Azerbaijan should focus on creating favorable conditions for SMEs

/By AzerNews/

By Aynur Karimova

The Azerbaijani government should focus on creating favorable conditions for the development of small and medium-sized enterprises, making use of international experience in this regard, remarked expert Kamil Salimov.

He told the local media that SMEs account for 90 percent of all enterprises in the European Union (EU).

"A large share of the GDP is produced in this sector, while the sector ensures the employment of the majority of the working population. The share of export-oriented enterprises in the total number of small enterprises is 20-25 percent in developed countries, while this figure is negligible in Azerbaijan," the expert stated.

Statistics from foreign agencies show that over the past 30 years, the total percentage of small businesses contributing to the GDP has reached almost 70 percent in developed countries, jumping from 38 percent to 52 percent in the United States, from 47 percent to 55 percent in Japan, and from 58 percent to 67 percent in EU countries, while the share of small businesses in the total number of enterprises in these countries does not fall below 92.5 percent.

Salimov further noted that the strengthening of the position of small businesses in these countries is predetermined by government policy.

"Unlike Azerbaijan, the SMEs enjoy priority access to funding and support from the EU in the European countries," the expert said. "However, if we look at the structure of financing in the Fund for Support of Entrepreneurship under Azerbaijan's Economy and Industry Ministry, the largest share [of funds] falls on large enterprises."

In this regard, the expert believes that the Azerbaijani Parliament should amend the laws on "fair competition" and "state support of small and medium enterprises," among others.

Small businesses are considered a key part of economic activity in most countries throughout the world, regardless of their geographical location and level of economic development.

SMEs are important engines for economic growth in each country and a key contributor to employment. They play a critical role in achieving sustainable domestic growth.

Given that 9 out of every 10 jobs are created by SMEs worldwide, improving their access to finance would lead to faster growth, enhanced productivity, and globalization – the core pillars of the country’s sustainability agenda.

Azerbaijan, the largest economy in the South Caucasus, is adopting measures to develop small and medium-sized businesses in accordance with global standards.

According to the criteria of the government, small businesses should maintain fewer than 50 employees and have annual revenue of 120,000 manats or less; medium-sized businesses should maintain 50-125 employees and have annual revenue of 120,000-1.125 million manats; and large businesses must employ a staff of over 125 people and receive annual revenue of more than 1.125 million manats.

One of the main steps in the promotion of SMEs was the establishment of the National Fund for Entrepreneurship Support in October 1992. This was the first financial institution under the Economy and Industry Ministry to be engaged in the allocation of loans to small and medium businesses, including soft loans from the state budget.