MICROCAPITAL BRIEF: Azerbaijan Implements Movable Collateral Registry, Credit Bureau with Technical Assistance from IFC, Funding from SECO

The government of Azerbaijan, with technical assistance from the World Bank Group’s International Finance Corporation (IFC), has instituted a series of regulatory reforms to improve financial infrastructure in the country. The Azerbaijan Financial Advisory Services program, which was funded by Switzerland’s State Secretariat for Economic Affairs (SECO), included the development of an “electronic movable collateral registry.” This allows for the tracking of assets that small businesses have pledged as collateral, thus boosting lenders’ confidence in lending to these businesses. The government of Azerbaijan also authorized the creation of the country’s first private credit bureau. Since its launch in 2018, the bureau has received approximately 2 million inquiries.

Ibrahim Alishow, Acting Chairman of the Azerbaijan’s Financial Market Supervisory Authority, said, “Small businesses are the backbone of Azerbaijan’s economy. The reforms we made will help unlock the potential of thousands of small businesses, ultimately driving economic growth.”

Hans Peter Lankes, IFC’s Vice President of Economics and Private Sector Development, said, “Banks in Azerbaijan and Eastern Europe can see that it makes good financial sense to lend to smaller businesses…. The key is creating the financial infrastructure, like credit bureaus, that allow them to do so with confidence.”

SECO is an agency of Switzerland’s government that is responsible for the planning and implementation of economic and trade policy measures relating to developing countries. SECO aims to integrate these countries more fully into the global economy and promote their sustainable economic growth, thus contributing to poverty reduction. SECO’s priorities include creating stable economic conditions, competitiveness, trade diversification, basic infrastructure, and domestic and foreign investment, with an emphasis on energy, environmental and climate issues. As of 2017, SECO had an annual budget of CHF 440 million (USD 440 million).

IFC offers loans, equity investments, advisory services and technical assistance to private companies with the intent of alleviating poverty and promoting open and competitive markets in developing countries. As of 2019, IFC reports total assets of USD 94.3 billion. Since 1995, IFC has invested approximately USD 473 million to finance 56 projects across the financial services, infrastructure and manufacturing sectors of Azerbaijan.

The World Bank Group is a multilateral organization whose goal is “to end extreme poverty and promote shared prosperity in a sustainable way.” As of 2019, it has 189 member nations. The group encompasses: (1) IFC; (2) the International Bank for Reconstruction and Development and the International Development Association, which make up the World Bank; (3) the Multilateral Investment Guarantee Agency; and (4) the International Centre for Settlement of Investment Disputes. During 2018, the World Bank Group committed USD 66.9 billion of funding to partner countries.

By Anna Gravois, Research Associate

Sources and Additional Resources

IFC press release
https://ifcextapps.ifc.org/ifcext/pressroom/ifcpressroom.nsf/0/A04F822544E4734B85258480005A1175?OpenDocument

IFC homepage
https://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/home

World Bank Group homepage
https://www.worldbank.org

SECO homepage
https://www.seco.admin.ch

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