Azerbaijan

Developing a strong, stable Azerbaijan

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Overview of international organizations' relief and development activities in 2002
[Editor's note: This article originally appeared in Baku Sun on January 17, 2003]

In 2002, the international development community, which includes international nongovernmental organizations, UN organizations and donor agencies, continued to reduce suffering and alleviate poverty among Azerbaijan's vulnerable populations, to develop a foundation for democracy and governance at the grassroots level, and to implement economic restructuring efforts with a focus on agribusiness. They addressed those goals through community development, civil society and democracy, health, media, as well as micro enterprise and business development programs.

The United States Agency for International Development (USAID), World Bank, IMF, European Union, Asian Development Bank (ADB), UNDP and other donor governments are among the major donors supporting the country's long-term development programs. International donors and international development and relief organizations provide funding and implement programs and activities in almost all regions of the country with a primary focus on the conflict-affected areas, where large numbers of refugees and internally displaced people currently live. The growing collaboration and partnership between the public and private sector in support of major programs is an important new development in the funding and management of relief and development programs in Azerbaijan.

The trend of a stronger partnership between the public and private donors is an exciting development in Azerbaijan. It will reduce duplication of effort and it will dramatically increase the impact of programs currently being implemented. The collaboration will leverage much greater results.

The U.S. government's suspension of Section 907 legislation in 2002 has opened new opportunities for enhanced and more clearly defined cooperation between programs funded by the U.S. Government and the government of Azerbaijan. This cooperation is essential if local and international NGOs are to effectively support problem-solving efforts.

Economic Development

The international community has supported the development of micro, small and medium enterprises with a focus on the agricultural sector, including agribusiness. Since 1998, the USAID-funded Azerbaijan Humanitarian Assistance Program (AHAP), alone supported 10,417 small-and medium-sized enterprises through business training for 14,084 clients, and 15,482 loans were disbursed, which created or sustained nearly 20,000 jobs.

The AHAP operation is a project that was designed to increase community development efforts to integrate, resettle and provide economic opportunities and better health for IDPs and conflict-affected populations within Azerbaijan. Begun in 1998, AHAP is a 6-year grant that is currently being implemented by seven U.S.-based NGOs - Adventist Development Relief Agency, Community Habitat Finance International, International Medical Corps, International Rescue Committee, Pathfinder International, Save the Children and World Vision.

AHAP continues to transition from relief toward more sustainable development programs that focus on social and economic integration of communities affected by the Nagorno (Daghlig)-Karabakh conflict. The AHAP partnership is implementing community-based projects in primary health care, credit and business-development services and community development in over 23 cities and districts of Azerbaijan. The partnership estimates that it has helped over 300,000 IDPs and conflict affected people in 2002.

The total amount of U.S. government funding in support of economic development programs is not restricted to AHAP operations, and there is also funding from other countries and UN agencies that provide additional support for income-generation activities.

Specific economic development activities include business development and micro-finance services, and nurturing existing and new private associations. Micro finance activities increase the availability of small and micro loans for private small and medium enterprises mainly engaged in agribusiness and rural services industries. Business development services assist private firms with business plan development, provide financial advice and support incorporating improved technology and overall management techniques into enterprises.

The partnership between donors and implementing organizations has also worked to strengthen or create private business owner associations, which, in turn, have the potential to become links to inputs, credits, market information, skills training or technical assistance. In 2002, the development community worked together to improve the policy, legal and regulatory environment, and the physical infrastructure supporting small- and medium-sized enterprises in Azerbaijan. The European Union, World Bank, Japanese Government and USAID funded physical infrastructure improvement including upgrading irrigation systems, electricity and road projects that favorably impact on private-sector development.

A stronger civil society

In 2002, the international organizations have continued their activities to improve the development of communities, and foster civil society and democracy in Azerbaijan. Significant activities focused on improving citizen engagement in economic, social and political decision-making. Communities are being encouraged to work together to address common issues that they could not otherwise solve. These clusters of communities also provide a mechanism for the transfer of development skills from one community to another, thereby making the community development process less reliant on external resources and beginning the move toward sustainability. Finally, this clustering also forms a basis for citizens and communities to constructively relate to the complicated world that surrounds them.

