Study of Small and Medium Enterprises in Azerbaijan - IFC

Chart 8.3
Banking Volume
vs GDP Growth in
Azerbaijan, in mln
AZN
30000
25000
20000
15000
10000
5000
Loans
Deposits
Assets
GDP
0
2005
2007
8.2 Financing SME operations
In market economies, banks and other non-bank financial institutions, such as leasing
companies and credit unions, are the main providers of financing. This chapter evaluates
the activity of the banking environment in Azerbaijan as it relates to SMEs, examining
how the credit conditions influence the development of local entrepreneurship.
Main Survey
Findings:
• Access to finance was indicated as a key problem by 73 percent of the
entrepreneurs;
• SMEs do not consider banks to be an effective mechanism for financing
their businesses – the share of bank credits was only:
– 4 percent of all investments into fixed assets;
– banks usually do not issue credits for equity;
– only 7 percent of financing for working capital is from banking sources.
Based on IFC’s research, the penetration of bank credits as a share of SMEs’ financing
for fixed assets was only 4 percent, with a similar percentage for the financing of
working capital.
Chart 8.4
Entrepreneurs do
not consider banks
to be an effective
mechanism for
financing their
businesses
Average number of inspections from
ones who had them
100% 94%
80%
60%
The share of the sources of the circulating
funds financing (among all enterprises)
100%
80%
60%
90%
40%
40%
20%
0%
20%
4% 2%
0%
7% 3%
Enterprise`s own funds
Funds borrowed in a private
commercial bank
Other sources
128
St u d y o f Sma l l a n d Me d i u m Ent e r p r i s es in Az e r b a i j a n