AZERBAIJAN - Economy
Managing Director, Eastern Europe and Caucasus at the European Bank for Reconstruction and Development (EBRD)
A French national, Francis Malige joined the EBRD in February 2010 as a Director in the Financial Institutions team. Over the past four years, he has successfully developed the bank’s Financial Institutions business in the Western Balkans, Eastern Europe, Turkey, and most recently in the southern and eastern Mediterranean. Before joining the EBRD, he was Managing Director for Corporate Development at BNP Paribas, focusing on bank acquisitions. His earlier career was in accounting and consulting, at Arthur Andersen and McKinsey & Company, where he served clients in industry, high tech and construction, as well as financial services. He is a graduate of ESCP Europe, a French business school.
Outside the oil sector, the EBRD is the largest investor in the private sector in Azerbaijan. Since the opening of our office in Baku in 1992, we have invested a total of $2.4 billion into 155 projects covering various sectors of the economy, including natural resources, manufacturing, services, the financial sector, agriculture, and infrastructure. Following a decade of rapid economic growth, Azerbaijan has reached a critical stage in its development. Diversification of the economy is now crucial to ensure that Azerbaijan enters the next stage of development with a modern and vibrant private sector. The recent decrease in oil prices has only added urgency to this mission. The EBRD has a longstanding track record of supporting this diversification agenda. We do so through a strong focus on SME development by making direct investments in mid-sized companies or providing credit lines to small businesses via local banks. This creates sustainable employment and wealth. 2014 has been a very successful year for the EBRD in Azerbaijan—a record year in terms of number of projects with 21 in total, representing ‚¬240 million in investments, and all in the private sector.
Energocredit was launched in Azerbaijan in November of last year. It is part of the Caucasus Energy Efficiency Program, a $125 million credit line to local partner banks to incentivize the efficient use of energy resources by SMEs, local businesses, and households. It aims to demonstrate the benefits of investing in energy efficiency for companies and households, in a very practical and tangible manner, and it provides financial means for the necessary investments. Already three local banks—DemirBank, Mu‚¬anbank, and AccessBank—have signed up to the program. AccessBank has used part of their loan to improve energy efficiency at their own head office building—a case of leading by example. DemirBank and Mu‚¬anbank will on-lend EBRD funds to local firms and retail clients to finance energy efficiency projects. Unibank is another bank that is considering joining the program in the near future. The program is also supported by a team of international consultants who provide support to local banks, firms, and households with a dedicated technical package.
The EBRD intends to continue playing a critical role in supporting the commercial and private banking sector in Azerbaijan. A strong and stable banking sector is essential for the development of the rest of the economy and for a well-functioning business environment. That’s why support for the financial sector translates into support for the whole economy. Nowhere is this truer than for SMEs as they are difficult for us to reach directly in large numbers. We work with banks because they have the infrastructure and the networks to serve their SME clients and assist them closely as they develop. SMEs are crucial to the diversification of Azerbaijan’s economy. Around the world, and are a major engine of growth. Improving their access to finance is vital for their success and expansion. In Azerbaijan, we have been, and will continue to be, one of the main financiers of SMEs both directly and indirectly.
We invest in agribusiness because this contributes to food security, to regional development outside the large cities, and to upgrading the skills of farmers, all to the benefit of the national economy and local communities. It is also a major opportunity. Azerbaijan’s agricultural sector has huge potential for further development, as current productivity remains comparatively low and further skills transfer is needed to upgrade farming techniques. A small number of enterprises, including our clients, have implemented international quality and hygiene standards. We need to build on that. Also, access to finance remains lower in rural than in urban areas. Our strategy is to take an integrated view of the agribusiness sector—from the field to the table. Small landholders can benefit from EBRD finance as much as big supermarkets can, whom we also encourage to invest in the local value chain.
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