Azerbaijan Microfinance Analysis and Benchmarking Trends Report 2008

This report traces performance changes in Azerbaijan’s microfinance sector within the context of current macroeconomic conditions and regulatory environment, highlighting trends for a group of nine leading MFIs in the period 2004–2007.

Economic growth and increased government expenditure have resulted in higher per capita income, job creation and lower poverty levels in Azerbaijan. The data reveals that:

• MFIs in Azerbaijan are becoming more efficient and increasing outreach despite high inflation, absence of a specific microfinance law and local bank reluctance to provide funding;
• MFIs and their staff have the capacity to operate in areas where banks are not willing to work and are improving microfinance sector transparency and openness;
• Azerbaijani MFIs will continue to benefit from the country’s economic growth in 2008;
• Government expenditure will continue to grow, exacerbating inflationary pressures as Azerbaijan continues to enjoy high oil and gas revenues;
• Rising inflation will continue to have a negative effect on MFI financial performance, and institutions will have to address these challenges in their operations and financing choices.