Developing Mudarabah, Musharakah and Wakala-Istithmar Instruments in Uzbekistan

This article examines the institutional and legal factors constraining the development of mudarabah, musharakah and wakala-istithmar instruments for entrepreneurship financing in Uzbekistan. The study aims to identify how these profit-and-loss-sharing instruments can be integrated into a single, prudentially sound, entrepreneurshiporiented financing architecture. Using comparative institutional analysis, doctrinal legal analysis and regulatory gap analysis, Uzbekistan is benchmarked against Malaysia, Pakistan, the UAE and Bahrain, and primary Uzbek legal texts (the Tax Code, Law No. LRU-1126, Law No. LRU-1031, and the Central Bank's regulations on reserve requirements and capital adequacy) are analyzed verbatim. The findings show that recent legislation brings investment deposits into, rather than out of, the deposit guarantee system, while neither the reserve-requirement nor the capital-adequacy framework provides any differentiated treatment for them — a departure from the international AAOIFI/IFSB profit-sharing investment account regime. Based on these findings, a five-track institutional reform package (taxation, capital adequacy, reserve requirements, investor protection, Shariah governance) is proposed. The findings are of practical relevance to the newly established Islamic Finance Council at the Central Bank of Uzbekistan.