SMEs in Azerbaijan still face challenges, particularly in accessing finance because of high borrowing costs, a lack of long-term financing, low lender perceptions of SME creditworthiness, poor financial literacy, low confidence in financial institutions, and insufficient collateral, APA-Economics reports citing Asian Development Bank.
”Yet official data and stakeholder surveys reveal that private sector credit as a share of GDP remains low at 17.6% because only a minority of SMEs use formal financial instruments, most of them preferring instead internal or informal sources
Reforming finance for SMEs requires a clearer and more inclusive strategy guided by targets and indicators. Optimizing funds already allocated can identify targets, eliminate overlap, expand available funding, and diversify product offerings. Adopting best international practices would make funding more efficient by consolidating, restructuring,and reorganizing facilities. Private lenders’ use of innovative technology and alternative financial instruments such as agricultural insurance, guarantees, and Islamic finance would improve access to finance, as would strengthened underwriting capacity, optimized product delivery, and greater rural presence.
Higher financial literacy and simplified taxpaying could make SMEs more creditworthy. Finally, establishing an SME registry would facilitate the recording, storage, and analysis of data on SME performance for better policy formulation,” it was noted.