Programs focused on the development of civil society also provide educational programs that specifically relate to democracy, gender issues such as women's rights and needs, and programs that support the growth and development of local NGOs through training, technical assistance and small grants.

International organizations are also working to improve the capacity of both the government and legitimate political parties to develop a policy and legal environment for civil society in Azerbaijan. In addition, a number of organization are working to ease the registration process for NGOs, and to establish a standard legal framework for all NGOs operating in Azerbaijan. Roundtable discussions have been organized with the various political parties to discuss topics such as the constitutional referendum, a unified election code and many other issues of concern.

Another key initiative is the support for the development of a free and transparent media. The focus of this support is to broaden informed public debate, improve the quality and professionalism of Azerbaijani journalists, and to develop the technical capacity of TV and radio stations.

Coordinating efforts

In the past year, international organizations continued to develop and foster several national-level coordination mechanisms to ensure higher levels of collaboration, cooperation and communication among the many donors, NGOs and government institutions. Mercy Corps and the media NGO Internews initiated a public relations forum to establish closer working relationships among PR specialists in Azerbaijan, to identify and solve issues pertaining to PR activities and to build a network among public relations professionals.

During the last year, Mercy Corps and 14 organizations including five local NGOs coordinated the development of the first National Community Development Conference which brought together more than 200 people from communities, development agencies and the government to discuss the effectiveness of existing approaches and processes in developing communities, and to determine the best strategy for positive, integrated development in Azerbaijan in the future.

Finally international NGOs regularly hold interagency meetings, according to sectoral activities, in order to coordinate work and share lessons learned.

Creating a workable legal environment

The legal status and the legal environment for local NGOs remain unclear. More importantly, the NGO registration process isn't functioning in a timely and appropriate manner. This is a critical issue for the future of sustainable development programs because the future of development in Azerbaijan is in the hands of those organizations, and their legal status is the subject of much concern within the international donor community.

However, considerable progress is being made with the registration of micro finance institutions. Recently the government recognized and is in the process of registering a number of micro-finance institutions as official entities. This will provide a legal framework enabling these institutions to deal with delinquent clients and to develop sustainable institutions that will be available to create economic opportunities for the poor and disadvantaged into the future.

Azerbaijan has only one mechanism for registering this type of organization and that is to register them as for-profit entities. Micro-finance institutions, however, are not commercial lending programs. They are non-profit operations, and they need a separate legal framework that recognizes their not-for-profit status. Few people within the government understand what not-for-profit means and so not-for-profit micro finance institutions are being asked to pay taxes on interest income from loans. This interest income is what allows them to continue to provide low-interest loans to the poor and disadvantaged. Although much is being accomplished in developing a legal framework for micro-finance programs in Azerbaijan, the status issue must still be addressed.

A coalition of international organizations led by the AHAP partnership has taken a lead role in addressing the concerns of micro-finance initiations. A meeting was held with the Ministry of Justice in September 2002 focusing on licensing and registration issues and, in particular, on the status of applications submitted by AMFA Initiative Group members. A meeting with the Ministry of Taxation on September 25, 2002 focused on VAT reimbursement issues.

Looking Toward the Future

In 2003 international organizations will continue their activities:

- To accelerate the development of private small- and medium-size enterprises, and economic restructuring,

- To support the development of civil society, democracy, NGOs, and media

- To reduce suffering and alleviate poverty among IDPs and the conflict-affected population through increased availability of credit and business services, primary heath care, community development and integrated multisectoral services

- To improve policy, advocacy and legal environment for civil society, media, private small and medium enterprises, agribusiness, and micro finance activities.

- To serve as an important catalyst for bringing public and private resources together to serve a greater good and increase impact.

- To collaborate more effectively by adopting "best practices" and sharing lessons learned in an effort to achieve greater results.

- To work constructively in a transparent environment with the government of Azerbaijan to serve the humanitarian and development needs of the poorest of the poor.

Mercy Corps Azerbaijan