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EBRD and EU support new tool to boost agricultural lending in Azerbaijan

Sep 9, 2019
EBRD and EU support new tool to boost agricultural lending in Azerbaijan

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Banks in Azerbaijan are expected to increase their capacity to lend to local farmers and agricultural firms thanks to a new, innovative tool to evaluate loans in the sector.

Agriculture is one of the key sources of livelihood for the Azerbaijani community, with 36 percent of the active labour force working in agriculture. The agricultural sector accounts for around 6 percent of GDP and reaches above 10 percent when agro-processing industries are also included. The country has strong potential in agribusiness thanks to its variety of excellent crops. However, difficulties in accessing long-term, reliable and affordable finance, especially for firms in remote areas or with no real estate collateral, are holding the sector back.

Ivana Duarte, Head of the EBRD’s office in Baku, said: “Offering banks a more efficient system for evaluating agribusiness loans will help improve services for the sector, which is often still considered to be risky, a perception that the new tool will help to address. The system is expected to leverage the positive effects of the reforms already being carried out in Azerbaijan’s financial and agricultural sector by the government.”

The EU funding was instrumental in assisting the creation of AzALES.

AzALES will be centrally operated and maintained by Azerbaijan’s Agency for Agricultural Credit and Development under the Ministry of Agriculture and will be available to the entire financial sector in the country.

It will enable financial institutions to:

  • benefit from centralised and reliable agricultural data, increasing efficiency and transparency and reducing costs
  • disburse agricultural loans in a more systematic way
  • lend the amounts on terms and conditions that will prevent over-indebtedness.

The EBRD maintains a strong focus on Azerbaijan’s agricultural sector. Since 2013, the Bank has provided about €50 million of financing to various agribusiness firms in the country.

Original source: EBRD
Published on 05 September 2019