Problems and Opportunities for Leveraging SME Finance through Value Chains in Azerbaijan
The number of small and medium-sized enterprises in Azerbaijan is increasing, but their contribution to the country’s economy has been insignificant.
We outline the contribution of small and medium-sized enterprises (SMEs) to Azerbaijan’s economy, their access to finance, and the role of value chains in ensuring financing. SMEs mainly benefit from bank loans, whereas there are some institutional, legislative, cultural and geographic factors limiting their access to finance.
The low financial literacy rate of SME owner/managers and higher interest rates offered by banks are among the factors restricting SME access to finance. The government has strengthened legislation—in particular relating to institutions—in recent years to improve SME access to finance, but the effectiveness of this move is insufficient.