Azerbaijan

Private Sector Activity (PSA)

In 2015, the Government of Azerbaijan (GOAJ) developed strategic sector roadmaps for developing the economy, with a special focus on nonoil sectors such as agriculture. The need for developing non-oil sectors, especially agriculture – which officially employs half the Azerbaijani workforce – became obvious as the world price for oil began declining in 2014. Since then, the GOAJ implemented a reform agenda supporting incentives for non-oil exports by facilitating greater exposure to regional markets, implementing administrative reforms to remove barriers for trade, registering agricultural associations, and establishing new government agencies to support small and medium sized business.

The USAID Private Sector Activity (PSA) is a five-year, $15 million initiative that utilizes a partnership and co-investment approach to support a more resilient Azerbaijan economy and improve the business enabling environment. To accomplish this, the Activity supports the non-oil sector by improving the competitiveness of the private sector (with a special emphasis on agriculture and other rural economic activities), building the capacity of business support services, and reducing the barriers that hinder the development of micro, small, and medium enterprises (MSMEs).

The Private Sector Activity is building on the successes of USAID’s support to agricultural producers and processors in Azerbaijan achieved over the last 20 years. In partnership with the Azerbaijani government and the private sector, the Activity helps address their priorities for modernization and improvement of public and private sector support and service delivery. This supports the diversification of Azerbaijan’s economy by strengthening the capacity of public institutions to carry out new responsibilities and adjust to institutional change to implement the reforms outlined in the strategic roadmap. The Activity achieves this through activities designed to:

1. Develop a more diversified economy: USAID provides assistance that supports the increased diversification of the non-oil economy in Azerbaijan, specifically but not limited to the agricultural sector. As such, the Activity assists small and medium-sized farmers to become commercially viable, competing in local or export markets. The project also works with processors, traders, and cold storage operators to improve their adherence to international standards. The activity builds capacity in support of developing the agricultural sector and value chains in which the activity works, as well as in support of USAID’s Global Development Alliance (GDA) initiatives.
2. Improve the business environment for micro, small and medium-sized businesses: Because businesses face administrative barriers that stifle competition, dissuade investment, and constrain trade, the Activity works with associations and MSMEs to identify these barriers, communicate them to the relevant government agencies, and target their elimination. These efforts help to increase the benefits of economic growth and remove obstacles to competition, investment, trade and integration into the global economy. The Activity also contributes to the harmonization of Azerbaijan’s legislation and institutions with  international standards and recognized best practices. As a result, businesses have increased opportunities to produce, trade, export and earn income.
3. Support Azerbaijan’s economic reforms: The Activity increases Azerbaijan’s economic stability by supporting economic reform initiatives to help boost the non-oil sector. To accomplish this, the project has developed a rapid, flexible response mechanism to provide technical specialists and material support to Azerbaijani officials who require assistance to identify public sector reforms. It will then recommend reform implementation options and monitor the progress of reforms offering assistance as needed. Support will include both short-term and long-term technical assistance to Azerbaijani counterparts, potentially including specialists in: Monetary Policy; Banking Supervision; Financial Intelligence; Public Financial Management; and others as identified by Azerbaijan’s government and private sector, as well as USAID.

Cross-cutting themes:

1. GOAJ collaboration
2. Private sector engagement
3. Women’s economic participation

Partners:

1. Nathan Associates Inc. (USA)
2. WCC International (USA)