Baku, Azerbaijan, May 8, 2003 --
The Swiss State Secretary, Mr. David Syz, and the Executive Vice President of the International Finance Corporation, Mr. Peter Woicke, today launched a new project to stimulate the development of financial leasing in Azerbaijan. The Leasing Development Project is a joint initiative between IFC, the private sector financing arm of the World Bank Group, and the State Secretariat for Economic Affairs of Switzerland (SECO).
IFC will provide advice to the government of Azerbaijan on establishing the legislative framework for leasing and train Azerbaijani companies on leasing operations. IFC will also conduct a broad education campaign among government agencies, private companies, and financial institutions on the benefits of this new financial tool and assist in the creation of a professional leasing association. The State Secretariat for Economic Affairs of Switzerland supports these efforts with a $1.3 million grant through the end of 2005.
Leasing is an alternative source of financing to bank loans. Leasing provides businesses with access to equipment for a relatively small up-front investment and does not require collateral. This can be vital to start-up and small companies with few assets. As limited access to capital remains a major constraint to business growth in Azerbaijan, leasing can become an effective tool for providing needed capital and stimulating economic growth.
“IFC’s worldwide experience in leasing demonstrates that the development of this financing tool benefits private companies of all sizes, but particularly small and medium enterprises that usually face difficulties in obtaining bank loans,” commented Mr.Woicke. “IFC is pleased to offer our expertise to Azerbaijan and support the country’s efforts in building a vibrant private sector.”
Mr. David Syz noted: "Based on Switzerland’s in-depth knowledge of Azerbaijan, a country we represent in the Bretton Woods institutions, we believe that there is significant potential for financial leasing which will support the development of a healthy industry facilitating the country’s economic development. Leasing will bring significant expansion in access to financing for small and medium-sized business.”
The Leasing Development Project in Azerbaijan builds on IFC’s successful cooperation with seco in Central Asia, where IFC contributed to leasing legislation in Uzbekistan, Kyrgyzstan, and Tajikistan. IFC invested $3.4 million in the first leasing company in Uzbekistan. IFC conduced a similar technical assistance project in Russia, with support from Canada and the U.K., where it saw the leasing sector grow from almost zero to a $2.3 billion industry in 2002. IFC also invested $19 million and mobilized $45 million in four Russian leasing companies.
The mission of IFC is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. Since its founding in 1956 through FY02, IFC has committed more than $34 billion of its own funds and arranged $21 billion in syndications for 2,825 companies in 140 developing countries. IFC's worldwide committed portfolio as of FY02 was $15.1 billion for its own account and $6.5 billion held for participants in loan syndications.
Switzerland participates in the international community’s efforts to help transitional countries build stable democracies and viable market economies. Each year, Switzerland spends approximately SFr 1.5 billion on development aid around the world, or about 0.34 percent of its gross national product. This is a testimony to Switzerland’s belief that long-term global security and prosperity can be achieved only by narrowing the gap between developed and transitional countries.
As for seco, its economic development cooperation program has four main objectives: (1) to help transitional countries reach the stage of development most favorable to growth and investment; (2) to mobilize private sector resources as a means of increasing the flow of finance to the transitional countries, as well as technology transfer; (3) to improve the productive and social infrastructure; and (4) to achieve greater integration of developing countries in international trade.
