Countries & Regions

The Azerbaijan microfinance market maintained stable loan portfolio quality in the most challenging years for microfinance in ECA. Nevertheless, there is a growing concern of multiple borrowing and over-indebtedness in the market. It is expected that recent inclusion of NBFIs into the credit registry will make it easier for NBFIs to stay away from multiple borrowing, although a high price per report charged by the registry still keeps MFIs uncertain as to how intensively the Registry will be used. Detailed analysis on potential effect of Credit Registry costs on the profitability of MFIs and comparison between Credit Registry prices in the region can be found in the Azerbaijan Country Briefing.

• Overview:  Azerbaijan was one of the very few microfinance markets in Eastern Europe and Central Asia to emerge relatively unharmed from the global financial crisis that swept across the region at the end of 2008 and throughout 2009.
• Supply & Demand: Azerbaijan is on a watch list of markets with high market penetration and growth rates due to recent periods of strong growth.
• Funding:  In 2010, deposits represented a larger portion of the funding base than the previous year. Investing in Azerbaijan is considered less risky relative to other ECA markets, which is visible through increasing external debt despite the financial crisis along with a notable decrease in the cost of the loans in 2010.
• Performance:  A recently implemented social insurance tax has negatively impacted the profitability of MFIs. Downscaling banks have substantially higher risk levels than NBFIs for their microcredit portfolio.
• Quarterly Update:  As MFIs are entering the Credit Registry, they are butting up against the price per report, as the costs are potentially damaging for their profitability. The Azerbaijani Central Credit Registry is clearly the most expensive in comparison with credit registries in Georgia, Kyrgyzstan and Kosovo.

To stay current on Azerbaijan market level developments and gain deeper market intelligence, learn more about MIX Premium Solutions to see if our premium services are right for you.