After two years of operation in Azerbaijan the BAS Programme has received excellent acclaim by local entrepreneurs, consulting companies, business service providers, professional associations and other donor initiatives.

Throughout 2003-2004 over 200 enterprises have been visited by the BAS team and about 180 project applications assessed. BAS Programme in Azerbaijan has undertaken 125 consultancy projects with 102 beneficiary enterprises and 40 consulting companies utilizing EUR 386,909. Furthermore, 8 fully-funded projects - conferences, workshops, trainings, etc. - have been implemented utilizing EUR 54,791.

The main objective of the BAS Programme is to help SMEs improve operations, enter new markets and gain access to financing so that they become viable businesses and maximize opportunities for growth.

Almost have of committed projects (48%) have been aimed at improving market performance which included business advice on market analysis and marketing, development planning, feasibility studies, partner search. This fact is indicative of the current development stage of the Azerbaijann economy as a whole. Operating in a competitive environment local SMEs have to invest significant efforts in improving their marketing strategy as well as constantly search for viable investment opportunities and new partners.

Cost reduction studies are only just beginning and accounted for only 2 projects - 3% of the total. Obsolete and depreciated production facilities owned by SMEs are low in efficiency and hence do not generate appropriate return on assets. BAS projects on automation of manufacturing systems, optimization and engineering solutions have been targeted at increasing operational efficiency and turnover, but the fact that consulting skills can achieve cost reductions is only just being understood and needs to be publicized more by BAS staff and consultants.

The projects aimed at improving management effectiveness are the second most popular in BAS Programme support - 22%. A great number of the companies that have survived and managed to grow over the last few years acknowledge that they need advice on how to improve their organization to be able to deal with the challenges of further growth. Greater employee numbers and increased output complicates the management and supervision of resources, hence imposing the need for introducing computerized financial/management information systems.

The high interest in quality management systems and certification (11% of BAS Azerbaijan projects) is motivated with the pressure for local companies to seek new markets in countries where product standards certification is expected and to comply with the requirements of customers, partners and suppliers. At the same time, SMEs that implement quality systems are driven by the need to improve their organizational structures and reassure clients of their ability to consistently provide a high quality product/service. Initially all QMS related projects were focused on basic ISO certification; this is now understood and BAS subsidies will be reduced to reflect this. However in order to attract more advanced processes, BAS will encourage the beginnings of health/safety and environmental regulations with higher subsidies.

The mix of projects in various industry sectors shows a wide spread, with only food and beverages and tourism evolving as key sectors. Food processing accounts for 40% of all manufacturing projects or 18% of the total BAS subsidy, while Travel and Tourism projects amount to 13%. This is a clear indicator of the industrial base in Azerbaijan. The strong demand in these particular sectors is in line with the relative number of companies in this sector. There is a good proportion (59%) in the service/trade sector, in which a lot of new SMEs are emerging.

The geographic distribution of the beneficiary SMEs which have received BAS Programme support follows the pattern of geographic location of SMEs in Azerbaijan as a whole. Though the majority of SMEs are based in Baku the Programme has shown high activity in the less developed regions outside the capital city; considering the concentration of industry in Baku a sizeable proportion of projects (29%) are for regional enterprises.

Enterprises with less than 300 employees are the major engines of job creation in countries around the world and by supporting SMEs in Azerbaijan, the BAS Programme has been furthering secondary objectives of poverty alleviation and sustainable economic development. Smaller enterprises tend to be able to take advantage of market opportunities more quickly than larger ones and thus contribute immensely to the competitiveness of the economy.

The SMEs supported by BAS financing are classified in 4 groups by the number of employees; the percentages of enterprises in each group reflect the size structure of the local economy and the criteria of BAS Programme. About 92% of projects were with companies having less than 100 employees and this is an encouraging sign as it indicates the companies which have great potential for growth.

A database of consultants has been set up listing 40 consulting companies, who have been retained under a BAS funded project.

Qualified local consultants are preferred and almost 90% of the consultants hired for BAS-supported projects in Azerbaijan have been locally-based. Local consultants offer excellent value for money and can communicate directly with the enterprise without language or cultural barriers, which increases the likelihood that the advice will be understood and acted upon. Moreover, local consultants aim to build a professional reputation and are strongly motivated. The Programme provides consultants with experience working on commercial projects for local companies and, as a demanding party to the project contract, compels consultants to perform their best for beneficiary enterprises.

Local consulting companies express significant satisfaction with the Programme, which has been recognized as instrumental in generating interest among potential clients and in increasing the access to advisory services; most of the beneficiaries have not used external consultants before the project with BAS.

BAS Programme procedures require preparation of a completion report for each project one year after the disbursement of the subsidy. Since the BAS Programme is a demonstration project designed to show SMEs the benefits of obtaining professional business advice, it is essential to prove that, in fact, enterprises have gained from the Programme's support and that the program has met its goals. Project success is evaluated by measuring the one-year growth in turnover, number of employees, investments attracted, etc.

Within the first year of operation BAS projects assisted SME with the development of Business Plans and Feasibility studies for the value of Euro 80 K. This enabled clients to obtain loans and equity for a total value of $K 915, allowing for necessary investments to grow the business, expand capacity and recruit more staff, creating employment in Baku and the regions.

As at 31 December 2004 nine completion reports were prepared. The majority of these projects have been ranked as satisfactory or highly satisfactory.

History and statistics for 2003 - 2004

Statistics for 2003 - 2007