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 Supervisory Authority.
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 sector growth.
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 visit www.worldbank.org , www.miga.org , and www.ifc.org .
About SECO
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 .
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