EBRD says Azerbaijan successful in tackling corruption

/By AzerNews/

By Gulgiz Dadashova

Azerbaijan, a resource-rich country in the South Caucasus region, turned out to be quite successful in tackling corruption, reads the Business Environment and Enterprise Performance Survey 2013/2014 conducted by the EBRD and World Bank.

The government was recently praised by the Organization for Economic Co-operation and Development for its anti-corruption measures, including the adoption of new legislation and the success of the Prosecutor General’s Anti-Corruption Department, according to the report published by the EBRD on April 9.

President Ilham Aliyev earlier announced anti-corruption activity as a priority for the Azerbaijani leadership.

“The system of state services must be built so that no corruption could penetrate it. We have already achieved 100% transparency in the extractive industries. Now it is the turn of the financial sector and the area of public services. We are working on this issue,” Aliyev said on the sidelines of the summer session of the Parliamentary Assembly of the Council of Europe in Strasbourg in 2014.

The top three business environment obstacles identified by Azerbaijani firms were competitors’ practices in the informal sector; access to finance; and access to land, according to the BEEPS V.

The report notes that the share of firms that compete against unregistered or informal firms decreased significantly from 40.7% to 18.4%, possibly due to measures introduced in 2009 aimed at making it easier to start a business.

Access to finance was named as one of the biggest problems in Azerbaijan, as “very few Azerbaijani firms relied on loans to finance their operational activities”.

“Only 14.6% of firms had a loan or a line of credit, down from 19.9% in BEEPS IV. Working capital was predominantly financed through internal funds (92.8%, highest among BEEPS countries), while bank financing accounted for only 4.7%,” the report reads.

Access to land remained in third place, despite a significant reduction in the waiting time for a construction-related permit (from 46.5 to 13.7 days), according to the report.

“The demolition of old buildings in Baku to clear paths for luxury real estate projects may have reduced the availability of land and driven up prices for many firms,” it reads.

Azerbaijan moved up its ranking on the Global Competitiveness Index from 72 in 2011 to 38 in 2014-2015. In the 2015 Doing Business rankings, Azerbaijan ranked 80 out of 185 countries with regard to ease of doing business. Although ranked high on business entry indicators, constraints persist with regard to trading across borders, getting electricity, and dealing with construction permits.

Azerbaijan’s achievements in poverty reduction and shared prosperity in recent years have been driven mostly by rising social transfers, pensions and real wages, rather than by an increase in access to more and better economic opportunities. Between 2005 and 2013, employment rate decreased from 77% to 74%, according to the WB January report.