HELP, NOT HINDER

"Last year the non-oil sector of our economy grew by nearly 10%. This growth shows that our reforms are having their effect," said President Ilham Aliyev at a conference on the results of the fourth year of the implementation of the State Programme for the socio-economic development of Azerbaijan's regions for 2009-2013. Today we no longer come across the suggestions expressed in previous years in the foreign press that Azerbaijan can expect an "oil curse" and it will run foul of the "Dutch disease". The economic figures for last year again proved that the work on diversifying the economy, providing full food security, intensifying our industrial and export potential, reducing dependence on imports and improving the business environment is having a really tangible result. And there is no question that the aforementioned programme, and the equivalent five-year programme that preceded it, as well as the development plans for individual industries and regions in the country have helped to achieve this. Together they have shaped that autonomous model of the economic development of Azerbaijan which not only protected the country from all kinds of crises in recent years but also ensured stable rates of development and the diversification of the economy.

Impressive figures

As already stated, the first State Programme for the development of the regions covered the years from 2004 to 2008 and was over-fulfilled even taking account of the additions introduced during the period of its implementation. The programme, adopted in 2009, was also later substantially augmented, and at the same time large sums were allocated from the president's Reserve Fund for the development of the regions, in particular for the infrastructure and transport, rural road renovation and providing new public amenities. It should be noted that a total of AZN 14.5bn of state investments were directed towards the development of the regions in 2009-2012, and this year 77% of all capital investments, or AZN 5.3bn, have been allocated.

It is these programmes that have become what one might call the core declarations of the development of the country's economy for two five-year periods. And the statistics of the last nine years clearly show how correct the choice of that model was. For example, since 2003 Gross Domestic Product has trebled, and in the non-oil sector it has increased 2.4 times. Industrial production has almost trebled, about $130bn has been invested in the country's economy, and last year investment reached a record level of over $22bn, of which $13bn were local investments. In the past nine years Azerbaijan's strategic foreign currency reserves have increased 28.8 times and are in excess of $46bn. Of the $128.3bn of investments in the Azerbaijani economy in 2003-2012, $65.7bn were made up of internal investments and foreign trade turnover increased 6.4 times. Azerbaijan became the first country in the Southern Caucasus to which the most influential international agencies - Standard & Poor's, Fitch and Moody's - awarded an investment rating. In global terms, our country's competitiveness brought it 46th place among 144 countries, and for the fourth year running it was first among the countries of the CIS. In addition, Azerbaijan has joined the group of countries with "high human development" and "high average income".

During these years the country was able to almost completely eradicate dependence on foreign aid in the implementation of projects and even turn it into a creditor-country. Moreover, Azerbaijan itself provided credit to the International Finance Corporation (part of the World Bank).

Yes, it would be na?ve to deny the influence of the oil sector on all these achievements. But the point is that, by using the revenue from the marketing of energy resources to implement economic programmes, Azerbaijan has made very serious progress in the question of diversifying its economy, having substantially increased the proportion of the non-oil sector in the country's GDP - last year the growth of the non-oil economy was 10%.

Business growth

However, the secret of the success of the regional programmes lies in the fact that specific objectives in virtually all spheres of the economy covering the whole of the country were assigned to them from the outset. In other words, emphasis was laid not on any specific sector or region, but on the development of the private sector as a whole, and because of this its proportion of GDP has already reached 83%. And at the same time, state financial support has been playing an important part in the development of business: since 2003, through the National Business Support Fund, over 15,000 businessmen have been offered preferential credits of AZN 936m for the implementation of projects in various areas of the economy leading to over 104,000 new jobs. Bearing in mind that these credits help to cover some of the cost of the projects, and the rest is being invested by the entrepreneurs themselves, one can say that the NBSF has become a model for partnership between the state and the private sector. That said, it should be borne in mind that the credits are being provided purposefully, firstly to spheres vital for the country's development and for providing food safety.

As we know, very close attention is being focussed on the latter today amid worldwide concern at the shortage of food to meet the needs of the earth's population. In Azerbaijan the agrarian sector has always been popular, but within the context of regional development programmes, where this sphere is a leader of the economy, its revitalization and adaptation to the conditions of a market economy comes more into focus. In the period from 2003 to 2012 the agrarian sector increased 1.4 times, and livestock production 3.4 times. The process of creating large farming enterprises has begun with about 5,000 ha of land already having been allotted and major grain-growing enterprises are being created in Agcabadi and Beylagan Districts, and in all at least 50 major grain-growing enterprises are due to be created to ensure that the country is completely self-sufficient in grain.

The tourism industry is also developing rapidly (since 2003 the tourist sector has grown 8.5 times, and the number of visitors to the country has increased 3.3 times), as is information and communications technology in transport, countless infrastructural projects, which are becoming the main engine for the development of other spheres, are being implemented and living conditions for people in the regions are being made as comfortable as possible. At the same time, there has been substantial progress in solving social questions: whereas in 2004 the average wage in Azerbaijan was about $100, today it is $500, and the average pension has increased from $20 to $200.

By the way, here we should point out that one of the main objectives of the regional programmes is to eliminate unemployment. And bearing in mind the fact that in the period since 2009 over 20,000 enterprises have begun to operate in the country, and about 360,000 new jobs have been created, including 270,000 permanent jobs, it has been possible to reduce unemployment to 5.2%. And the poverty level has gone down to 6%.

A final warning

And so, at the basis of the development of the Azerbaijani economy today lies a strengthening of the private sector, and the support being given by the country's president for the development of business will help to improve the business environment in the future. However, despite the head of state's frequent remarks to bureaucrats about creating the most favourable conditions possible for the private sector, problems such as bureaucratic hurdles and pointless interference are still on the agenda. At a meeting on the implementation of three years of the second regional programme, Ilham Aliyev issued the following warning:

"The heads of local government bodies, chief executives and officials everywhere must help the people of business. They must support their activities, but they must not offend them, interfere in their work or make unlawful demands. The development of business is a state policy and the chief executive is someone who is carrying out state policy in the regions, and he must not do anything that goes beyond the bounds of state policy. And so I repeat: let all chief executives be aware that anyone offending businessmen will be punished," the president said.

Clearly, the president's patience has run out and certain negative signals from the regions were the last straw. Ilham Aliyev also said that the citizen of Azerbaijan is at the centre of state policy. Consequently, any bureaucrat who looks down on people's problems is betraying the country's state policy and should be stripped of his post. In this connection, the president has set the task even more acutely to tighten up the fight against bribery and corruption. "I believe that we have not done enough in these matters. If we really want to become a developed country we must get rid of corruption. A number of factors are required to achieve this and they are all here in Azerbaijan. A strong political will and international experience. We are studying this experience. Measures of punishment and reforms of a systemic nature must and will be taken. We are approaching this question thoroughly, and some work has already been done. But I would like to say that I am not satisfied with this work. The fight against corruption must be even more intense and it must have more solid results," Aliyev said. He also called for more intensive reforms of a systemic nature. These included electronic services, "ASAN xidmat" and the "Electronic Government" initiative - all this will be a serious tool in the fight against corruption.

There is reason to believe that this time the president's instructions, bearing in mind this latest warning, will be carried out to an even tighter schedule. After all 2013 is the last year for the implementation of the second State Programme for the development of the regions and these black spots must be eliminated to complete the report about its favourable completion.