Azerbaijan enhances SMEs' role in transitioning to green economy
Nazrin Abdul
Read moreIn Azerbaijan, small and medium enterprises (SMEs) are the backbone of the economy, comprising 99.6% of all businesses, Azernews reports.
The Small and Medium Business Development Agency, part of the Ministry of Economy, reports that 96.8% are micro-enterprises, 2% are small enterprises, and 0.8% are medium enterprises.
Globally recognised on June 27 as the Day of Micro, Small, and Medium Enterprises since 2017, this day highlights their pivotal role in sustainable development and the economy. SMEs are acknowledged as drivers of economic growth, providing employment, reducing poverty, fostering entrepreneurship and innovation, and contributing significantly to achieving Sustainable Development Goals. Worldwide, SMEs constitute about 90% of all companies, employing 60-70% of the workforce and generating 50-60% of GDP.
In Azerbaijan, the categorization of micro, small, medium, and large businesses was formalised by a Cabinet of Ministers' Decision in 2018. Micro-enterprises employ up to 10 individuals and earn up to 200,000 manats annually, while small enterprises employ 11-50 people with annual earnings of 200,000 to 3 million manats. Medium enterprises have 51-250 employees and earn between 3 and 30 million manats annually.
The sectors where Azerbaijani SMEs are most active include trade, agriculture, construction, processing, logistics, industry, tourism, public catering, and transport. Over the past five years, under the new SME classification criteria, the number of SMEs has increased by 54%. Their contribution to the non-oil/gas sector's added value has risen from 23.5% to 27.2%, generating approximately 17.2 billion manats in added value. Employment in SMEs has grown by 31%, surpassing 370,000 workers.
In 2023, the turnover of Azerbaijan's SME sector reached 43.8 billion manats, marking a 13% increase from 2022. This growth reflects positive trends in company numbers and criteria compliance, with approximately 5,300 companies meeting growth standards.
The government provides extensive support to entrepreneurs and SMEs, including tax incentives, customs benefits, infrastructure development, preferential loans, and subsidies. The Small and Medium Business Development Agency (SMB) plays a pivotal role in enhancing state policy effectiveness, implementing institutional support, and facilitating business establishment and growth.
Looking forward, Azerbaijan aims to further digitise SMEs, enhance their role in transitioning to a green economy, and support their activities in recently liberated territories. This strategic focus aligns with Azerbaijan's broader socio-economic goals outlined in the "Azerbaijan 2030: National Priorities for Socio-Economic Development" strategy, reinforcing SMEs as a cornerstone of economic growth and employment.
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