The Asian Development Bank (ADB) is providing small and medium enterprises (SMEs) of Azerbaijan access to affordable credit to help the Central Asian nation develop industries beyond the oil sector, ADB said in a news release on Tuesday.
ADB is extending up to 6 million U.S. dollars in loans to Azerbaijan's Bank of Baku, a commercial bank that primarily caters to retail customers, accounting for 60 percent of the retail sector of Azerbaijan.
"The proposed loans will provide increased access to financing by SMEs, which would help promote their operations and profitability and enhance their competitiveness, contribute to private sector development and translate into sustainable economic growth," said William Willms, Director for Capital Markets of ADB's Private Sector Operations Department.
One of the biggest hurdles facing SMEs in Azerbaijan is the lack of access to finance, though they account for 80 percent of registered private businesses in the country and represent an estimated 10 percent of gross domestic product in the past five years.
SMEs are the biggest source of domestic employment outside of the public sector, providing livelihood for over three quarters of the country's workforce, said the multilateral development finance institution.
"In the long term, Azerbaijan's high dependence on oil exports may pose a threat to the economy given the potential volatility in the international oil market, said Willms," adding that the main challenge for Azerbaijan is to develop the non-oil sector to ensure that the economy continues to grow on a sustainable path after the oil boom.
ADB's assistance is expected to help strengthen the banking sector of Azerbaijan, which is currently underdeveloped and unable to fully mobilize available liquidity and channel it to SME investment. As private banks are a key source of small-scale loans, in particular for individual entrepreneurs and SMEs, they are critical to the economy, said ADB.
Source: Xinhua
|
Comment
Tell A Friend
Print Format
Save Article