experience of other emerging markets that boosted their tech sector, e-commerce and fintech in Uzbekistan were expected to grow at the fastest pace.

And that’s exactly what happened. According to KPMG, the volume of online trade in Uzbekistan has increased sixfold since 2019, albeit from a very low base. Currently, online sales penetration is about 2.2% of Uzbekistan’s retail trade turnover, compared with 12% in the UAE and over 27% in China, indicating potential for significant growth.

Although 62% of the assets within Uzbekistan’s banking system are concentrated in the top five largest state banks, dozens of fintech startups have emerged in the country over the past few years, according to a recent Mastercard report. These include neobanks, payment services, online insurers and software developers for small businesses, among others.

When my partners and I founded Uzum, which means "grape" in Uzbek, we focused on e-commerce and fintech. Uzbekistan had all the prerequisites for the rapid development of these services: a large population, over 60% of which is under 30 and has been using smartphones since childhood, as well as high internet penetration. We decided to build on these promising factors by creating convenient logistics and payment infrastructure to transform the consumer habits of the entire country.

People in Uzbekistan love to trade. For many centuries, the country was a key hub along the Silk Road – a network of caravan routes leading from China to the Middle East and Europe. Uzbekistan is known not only for its ancient mosques but also for its bazaars, where one can buy virtually everything from fresh and dried fruit to ceramics, clothing and fabrics.

People go to bazaars not just to buy something but also to bargain and socialise. It's part of the culture. Therefore many were sceptical that online shopping would take off. Neither Amazon nor Alibaba were present in the country. The shops that did offer online sales promised delivery times of 6-10 days across the country. As a result, people considered online shopping to be inconvenient.

The e-commerce infrastructure in Uzbekistan was almost non-existent. We had to build modern warehouses ourselves, purchase vehicles and create a network of hundreds of order pick-up points in all of Uzbekistan’s cities. Thanks to these efforts, Uzum can now deliver orders to any city across the country within 24 hours.

We also had to work hard on developing fintech. Uzbekistan is a Muslim country, and unsecured interest-bearing loans are considered a violation of Sharia law – only instalment payments are permitted. In the past, customers could come to an electronics store and request an instalment plan. If the store's owner knew the person's family, they would grant the instalment; if not, the decision would very likely be negative. Unsurprisingly, the approval rates for such plans were low.

We created Uzum Nasiya, a digital BNPL (Buy Now, Pay Later) service. It takes just a quick registration in the Uzum app, and less than a minute, the software conducts scoring procedures and confirms a certain limit approved for the customer – the amount they can use to buy goods in instalments through offline stores within our partnership network.[1] Uzum Nasiya has become the premier BNPL service in Uzbekistan, currently occupying 2/3 of the total market alongside Alif Nasiya.

This Sharia-compliant service has gained huge popularity. It has helped stores to increase their sales volumes and made purchases much more accessible for consumers. The average official salary in Uzbekistan is equivalent to $320 per month, with other income sources often remaining in the “grey” area. Affordability of fintech products such as Uzum Naziya combined with general ecommerce penetration across the country have been driving the gradual ‘whitening’ of the population’s income and financial inclusion. At the same time, many items, such as smartphones or TV sets, are still mostly unaffordable for consumers to buy with a single paycheck.

Upon launching Uzum Market, our own marketplace, at the end of 2022, we decided to integrate the BNPL service into it – not only for large purchases but also for those starting from $30 upwards – and reduced the commission to zero. This move has disrupted the market. Currently, almost half of the purchases on the Uzum marketplace are made through this instalment service.

In 2023, the first full year of Uzum marketplace's operation, sales volumes reached $150mn. This year, after raising funds from global venture capital firm FinSight Ventures and UAE’s Xanara Investment Management, a regional multifamily office, Uzum became the first tech unicorn in Uzbekistan with a valuation of over $1bn.

We achieved this breakthrough by building an e-commerce infrastructure almost from scratch and launching an innovative instalment service, bundled together into one super app.

Many technology companies dream of creating a super app similar to China's WeChat, which covers most of users’ online needs. In other regions of the world, there are also super apps that satisfy several needs at once. Some of them have emerged from the combination of ride-hailing and food delivery, such as Careem in the Middle East or Grab and GoTo in Southeast Asia.

Others are based on the integration of fintech and e-commerce, just like Uzum.

Examples include Mercado Libre in Latin America, Jumia in Africa and Kaspi.kz from Kazakhstan, which has listed in the US and is now valued at over $20bn.

Kaspi’s example is our biggest inspiration – and considering that Uzbekistan’s population is almost twice as large as that of Kazakhstan, we see immense potential ahead. As we witness rapid growth of fintech services in Uzbekistan, we remain committed to playing a pivotal role in the country’s digital transformation, and contributing to further economic development of the nation.

Djasur Djumaev is the CEO Uzum, which became Uzbekistan first tech unicorn in February, with a valuation of more than $1bn. The success of the national e-commerce platform underscores Uzbekistan's status as the fastest-growing e-commerce market in Central Asia.