National Fund for Entepreneurship Support

After the Republic of Azerbaijan announced independence in 1991, the necessity emerged for establishment of financial institutions able to provide efficient financial support for transition to new economic relations and establishment and development of private sector and consequently in October 12, 1992 the first financial institution was established intended to provide lax credits from the state budget for entrepreneurship, including small and medium business with approval of the “Charter of Azerbaijan Republic National Fund for Entrepreneurship Support” and implementation of necessary arrangements with regard to activities of this entity were delegated to the Cabinet of Ministers of Azerbaijan Republic.

Mechanism of the Fund

After approval of the “Charter on the distribution and use of proceeds” specified in the “Investment support to small entrepreneurship” of the State budget with the decision No 110 dated September 29, 1997 of the Cabinet of Ministers of Azerbaijan Republic, provision of concessionary credits to entrepreneurs has been carried out on account of the funds allocated by the Ministry of Finance of Azerbaijan Republic with the relevant decision of the Cabinet of Ministers based on the suggestions of State Anti-monopoly Policy and Entrepreneurship Support Committee as a result of amendments made in the procedures for placement of the proceeds of the National Fund for Entrepreneurship Support.

As the first mechanism to deliver the proceeds of the National Fund for Entrepreneurship Support to the entrepreneurs failed to properly guarantee full utilization of the proceeds provided by the state budget, provision of concessionary credits to entrepreneurs for the time satisfying the latter, also achievement of quantity and quality indicators required in the efficient use and repayment of credits, only 1.1 million AZN or 8 percent out of 13.2 allocated from the state budget for concessionary credits was used up to 2001. This situation created the necessity to make substantial amendments in the Charter of the National Fund for Entrepreneurship Support and in the procedures on use of its proceeds.

Activity of the National Fund for Entrepreneurship Support

Reestablishment of the mechanism for the activity of the National Fund for Entrepreneurship Support and financing of the investment projects of the entrepreneurs with concessional credits was a turning point with approval of the “Charter of Azerbaijan Republic National Fund for Entrepreneurship Support” and the “Procedures on the use of the funds of Azerbaijan Republic National Fund for Entrepreneurship Support” with the Decree No 779 of the National Leader Heydar Aliyev dated August 27, 2002 for the purpose to eliminate the problems in the utilization of concessionary credits provided from the state budget, coinciding the activity of the National Fund for Entrepreneurship Support with the duties to be solved on the priorities and steps of development of Azerbaijan economy, strengthening of state support on the entrepreneurship and widening of this activity.

Application of these procedures played an extremely important role in provision of concessionary credits. In compliance with the Procedures, the proceeds of the National Fund for Entrepreneurship Support are placed through authorized banks selected by the Competition Committee established from the representatives of the Ministry of Economic Development, Ministry of Finance and Central Bank and commencement of provision of credits in national currency to entrepreneurs with the lowest interest (annually 7%, and annually 5% for the projects directed to development of mass media), also establishment of the concessional period of the first three two part of credit periods and lower credit interests resulted with an extraordinary interest of the entrepreneurs in the use of these credits.

The changes occurred like establishment of representative offices of the Fund in regions, application of entrepreneurs directly to the Fund and regional representative offices, establishment of a Supervisory Board of the Fund, which is a management establishment as well and provision of concessionary credits as per the following classification through the modification of the activity mechanism of the National Fund for Entrepreneurship Support with the “Charter of Azerbaijan Republic National Fund for Entrepreneurship Support” and the “Procedures on the use of the funds of Azerbaijan Republic National Fund for Entrepreneurship Support” approved with the Decree No 504 of the President of Azerbaijan Republic dated December 2006.

The “Charter of Azerbaijan Republic National Fund for Entrepreneurship Support” and the “Procedures on the use of the funds of Azerbaijan Republic National Fund for Entrepreneurship Support” approved with the Decree of the President of Azerbaijan Republic dated October 7, 2009 (this Decree has become effective in October 9, 2009) envisage the development of activity mechanism, rights and duties, legislation base and management structure of the Fund, including the arrangements of an utmost importance like precise and effective control of the activity of the Fund.