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Credit unions may significantly contribute to agrarian sector in Azerbaijan

By Narmina Mammadova

The development of credit unions can make a significant contribution to the development of the Azerbaijan’s agricultural sector, the chairman of the board of the Azerbaijan Credit Unions Association (AKIA), Jalil Suleymanov, told Trend on December 20.

“Credit unions in Azerbaijan are mainly aimed at financing the agricultural sector, because loans of 2,000-3,000 manats are not a significant amount for other sectors of the country’s economy. Farmers sometimes need such amounts for tillage and other work,” he said.

Suleymanov pointed out that in most cases banks are not interested in issuing loans to small and medium-sized businesses in the regions, with the exception of a limited number of entrepreneurs, and this is not widespread.

“78 credit unions operate in the country, and more than 80 percent of these companies are concentrated in the regions of the country,” he said.

Listing the problems of credit unions, Suleymanov noted that the unions have problems with financing, while there is high demand in the market.

“At the moment there is a high demand in the agricultural sector, in particular in the field of cotton growing. From the side of the cotton growers, there is a high demand for loans for the year in the amount of 1000-2000 manats in accordance with the turnover. But donor companies avoid working in this direction,” he said.

This year cotton is planted on 132,000 hectares in Azerbaijan and next year it is planned to plant 100,000 hectares with cotton. As for November 2018, 215,000 tons of cotton have been harvested.

2016 was a turning point from the perspective of cotton-growing in the country. In 2016, cotton was planted on an area of 51,000 hectares, while the harvest hit 90,000 tons. That is three times more than in 2015.

Recently it became known that livestock sector is leading in the number of agricultural loans, 84 loans were issued in this sector in 2018 and 18 more loans were issued in horticulture.

Since the beginning of lending in 2018, 151 farmers from 41 Azerbaijani regions have been provided with loans worth 10 million manats in the agricultural sector.

In general, since 2007, loans worth 210 million manats have been issued.

Suleymanov also noted that all Azerbaijani credit unions work with local capital and the share of problem loans in the total portfolio of unions is much lower than that of large credit organizations.

The head of the association also added that currently the Enterprise Development Fund works closely with credit unions, monitoring is conducted and he has certain plans for working with unions.

The Azerbaijan Credit Unions Association (AKIA) was founded in 2003. Its main objectives are promoting credit unions at both the regional and international levels, assistance in creation of new loan unions, training for members of the loan unions to improve the quality of their work, establishing of contacts with donor organizations, the protection of the rights of the loan unions, lobbying for legislation related to their activities.

About Fidan Abdullayeva