Azerbaijan’s Entrepreneurship Dev’t Fund prioritizes green projects – chairman (Exclusive interview)

BAKU, Azerbaijan, April 9. Green projects are
one of the priority directions for the Entrepreneurship Development
Fund (EDF), Chairman of the Management Board at the Fund under the
Ministry of Economy of Azerbaijan Osman Khaliyev told Trend in an
exclusive interview.

“Green projects are a major priority this year. Entrepreneurs
can use the Fund’s preferential lending mechanism to finance green
energy projects and receive loans at a five percent annual interest
rate. Currently, three initiatives in this domain have been
completed. One of them tries to meet a poultry farm’s energy
requirements by utilizing solar panels. Another initiative focuses
on developing electric charging stations and promoting electronic
infrastructure development. The third project is dedicated to
creating construction materials through recycling, promoting
closed-cycle economic advancement,” he said.

Khaliyev emphasized that such projects can be successfully
implemented in various spheres of the economy and expressed the
readiness of EDF to finance all initiatives of entrepreneurs,
including green projects, on preferential terms.

In addition, he said EDF has developed its own ESG model.

“The fund has developed an ESG (Environmental, Social, and
Corporate Governance) model that is consistent with international
standards, allowing it to identify the environmental, social, and
corporate governance aspects of backed firms, as well as potential
hazards. Using this strategy, the Fund proactively works to
mitigate or prevent the identified risks in the future,” Khaliyev
stressed.

The chairman noted that the Fund is diligently addressing
important issues such as creating new jobs and providing
preferential financial resources to women and young
entrepreneurs.

“The fund-financed projects are expected to produce 3,154 new
jobs by 2023. Of them, 398 enterprises that have received soft
loans from our Fund belong to women entrepreneurs and young
entrepreneurs,” the chairman added.

In general, the chairman stated that EDF issued soft loans
totaling 43.1 million manat (or $25.35 million) to fund 1,065
investment projects in the first quarter of this year.

Khaliyev stated that the EDF’s primary objective is to give
financial assistance to commercial entities, promote cooperation
between the state and entrepreneurs, and create a conducive climate
for interaction.

“Currently, the fund collaborates with 21 banks, 9 non-bank
credit organizations, and 10 credit unions within the country,
enabling business entities to access favorable financial
assistance. In the initial three months of the present year, soft
loans totaling 43.1 million manat, or $25.35 million, were
disbursed for 1,065 projects through authorized credit
organizations,” he said.

The chairman emphasized the importance of cooperation with the
private sector in the implementation of financial mechanisms to
support entrepreneurship, such as soft loans, guarantees,
subsidies, and equipment loans. These mechanisms are implemented
through authorized credit organizations.

“Preferential loans are allocated for projects aligned with the
priority areas outlined for 2024. These projects undergo evaluation
by both credit organizations and the fund, with funding decisions
based on their potential economic contribution and impact on
growth. Alongside collaboration with credit organizations, the fund
actively engages with various entrepreneur associations and clubs,
conducting regular meetings with their members,” Khaliyev
added.

Speaking about activities in the liberated territories, the
chairman noted that a special approach has been developed for the
territories of Azerbaijan liberated from occupation to identify
priority areas for preferential lending.

“Commencing in 2022, the Fund initiated offering preferential
loans to businesses operating in the liberated territories. Thus
far, over 14 million manat ($8.2 million) have been allocated to
seven projects in industries and agriculture within these regions.
A tailored approach has been devised for these territories to
ascertain priority sectors for preferential lending. The supported
projects encompass not only industry and agriculture but also the
service sector,” he said.

According to the chairman, the fund has started implementing a
mechanism of guarantees and subsidies for entrepreneurs, aimed at
stimulating economic activity and investment, since the beginning
of February this year.

“We offer a guarantee of up to 90 percent for business loans,
ranging up to 5 million manats, with an annual interest rate capped
at 15 percent,” Khaliyev explained, emphasizing that projects in
exempted territories are provided with state guarantees.

He pointed out that entrepreneurs are also eligible for
subsidies on these loans, with the government subsidizing 10
percent of the annual interest rate for a period of up to 36
months.

“We’ve established an information system called ‘Electronic Loan
and Guarantee’ to enable entrepreneurs to apply electronically,
streamlining the process and expediting access to financing. These
initiatives unlock fresh opportunities for entrepreneurs across
diverse sectors of the economy and aid in revitalizing economic
activity in the liberated territories,” he added.

Khaliyev emphasized that one of the strategic goals of EDF is to
make financial mechanisms more accessible to entrepreneurs. He
noted that one of the key benefits of electronization for
entrepreneurs is increased access to financial resources.

“One of the fund’s primary objectives is to improve
entrepreneurs’ access to financing instruments. To do this, the
fund is creating the capacity for entrepreneurs to submit
applications via the ‘Electronic Loan and Surety’ information
system, allowing them to apply for soft loans remotely. The
system’s capacity to continuously monitor application status
distinguishes it. Furthermore, by integrating the information
system with the ‘Electronic Government’ portal, entrepreneurs can
get relevant papers from a centralized database of other government
departments,” he said.

Khaliyev believes that the advantages of the electronic
information system contribute to the development of trust between
the public and private sectors by ensuring transparency and
expanding access to preferential financial resources for
entrepreneurs.

In 2023, the Entrepreneurship Development Fund of Azerbaijan
provided concessional loans worth 193.8 million manat, or $114
million, to finance 3,276 investment projects.

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