This OECD peer review seeks to support the government in fostering the private sector’s digital transformation, with a specific focus on the provision of digital skills. Three overarching dimensions of digital upskilling are examined within the report: the institutional framework; firms’ awareness of digitalisation and required competences; and digital upskilling support for firms.
Digital Skills for Private Sector Competitiveness in Uzbekistan
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Executive summary
The COVID-19 pandemic has highlighted the necessity of an inclusive digitalisation strategy to foster private sector growth
Uzbekistan embarked on an ambitious reform agenda in late 2016, aimed at liberalising the economy, promoting inclusive prosperity and furthering Uzbekistan’s integration into the international economy. While the country has already achieved substantial progress in its transition, deeper structural reforms are needed to reduce the dominance of state-owned enterprises (SOEs) in the economy and foster private sector development.
Recognising the importance of digitalisation as part of this transition, the government in 2020 adopted the Digital Uzbekistan 2030 strategy, which aims to integrate digital technologies in public services, infrastructure, the economy and education. While access to broadband infrastructure and e-government services had already markedly improved in Uzbekistan prior to the COVID-19 pandemic, the pandemic reinforced the need to accelerate the country’s digital transformation, as businesses, the government and society rapidly moved online. Nevertheless, the aftermath of the pandemic has revealed that the private sector has not yet fully harnessed the opportunities arising from the government’s digital strategy, as it still lacks the institutional framework, awareness and skills to do so.
Augmenting digital skills can foster SME productivity and growth in Uzbekistan
While digitalisation can contribute to private-sector development, government support is needed for SMEs to overcome barriers to digitalisation, such as lack of information and awareness, lack of digital skills, and insufficient resources. In particular, the lack of digital skills, among both managers and employees, appears a significant challenge to most SMEs.
This report presents an analysis of the elements in the legal and policy framework that hold back the digital upskilling of businesses in Uzbekistan. Based on recent OECD work, it assesses challenges and develops recommendations to support the digital uptake of the private sector in three areas:
the institutional framework to support the acquisition of digital skills by the private sector;
private-sector awareness of the benefits associated with going digital; and
the public services and incentives needed to promote firms’ digital upskilling.
Developing a supportive institutional framework helps resolve skills mismatches on the labour market
The entry into force of the decree on the Digital Uzbekistan 2030 in 2020 formalised a digital strategy with a range of government actors involved to develop and introduce information and communication technologies in the economy. However, the institutional framework in place to implement the strategy does not capture the private sector’s digital needs, with relevant stakeholders such as the Ministry of Public Education currently missing, as well as mandates and roles that sometimes overlap between agencies. Moreover, SMEs’ digital upskilling is not subject to concrete, quantified objectives.
Clearly defining mandates and integrating additional public and private actors would serve to clarify the institutional set-up and ensure the involvement of stakeholders who could add relevant inputs into the strategy. In particular, involving industry representatives would make it easier to uncover the types and levels of digital skills required by different sectors and the skills gaps that exist, while collaborating more closely with the private sector and educational stakeholders could ensure that future labour market needs are met.
Data collection and greater awareness of digitalisation benefits could improve the effectiveness of government support
Uzbek firms’ digital adoption has been increasing in recent years but remains lower than regional peers. Digital skills, in particular, seem to lag, suggesting that businesses are not aware of the most suitable tools required for their operations. This could be explained by the fact that there are few data available on firms’ digital literacy, reducing the effectiveness of initiatives to address private sector’s needs. Lack of data also hampers opportunities to forecast the evolving needs of the labour market.
Improving communication on training already available, as well as providing digital skills assessments tools, would allow firms to identify suitable digital solutions and better inform their decision to invest in skills development. At the same time, the government should consider collecting data on private sector trends in digitalisation to anticipate labour market trends and adapt policy-making accordingly. The private sector should be involved in, and informed of, these various initiatives to ensure that policies address concrete needs.
Developing one-stop-shops and expanding incentives can help address remaining barriers to digitalisation
The government has been fostering firms’ digital upskilling through the provision of e-government services and the introduction of dedicated financial incentives, while focusing in particular on the development of national IT and BPO sectors. Yet the current digital tool provision remains scattered across agencies, making it difficult for SMEs to be aware of the services on offer, while incentives to digitalise are largely limited to the two prioritised sectors. OECD interviews also found that regulatory barriers pertaining to personal data protection discourage firms from investing in their digital transformation.
Developing a digital one-stop-shop would allow firms to access digital skills support and tools in a centralised location. Existing financial and non-financial incentives to upskill could be expanded and applied to more sectors to reduce the costs associated with SMEs’ digital investments. When designing such incentives, policy-makers should also be mindful of the digital gender divide to ensure the digital transformation stays inclusive. In parallel, efforts to equip civil servants with digital skills should be pursued to ensure the public sector keeps abreast with technological developments and can provide adequate support to firms. Finally, addressing regulatory barriers in the personal data protection sphere will help alleviate firms’ concerns when investing in their digital transformation.