ABAD: STEP BY STEP

The positive experience of ASAN, which has managed to improve significantly the relations between the government and population in a short period, is now successfully applied in the organization's subsidiaries. Initiated by President Ilham Aliyev, the idea of ​​creating a unique single institution with a fully transparent mechanism for providing government services continues expansion not only geographically but also meaningfully, taking in new services and significantly easing the lives of citizens. For example, the public legal entity ABAD established a few months ago under the State Agency for the Provision of Services to Citizens and Social Innovations, should directly support the development of the non-oil sector of the national economy. It will try to solve a rather difficult task - to develop a small family business in Azerbaijan, bringing it to international levels.

Director of the organization Rufat Elchiyev told us more about these tasks in his interview.

It would be interesting to learn more about the ABAD itself. What is the purpose of its creation?

The decree on the establishment of a new legal entity of public law, ABAD, was signed by the President of Azerbaijan, Ilham Aliyev, on September 23, 2016. The aim of the project is to help the development of family businesses. In many developed countries, small and medium-sized businesses, including the family business, provide a large part of GDP.

Azerbaijan also operates small family farms in various industries. However, today they find it difficult to manufacture their products in accordance with the requirements of the existing market, or they cannot produce enough products that would satisfy the market demands. So, they need support.

ABAD helps small businesses to get certified, provides technological innovations, helps in branding and product design, maintains accounting, provides legal assistance and logistics services, and, finally, helps sell the product. We want people to have confidence in creating their own small business.

Does ABAD operate throughout Azerbaijan or in specific areas?

Currently, ABAD is a pilot project and operates in two regions only. We started with Masalli, where nine families were selected. Thanks to the support of SOCAR, we conducted a selection in Balaken as well, where we currently are working with twelve families. Of course, there were many more who wished to be involved. We still receive applications from the households. By the way, today we are working in two directions - arts and crafts and agriculture. For example, families from Masalli will produce jams, cheeses and sausages.

We are happy to see such a huge interest in our project. It is important to note that ABAD is the offspring of the State Agency for the Provision of Services to Citizens and Social Innovations, which also owns the popular ASAN Service.

You said that you have selected a total of 21 families in two districts. What are the selection criteria?

We live in a market economy. If we reach a deal with supermarkets that we will supply them with certain goods produced by our customers, then we must ensure consistency. It is impossible to leave the shelves empty. Another important criterion for us is the quality of the goods. Therefore, it is important to study the potential and capabilities of these people so that we can be sure that tomorrow and the day after tomorrow they will be able to produce these products. It is important to note that we are not going to create business from scratch and transfer it to our selected families. Our task is to support the existing businesses. For example, if they used to produce handicraft products, we help them organize their business in accordance with the highest standards. ABAD provides the necessary assistance including the development of a business plan or obtaining the necessary equipment, so that the family business is transformed into a normal business acting in accordance with the market laws.

Do you have a specific budget for each project?

According to the decree on the establishment of ABAD, our initial capital is ₼1 million. This is all that we spend to sustain our own activities and to support the family business of our customers. For example, we help them with the purchase of equipment. Given our legal form, an entity of public law, we assume that in the future we will be able to generate profit ourselves.

So, you will not be financed from the state budget to support small entrepreneurs?

That is right.

What are you going to do then?

For example, we have our first shop working at the historical and architectural reserve Icherishahar, where we sell the souvenirs made by almost 70 masters supported by us. Soon we are planning to open a second shop in the Duty Free zone of the Heydar Aliyev International Airport. Our first shop was very successful, so we hope to keep this success in the second project as well. Our profit is the interest that we receive from the sale of products of family businesses. However, in the future we plan to earn more, of course.

You mentioned the souvenir shop. That means your another field of operation is applied arts?

Although we have not yet started production of agricultural products, we already have success with the production and sale of souvenirs. People had to think about not only creating the souvenirs, but also selling them, which distracted them from the main business. Creative people should be engaged in creativity. And when they encountered low sales, they lost interest in their work. As a result, local souvenirs could not compete with the Chinese ones. Now they do not need to think about the sales of their products, because we are doing it.

Our first store in Icherishahar is very popular among both the foreigners and our local residents. Most often, these are our nationals who plan to visit their friends or relatives living in other countries. The souvenirs produced by our masters are not just a pleasant gift; they symbolize Azerbaijan. This is their advantage. This is 100% local goods.

Speaking of souvenirs, as you know, in April we signed a memorandum with the Ministry of Labour and Social Protection. We will help people with disabilities to sell their products. In the event that their products are not yet ready for sale, we involve specialists and organize training for them.

Previously the decorative and applied art in Azerbaijan was in decline. But we intend to correct this situation. We want to help the family business produce competitive products under the ABAD label, which will become a guarantor of high quality.

And what if your customers, family businesses, get mature enough to start exporting their products. Can ABAD support them in this case?

Why not? Of course, we do not consider this possibility now, because we are still operating as a pilot project. However, we perfectly understand that soon or later our customers, as you said, will ‘get mature’ for export. The Azerbaijani market is not very large, and if production volumes increase, we will be able to begin to supply part of the output abroad. We are ready to help the Azerbaijani family business to enter other markets.

Currently we are interested in selling the goods through the stores. But we are also seriously thinking about online shopping. E-commerce is actively developing all over the world.

Does ABAD have plans to sell its products online?

We are busy with developing our brand new website, ABAD Store. I do not want to rush on this, as I am still working on this project. It is not enough just to create a website. It is important that to have the necessary infrastructure. We need to take into account many organizational issues. For example, we are thinking about the delivery of goods at home. In this case, we need to think over the logistics issues, including how we will deliver the goods outside the country.

You said ABAD is still a pilot project. When do you plan to start operating as a full-scale project?

We do not have a specific period. When the products of the selected families receive certificates and enter the market, then we can say that the pilot project is over.