Gov’t to use venture capital to finance projects in field of engineering
By Sara Israfilbayova
The government of Azerbaijan is considering the possibility of attracting venture capital to finance projects in the field of mechanical engineering.
Venture capital is a type of private equity, a form of financing that is provided by firms or funds to small, early-stage, emerging firms that are deemed to have high growth potential, or which have demonstrated high growth (in terms of number of employees, annual revenue, or both).
To study the possibilities of introducing new financing mechanisms in the heavy industry, a working group under the Ministry of Economy was established in June 2017, reads a report on evaluation of the results of implementing the Strategic Road Map for the development of heavy industry and machinery in Azerbaijan.
“First and foremost, the working group explored the possibility of attracting venture capital. In addition, as part of measures to expand the use of alternative financial instruments, the Ministry of Economy sent a letter to Azerbaijan’s Financial Market Supervisory Authority. Both bodies agreed to hold discussions with the participation of entrepreneurs and state agency officials to prepare proposals for the implementation of such measures,” reads the report.
The short-term (2016-2020) objectives of the Road Map for heavy industry include creation of a competitive sector, provision of financial resources for its development. The implementation of these measures will allow to increase GDP by almost 560 million manats ($306.8 million).
Strategic goals covering the period until 2020 envisage enabling large industrial enterprises of the country to meet major domestic demand. At the same time, the share of Azerbaijani industrial production will be increased in the regional market, and achieving the long-term objectives (by 2025) will considerably boost the competitiveness of the country in the regional level. The measures designed for the period until 2025 will turn the country into a centre of machine engineering. Post-2025 objectives envision making the country an integral part of the global value chains.
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