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Qabil Ashirov

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As new rules and reforms are implemented, the banking sector in Azerbaijan is also starting to develop. As banking is one of the leading sectors in the economy, the government pays special attention to development in this area. Figuratively speaking, the banking system plays a nourishing role as a blood vessel in the human anatomy. In a nutshell, banks are the source of finance for the economy.

In addition to the government, foreign finance institutions that intend to take part in the economy of the country are interested in banking sectors and keen to cooperate with banks. With the help of banks, these institutions can reach out to the local economy to find partnerships. One of such institutions is The European Bank for Reconstruction and Development (EBRD).

EBRD has been cooperating with Azerbaijan for a long and financed 189 projects so far. European Bank is keen to broaden its activity in Azerbaijan and therefore it intend to cooperate with local banks.

Speaking to Azernews on the issue, Nataly Mouravidze, Head of EBRD in Azerbaijan, noted that the Bank is still working with its potential new partners, and as soon as it finalise agreements with them, the Bank will publicly announce these new partnerships.

“As we cannot do so before the signings, please stay tuned for the announcements that might come from our Baku team in the coming months. At this stage, however, we can tell you about our guiding principles to the client selection. In general, we focus on the private sector and are open to partnering with those institutions that are strategically aligned with our priorities (such as MSME support, green and inclusive financing, for instance), have the critical mass to make an impact in the sector and, importantly, operate on a commercial, transparent, arms-length and self-sustainable basis," Nataly Mouravidze said.

She pointed out that the EBRD believes that creating conditions for small businesses to thrive is fundamental for sustainable and inclusive economic growth. A vibrant small and medium-sized enterprise sector is a vital ingredient for a healthy market economy. That is why one of Bank’s key priorities in Azerbaijan is to support the growth of small and medium-sized enterprises (SMEs).

“In many cases, the most effective way to channel funds to the private sector is by financing local banks who will then on-lend these investments to them. We tend to finance local banks due to their proximity with the local businesses. Apart from financing, however, we also include, where relevant, grants, technical support, and advisory services to enable them, and their clients to make the best of the financing provided to them,” Nataly Mouravidze stressed.

She said that the Bank actively working to do more in this direction, and where possible, to provide loans in the local currency. Mouravidze underscored that one of Bank’s key priorities now is to strengthen local financial institutions so the private sector has better access to finance for growth. This will help us to increase EBRD lending to micro, small, and medium-sized enterprises and to support their competitiveness, green finance, and women-led businesses, and youth employment opportunities.

“We support the development of a sound banking sector through improvement of business standards, restructuring and consolidation, and increased competition. Improving corporate governance and management standards of our partner financial institutions will undoubtedly make our operations more effective in achieving our strategic priorities here, which are to support local SMEs, help develop the country’s non-oil sector, and to boost investment in the green economy,” the head of EBRD in Azerbaijan said.

Nataly said that the cooperation with local banks and financial sector in general accounts for a visible portion of Bank’s annual business in Azerbaijan, alongside its projects in other industries and sectors of Azerbaijan economy. With the growth of the economy, its increasing sophistication and improving credit penetration, we are planning to further develop Bank’s engagement with the financial sector going forward in several directions, including expansion of the number of partners, capital market development and dialogue with the authorities on policies and regulations improvement, where relevant.

“EBRD remains committed to financing the Azerbaijani banks. As we speak, we are working on several facilities in line with our main strategic topics such as promotion of international trade, support to MSMEs, and green and inclusive financing. As part of this effort, we are actively looking to extend the number of our partner banks in 2024 and beyond. Additionally, we are working towards supporting the growth of financial markets at the regional level, while increasing our involvement in trade finance,” the head of EBRD in Azerbaijani Nataly Mouravidze concluded.

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