Baku, Azerbaijan, September 25, 2019—The
World Bank Group, through IFC’s advisory work, has helped implement a
series of regulatory reforms of systemic importance in Azerbaijan to improve
the country’s financial infrastructure and allow smaller businesses to
obtain easier access to credit.
IFC today presented results of the Azerbaijan
Financial Infrastructure Advisory Services project, implemented over the
past 10 years in partnership with Switzerland’s State Secretariat for
Economic Affairs (SECO). IFC’s advice has helped develop a secured transactions
law that allows smaller businesses, which often lack assets like real estate,
to use their movable assets, including inventory, accounts receivable,
and equipment, as collateral for securing credit.
As a result of the reform, a fully electronic
movable collateral registry was created in March 2018. According to the
financial sector regulator, the Financial Market Supervisory Authority
of Azerbaijan, lenders in Azerbaijan have filed notices to the registry
for loan applications from 32,000 borrowers, including smaller businesses,
enabling these businesses to obtain easier access to finance.
“Small businesses are the backbone of Azerbaijan's
economy. The reforms we made will help unlock the potential of thousands
of small businesses, ultimately driving economic growth," said Ibrahim
Alishov, acting Chairman of the Executive Board of the Financial Market
With IFC’s help, the government has also
adopted a modern law on credit bureaus, which allowed the creation of the
country’s first private credit bureau in 2018, bringing the credit reporting
system in line with best practice. That has helped improve the quality
and range of credit information, reducing financial institutions’ risks
and facilitating more lending. The private credit bureau has received an
estimated 3 million inquiries since its launch.
Simone Haeberli, Deputy Regional Director
of the Swiss Cooperation Office, said the project was evidence that systemic
change could be achieved when governments and international institutions
combined forces. She congratulated Azerbaijan on its reforms and said she
was confident improved financial infrastructure would further stabilize
the country’s financial sector.
"Banks in Azerbaijan and Eastern Europe
can see that it makes good financial sense to lend to smaller businesses,
but there’s more potential," said Hans Peter Lankes, IFC’s Vice
President of Economics and Private Sector Development. "The key is
creating the financial infrastructure, like credit bureaus, that allow
them to do so with confidence. We are delighted to have had an opportunity
to help foster private-sector growth in Azerbaijan."
The regulatory reforms helped Azerbaijan
enter the list of 10 economies showing the most notable improvement in
performance in the last World Bank Group Doing Business Report, released
in October 2018, which looks at the business climate in 190 economies around
the world. The country had carried out eight reforms, the highest number
by an individual country.
Azerbaijan became a member of IFC in 1995.
Since then, IFC has invested around $473 million, including $73 million
in mobilization, financing 56 projects across a range of sectors, including
financial services, infrastructure, and manufacturing. In addition, IFC
has supported around $100 million in trade through its trade finance program
and provided $250 million for the Baku-Tbilisi-Ceyhan pipeline. IFC has
also implemented a range of advisory projects aimed at encouraging private
About the World Bank Group
The World Bank Group is one of the world's
largest sources of funding and knowledge for developing countries. It comprises
five closely associated institutions: The International Bank for Reconstruction
and Development (IBRD) and the International Development Association (IDA),
which together form the World Bank; the International Finance Corporation
(IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International
Centre for Settlement of Investment Disputes (ICSID). Each institution
plays a distinct role in the mission to fight poverty and improve living
standards for people in the developing world. For more information, please
SECO is Switzerland’s competence center
for all core issues relating to economic policy. SECO’s economic development
cooperation strives to achieve inclusive sustainable growth and poverty
reduction in its partner countries. Its activities aim to create more and
better jobs, to enhance trade and competitiveness, to support effective
institutions and services and to foster climate resilient economies. This
year, Switzerland celebrates 20 years bilateral technical cooperation with
Azerbaijan. For more information, visit www.seco-cooperation.admin.ch.