GTZ is assisting the Azerbaijan Government in the priority area economic reform and developing the market system (WiRAM) in creating an economic and legal environment to promote the private sector. The primary goal is to reduce poverty by creating sustainable and broad-based employment and income opportunities. Regionally-oriented promotional strategies are intended to reduce the deep economic gap between the region around the capital and rural areas.

GTZ is focusing its measures on the following areas:

Promotion of small and medium-sized enterprises (SMEs)

Azerbaijan’s economy is dominated by export-oriented petroleum production, with a low degree of diversification and further processing in other industries. The slow pace of privatisation and delayed structural reforms together with an adverse investment climate are hindering rapid reorganisation of the economy. GTZ is assisting the Azerbaijan economy in transforming large enterprises into smaller operating units. It is providing partner organisations with expert international advice on privatisation, splitting up operating units and establishing them as separate businesses, and is also providing financing instruments in cooperation with local banks.
Establishments often lack market knowledge, modern technology, adequate capital resources, and knowledge of management, plant organisation and cost accounting. GTZ is accordingly supplying expertise in production and marketing, assisting establishments in purchasing suitable intermediate products and modern technology, and is drawing up business plans.

Development of the banking sector

Procedures and intrabank settlement systems have fallen behind the times in Azerbaijan and do not meet international standards. GTZ is mobilising the necessary expertise in cooperation with the Savings Bank Foundation for International Cooperation. It is advising partner banks on lending, deposit management, product development and staff training. The Azerbaijan bank training centre in Baku is being integrated into the local training measures. Trained bank staff get backstopping and advice on the job. This involves product design in the lending and deposit-taking business, evaluating credit risks, and portfolio management.

Legal and judicial reform

The lack of legal certainty in commercial, trade, lending and bankruptcy law makes it particularly difficult to find foreign investors for business start-ups. GTZ is helping find loans and establish contacts with international customers, investors and lenders. As an accompanying measure, GTZ is advising the Azerbaijan Government in the context of legal and judicial reform on the further development of civil and commercial law. Commercial law plays a special role in connection with SME promotion.