Baku, May 12, 2015 - Today, the World Bank presented the findings of the 2014 Micro, Small and Medium Enterprises (MSME) Access to Finance Demand Survey in Azerbaijan in a workshop with participation of representatives of the Central Bank and government. The survey was carried out among 516 MSMEs operating in the agriculture, manufacturing, construction, trade, services and tourism sectors, and aimed at identifying constraints faced by MSME in getting finance and their demand for it. It also recommends actions that could be taken by the authorities to increase MSME lending, which would support the country’s economic growth.
The Government of Azerbaijan’s goal is to reduce the country’s dependence on the energy sector by boosting private sector growth and competitiveness, and fostering new and better paid jobs in the economy. Growth of the financial sector is pivotal in achieving this objective. Rolf Behrndt, Manager of the World Bank Group’s Finance and Markets Practice said, “Every 9 out of 10 jobs are created by MSMEs worldwide. Therefore, Azerbaijan’s future growth will largely depend on the increasing role of innovative, skillful and competitive MSMEs sector. Improving access of MSMEs to finance means faster growth, enhanced productivity and internationalization – core pillars of the country’s sustainability agenda”.
Azerbaijan’s financial sector grew significantly over the past decade with bigger assets and more diverse products. Still, as the survey found out, only a small fraction of MSMEs have access to formal finance. About half of interviewed MSMEs in Azerbaijan cite inadequate access to finance as their primary obstacle to business growth. “Complex credit procedures, high costs and collateral requirements, inadequate financial transparency and financial capability of MSMEs constraint their ability to borrow and grow”, said Angela Prigozhina, who leads the World Bank’s financial and private sector work in the South Caucasus.
The survey has led to a number of recommendations on advancing reforms for developing a modern secured transactions framework and credit reporting system and for enhancing risk management practices while simplifying and standardizing lending procedures. Further growth and deepening of the financial sector would require development of innovative bank and non-bank financial products for different clients, especially for smaller and younger firms, and those located in rural regions. Larisa Leshchenko, World Bank’s Country Manager for Azerbaijan said, “Unleashing the potential of the domestic financial sector will contribute to Azerbaijan’s growth and prosperity. The World Bank Group is currently preparing its new partnership framework for the country, and we will continue our support to Azerbaijan in accomplishing this important agenda”.
The current World Bank investment portfolio in Azerbaijan includes 18 projects. Since joining the World Bank in 1992, commitments to the country have totaled over US$3 billion for 55 projects.
