Azerbaijan Competitiveness and Trade (ACT) Project

Region: 
Europe and Eurasia
Country / Countries: 
Azerbaijan
Project Status: 
Completed

In Azerbaijan, IDG implemented, the Azerbaijan Competitiveness and Trade Project, a flagship USAID Economic Growth Project that consisted of the following three components:

Improve Domestic Business Environment: Development of the non-oil economy, especially the agriculture sector which employs about 40% of the population, is the most important development challenge facing the country. While there are many highly educated and capable individuals in business and government across Azerbaijan, a quantitative analysis of the impact of current practices on the economy, particularly outside of the oil-funded domain, is absent. Under this component, USAID supported a series of activities that will produce and disseminate economic analysis and economic knowledge and capacity building, with the goal of providing impetus for policy change. This component aimed to:

  • Build and sustain the case for economic reform in Azerbaijan
  • Facilitate changes to business-related laws, regulations, and administrative procedures so as to improve the business climate, particularly in the non-oil sectors
  • Enhance the capacity within the central bank to maintain stability within the financial sector. 

The IDG-led consortium cooperated with government to update business related legislation, regulation, and administrative processes governing: competition, taxation, banking, investment, regulatory agencies, technical and other barriers to business operation, growth and job creation; working with government and private sector to strengthen public-private dialogue; partnering with the banking sector to improve SME lending and increase access to finance; and supporting the use of cost-benefit analysis to rationalize public investment decisions. IDG helped develop e-commerce legislative and regulatory infrastructure in Azerbaijan to conform to international best practices, while also being consistent with the Azerbaijani legal and regulatory structure. 

 

Improve Agricultural Value Chains: Smallholder farmers usually have fragmented land areas of from 1-3 hectares, and they face the constraints of small areas, limited profits, verbal though no written title to land, and limited capital to use to obtain additional financial resources to grow their businesses. Imports of food products in 2009 outweigh exports by a ratio of 2.5 to 1 according to IFAD.

This component of IDG's ACT Project provided technical assistance to farmers, key businesses (processers, cold storage, transport, etc.) in the targeted value chains, formal and informal associative entities, and business support organizations to help rural residents improve their income possibilities through value chain upgrading. IDG aimed to: 

-Identify subsectors that exhibit potential for competitive growth.
-Improve competitiveness of targeted sub-sectors.
-Improve and expand knowledge of agricultural best practices.
-Improve access to finance for SME's and farms, particularly in rural areas. 

IDG worked to build capacity, improve management, and introduce new production technologies for local institutions—business development organizations, associations, processors, and farms and also to facilitate standards improvement and certifications programs. The Team supported improvements all along the value chain starting with the farmer at the cultivation and harvest, up through the cold storage and transportation process, to the processor and then at the final market/consumer.

Improve the Trade Environment: Progress by the Government of Azerbaijan (GOAJ) toward economic reform and open markets has been slow and inconsistent. The GOAJ continues to express interest in entering the World Trade Organization (WTO). Consequently, USAID maintains some active support for reform initiatives. Work in the international trade arena is needed to provide additional support to the GOAJ to improve its track record of implementation of business-friendly policies. The below activities stimulated broad-based understanding of the trade distortions and needed legislative reforms to accede to WTO:

  • Support to GOAJ in improving the trade enviroment
  • Support to GOAJ on procedures and mechanics of WTO accession. 

IDG supported the government in meeting international trade and investment standards and implementing relevant legislative changes; assisting the process for acceding to the WTO; supporting government and civil society in quantifying the impact of international trade reforms; and supporting government in initiatives to meet international best practices in combating anti-money laundering.