Study of Small and Medium Enterprises in Azerbaijan - IFC

There also appears to be a serious gap between the strictness and a number of
certification requirements on paper and the implementation capacity of certification
agencies. Realistically, the gap needs to be closed at both ends. Implementation
capacity of the relevant services and their labs needs to be strengthened, while
requirements need to be reduced and focused on areas with serious health and safety
concerns. Additionally, a risk-based approach, which is widely used in the European
Union, could be applied in Azerbaijan (see Box 9.4).
The certification process is made even more complicated by the fact that entrepreneurs
have difficulty in obtaining information on new or existing requirements from
state agencies. For instance, the texts of national standards on the basis by which certification
is carried out are not publicly available and may only be obtained (with a great
deal of difficulty) from the Standardization Agency and some other agencies involved
in dealing with certification. As a result of the numerous compulsory requirements,
the majority of entrepreneurs use unofficial ways to obtain a certificate. According to
the IFC survey, 31 percent of individual entrepreneurs and 64 percent of SME participants
indicated that they used unofficial ways to have certificates issued.
View from an entrepreneur:
“If you want to work lawfully, you must deal with officials that are likely to find issues. As
a result you lose time and money and eventually have to come to an agreement with that
official anyway. Therefore, it is far more convenient to do it via the informal way.”
Regulation of the official cost of certification is not uniform, leaving certification
authorities with the discretion to set the fees. According to IFC survey findings, entrepreneurs
spent an average 11 days and 258 Azerbaijani manats ($320) to obtain one
certificate. In addition, on average a certificate is valid only 19 months, which means
the entrepreneurs have to go through the certification procedure every 2 years.
9.3 Main difficulties faced by IEs and SMEs in importing
While few businesses participate in foreign trade, the survey results showed that
about 66 percent of IEs and 38 percent of SMEs consider import procedures as
problematic. The main problems entrepreneurs face in importing are difficulties
related to transportation, high customs tariffs, bureaucracy in customs authorities
(inviting to pay unofficial payments), and unclear customs value assessment methods.
Survey respondents believe that various types of administrative barriers and excess
bureaucracy together make up the third major problem faced by entrepreneurs in
importing (see Chart 9.3).
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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