Azerbaijan attracts foreign investors to the microfinance market
By Leman Mammadova
Azerbaijan Microfinance Association (AMFA) is negotiating to attract manat funds from foreign investors, AMFA Executive Director Zhalya Hajiyeva said, Trend reports.
Hajiyeva said that the main goal is to refinance (microcredit organizations) in local currency, not in foreign. Therefore, it would be advisable if foreign funds were hedged and only after that came to Azerbaijan, noting that negotiations are currently underway in this direction.
Hajiyeva also added that investors usually visit Azerbaijan in April and hold meetings with their clients, as well as with potential clients.
“We believe that some microcredit organizations will be able to sign refinancing contracts with foreign investors,” she said.
The Executive Director added that AMFA also sent its proposals to the Financial Market Supervisory Authority to revise the legislation on non-bank credit organizations (NBCOs) so that the range of services provided by the NBCO has been revised.
According to the Central Bank of Azerbaijan, as of December 1, 2018, the loan portfolio of non-bank credit organizations amounted to 392 million manats ($ 230.66 million), which is 6.7 percent less compared to the same period last year, its share in the total loan portfolio of credit organizations is 3.1 percent.
At the same time, the peak indicator of the NBCO loan portfolio at the beginning of 2016 was 595.5 million manats ($ 350.40 million).
Microfinance organizations have always played a special role in the development of Azerbaijan’s economy, reducing poverty and supporting entrepreneurship. At present, the loan portfolio of microfinance organizations in Azerbaijan amounts to $273 million.
Microfinance has been submitted to Azerbaijan in the mid-1990s as a strategy for repatriation of 1,000,000 IDPs and refugees who have been expelled during the Nagorno-Karabakh conflict with Armenia. In 1996, international non-governmental organizations in Azerbaijan launched microfinance activities to increase economic opportunities for local and war-affected people in the country. They began to discuss and exchange experiences on the issues they faced in providing credit services in order to attain sustainable incentives.
On December 19, 2001, a number of organizations signed the Memorandum of Understanding, incorporated the Azerbaijan Microfinance Association.
AMFA main mission is to strengthen the potential of microfinance organizations in the country and create conditions for joint rational activities within the interests of the microfinance community.
AMFA currently includes 35 structures, including commercial banks, NBCOs, credit unions, insurance companies, leasing companies, and others.
Micro finance refers to an array of financial services, including loans, savings and insurance, available to poor entrepreneurs and small business owners who have no collateral and wouldn't otherwise qualify for a standard bank loan.
The goal of microfinance is to create a highly dynamic and efficient system of lending to small enterprises to further stimulate the production and distribution of goods and services, and to help start-up entrepreneurs in acquiring the experience of making a profit and accumulating capital.
This financial service is mostly in demand in the countries with developing economies, because it helps solve many problems of national importance.
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