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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