By Rasana Gasimova

One of the tasks of the Azerbaijan Micro-finance Association (AMFA) is to restructure the credit portfolios of its members, and corresponding work is being carried out to this end, Jalal Aliyev, Chairman of the board of the Azerbaijan Microfinance Association, told Trend on October 9.

The Association currently envisages restructuring of credit portfolios worth 3.1 million manats ($1.83 million), Aliyev said.

“We have already restructured about 1.4 million manats ($823,500), which is approximately 45 percent of all loans that we must refinance,” he added.

He mentiond that it is necessary to ensure refinancing of microcredit organizations in national currency.

Aliyev went on to say that foreign investors show particular interest in the microfinance market of Azerbaijan. “A few days ago, the Association held an event where one of Aggreko investors also participated. During the meeting, Aggreko representatives and members of the Association discussed issues of attracting loans from other funds and foreign banks.”

He also drew attention to the mission of the Islamic Corporation for the Development of the Private Sector, particularly the Islamic Microfinance Fund in Azerbaijan.

Aliyev said that the legislation in force in Azerbaijan does not allow banks and credit organizations to engage in financing on Islamic principles. He added that Islamic Development Bank (IDB) and the Ministry of Economic Development signed a memorandum-protocol to improve the legal framework and provide local economic entities with access to Islamic finance.

“Nevertheless microcredit organizations registered in Azerbaijan are engaged in Islamic finance, and over the past years, the Islamic Corporation (ICD) has proposed and implemented projects to provide technical support to our banks and non-bank credit organizations. We know that there are two credit organizations in Azerbaijan that received such technical support from ICD – one for financial development, and the other is Fineko. This technical assistance is aimed at developing accounting operations for the implementation of Islamic microfinancing, “Aliyev continued.

As for the introduction of new business models, according to Aliyev’s words, in recent years, innovations have improved not only in the banking sector, but also in other areas of the economy.


“Our local credit organizations use these innovations. Credit organizations already accept applications from our potential customers online through the electron government, applications and documents to confirm income through the Asan finance system. Our organization expects in the future to introduce technical capabilities and expand opportunities for quick credit provision to our customers within the framework of the legislation,” Aliyev concluded.

At present, the credit portfolio of microfinance organizations in Azerbaijan amounts to $273 million.

Microfinance has been submitted to Azerbaijan in the mid-1990s as a strategy for repatriation of 1,000,000 IDPs and refugees who have been expelled during the Nagorno-Karabakh conflict with Armenia.

On December 19, 2001, a number of organizations signed the Memorandum of Understanding, incorporated the Azerbaijan Micro-Finance Association (AMFA).

AMFA main mission is to strengthen the potential of microfinance organizations in the country and create conditions for joint rational activities within the interests of the microfinance community.

AMFA currently includes 35 structures, including commercial banks, NBCOs, credit unions, insurance companies, leasing companies, and others.

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