Asian Development Bank

JFPR-9075: Mahalla¹ Business Development Project
Azerbaijan (AZE)

Project Summary

Name of Counterpart (loan) Project(s)

Grant Type

Task Officer/ Department

Budget

Executing Agency

State Program on Poverty Reduction and Economic Development (SPPRED) Secretariat,
Ministry of Economic Development

Implementing Agency(ies)

Scope

The Project will undertake activities to implement effective poverty reduction mechanisms in 10 of the poorest regions in Azerbaijan. The implementation of the Project will be a highly participatory process, involving all stakeholders including central and regional governments, private sector, NGOS, villages and local communities. Consultations will be held with each of these stakeholders to ensure that all major economic and social objectives are met.

Objectives

Grant Development Objective (GDO)

1. Form business support service centers (BSSCs) in 10 rayons² to train poor households on income-generating activities,
2. Foster a savings and credit culture through creation of community savings groups (CSGs), and
3. Provide financial assistance to the extremely poor for income-generating activities.

Project Purpose

With 9 of the world's 11 major climactic zones identified within its borders, Azerbaijan grows a wide variety of crops. The main agricultural products include grain, cotton, tea, vegetables, fruits, and nuts. Further, products such as beef, spices, wine, and spirits have become increasingly important commodities, as significant scope exists for the production and sale in the domestic market as well as the export market.

Despite the high potential for agriculture-related production, growth in economic activities in rural Azerbaijan has been limited. The lack of expansion in economic activity can be attributed to:

1. The lack of adequate access to financial resources, agricultural inputs, and markets;
2. lack of basic business skills;
3. lack of information on market conditions and economic opportunities; and
4. lack of sufficient business activities to benefit from scale production. As the Micro and Rural Finance Project will address the lack of financial outreach in the rural areas, the JFPR will be complementary by enhancing the ability of rural households to use financial services.

Expected Outputs

1. 10 BSSCs established and sustainable, with continued knowledge dissemination and real income levels of beneficiary households raised by 15%;
2. 1,000-2,000 of the beneficiary households engaged in income-generating activities, and poverty incidence reduced by 15% in beneficiary communities;
3. Inclusion of women as beneficiaries, both in training and financial assistance; and
4. 50 CSGs established to enhance understanding of savings and credit, with participation from at least 1,000 members to reintroduce confidence in savings and credit and increase credit usage in rural areas.

Main Project Components and Activities

Main Project Components

1. Business Support Services
2. Community-based Savings Groups
3. Livelihood Assistance Fund
4. Project Management Monitoring and Auditing

Activities

A. Training for at least 50% of the target community households on the following techniques:

1. Basic business skills, including basic book keeping, obtaining credit, marketing, understanding collaterals and repayment methods;
2. training in proposal writing and developing business plans;
3. training of trainers to strengthen local knowledge on business skills and entrepreneurship development

B. A time-bound action plan with milestones for the implementation of the BSSCs, CSG and the Seed Capital Fund;

C. Effective reporting arrangements between BSSCs and the PMU to obtain up-to-date information with regional economic environment

D. Timely selection of NGOs, consultants and other individuals for the PMU, and BSSCs as needed

E. Training for at least 50% of the target community households on the following techniques:

1. Basic business skills, including basic book keeping, obtaining credit, marketing, understanding collaterals and repayment methods;
2. training in proposal writing and developing business plans;
3. training of trainers to strengthen local knowledge on business skills and entrepreneurship development

F. A time-bound action plan with milestones for the implementation of the BSSCs, CSG and the Seed Capital Fund;

G. Effective reporting arrangements between BSSCs and the PMU to obtain up-to-date information with regional economic environment

H. Timely selection of NGOs, consultants and other individuals for the PMU, and BSSCs as needed

I. Comprehensive project work plan and delegation of duties on the national, regional and local level

J. Preparation of implementation schedule

K. Preparation of annual budget for individual component and effective disbursement and utilization of funds

L. Completion of inception, progress, interim, completion, impact assessment reports