Azernews.Az

By Sara Israfilbayova

The event dedicated to the establishment of the regional association of providers of credit bureaus was held in Baku on April 17.

During the event a document on establishment of the association was signed by heads of credit bureaus and organizations of six countries - Azerbaijan, Georgia, Ukraine, Kazakhstan, Kyrgyzstan and Tajikistan.

Credit bureaus of Belarus and Moldova are expected to join the association in the future.

Addressing the event, executive director of Azerbaijan’s Financial Markets Supervisory Authority (FIMSA), Ibrahim Alishov said that small and medium-sized enterprises (SMEs) in Azerbaijan will receive additional impetus for development starting from 2018.

He noted that the Azerbaijan Mortgage and Credit Guarantee Fund, the register of movable property and the private credit bureau will facilitate the development of SMEs in Azerbaijan.

“The Azerbaijan Mortgage and Credit Guarantee Fund will support SMEs through interest subsidies and a guarantee mechanism,” he said, adding that the movable property register launched in March this year will expand access to loans for businessmen, because not all entrepreneurs had real estate or documents for it, in order to use it as collateral for obtaining a loan.

The executive director went on to say that more than 500 participants registered in the movable property register and over 10,000 requests were sent in. At the same time, Alishov noted that the register in Azerbaijan has some differences from similar systems in the region. Thus, entrepreneurs in Azerbaijan often use not only consumer goods, but also agricultural equipment, minerals, raw materials, livestock and even fish products as collateral, he added.

“The third institution is a private credit bureau that started operating in March this year,” said Alishov. “Its activity is important in terms of expanding credit underwriting, decreasing the cost of loans, reducing customer evaluation time and preventing fraud. More than 200,000 requests have been sent to the bureau since the start of its operation.”

Alishov also noted the important role of the International Finance Corporation (IFC) and the Swiss State Secretariat for Economic Affairs (SECO) in creation of the mentioned institutions.

Further, Alishov told reporters that the establishment of the association in Baku proves its importance as the financial center of the region.

“Azerbaijan has begun to play a transit role in the South Caucasus and Central Asia. We used to know that Azerbaijan is the regional center when it comes to the energy sector. It's great that now we are beginning to play a role of the financial center of the region,” Alishov said.

He further reminded that this year Baku is included in the “Index of Global Financial Centers 2018” for the first time. The rating included 100 major financial centers of the world.

As for the association’s activity, Alishov said that it will play a stabilizing role in the financial markets of the participant countries through facilitating the information exchange among countries and transparency of credit data.

The first private credit bureau in Azerbaijan has been operating since March 2018, with participation of the IFC and the SECO.

Creation of credit histories of borrowers in Azerbaijan began in 2005 after the establishment of the Centralized Credit Registry Service (CSC). The register covers the full range of information on banks, non-bank credit institutions, borrowers, owners of large interest packages in the borrowers' capital, loans and pledges.

The private credit bureau will contain more information than the Centralized Credit Registry and cover a big number of borrowers. The bureau will receive information not only from banks, but also from insurance and leasing companies, municipal institutions, mobile operators and others.

In turn, Aliya Azimova, head of Baku office of the IFC, noted that over the past decade, Azerbaijan managed to successfully use its natural resources.

She stressed that over these years, the poverty level has decreased in Azerbaijan, the number of middle class representatives has increased and important steps have been taken to improve the well-being of the country’s population.

However, the economic realities in the world, and in particular in Azerbaijan, are changing, and in this context the role of private sector development is growing, she added.

Azimova noted that the IFC is ready to help strengthen the private sector and fight modern challenges by attracting investments and rendering consulting services.

The role of the regional association and credit bureaus in the development of the private sector is also very high, because it will help to lower the level of shortcomings among financial institutions and other organizations, as well as increase the level of lending, she said.

“We pin high hopes on the association and we believe that it will be able to become a platform of innovations and reforms for the financial structure of the region,” she added.

IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector in developing countries.

Established in 1944, the WBG is one of the world’s largest sources of funding and knowledge for development solutions.

Azerbaijan became an IFC member in 1995. Since the beginning of cooperation, the IFC has allocated over $500 million for projects in Azerbaijan that cover financial services, infrastructure and production.

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