The new tool, AzALES, will cover all commercially viable crops and animal products in Azerbaijan and will help lenders in assessing the risk more effectively
Image: EBRD and EU support Azerbaijan in developing new agriculture loans tool. Photo: Courtesy of The European Bank for Reconstruction and Development.
The European Bank for Reconstruction and Development (EBRD) and the Frankfurt School of Finance and Management, with support from European Union (EU) have developed the Azerbaijan Agriculture Loan Evaluation System (AzALES), a new tool to increase the capacity of banks in Azerbaijan to lend to local farmers and agricultural firms.
AzALES is expected to cover all commercially viable crops and animal products in the country and help lenders in assessing the risk more effectively, process loans faster and improve the access of finance for small private firms.
According to EBRD, AzALES will be centrally operated and maintained by Azerbaijan’s Agency for Agricultural Credit and Development under the Ministry of Agriculture and will be available to the entire financial sector in the country.
The new tool will increase transparency and reduce the cost of agricultural loans in Azerbaijan
The tool will benefit from centralised and reliable agricultural data, which will increase efficiency and transparency and could also reduce costs. It can disburse agricultural loans more systematic way. The lending will be on the terms and conditions that will prevent over-indebtedness.
EBRD’s office in Baku head Ivana Duarte said: “Offering banks a more efficient system for evaluating agribusiness loans will help improve services for the sector, which is often still considered to be risky, a perception that the new tool will help to address.
“The system is expected to leverage the positive effects of the reforms already being carried out in Azerbaijan’s financial and agricultural sector by the government.”
EBRD said that funding from the European Union had been instrumental in the creation of AzALES.
Minister Counsellor and EUD Delegation to Azerbaijan Cooperation Section Head Simona Gatti said: “AzALES comes at a critical point in time when the government of Azerbaijan deploys important resources to modernise the agricultural sector as part of its economic diversification strategy.
“The success of many of the initiatives inscribed in the government roadmap for agriculture and indeed EU-supported activities in this sector hinge on improved access to agricultural credit notably by smaller and medium-sized rural operators.”