WHEN AMBITIONS COME TRUE

The state program on social and economic development of the regions of Azerbaijan is sort of a trademark of the economic policy implemented by President Ilham Aliyev. Even at the beginning of his leadership, Aliyev announced his intention to solve the problems of the provinces. The first development program was adopted in 2004. The third program will be completed this year, while  the works on the fourth one have already started. Considering the upcoming presidential election in 2018, Aliyev's recent statements at the conference on the results of the implementation of the State Program for 2014-2018 is a symbolic report about the achievements of the past fourteen years and his vision of the future.

Infrastructural image

“The adoption of the first program was a historic event, which is explicitly proven by life. I would say the program adopted in early 2004 was a turning point in the regions of Azerbaijan. Their rapid development would be impossible without the first program. The realities of the past fourteen years show that all these promises have been accomplished in full,” said the president.

Suffice to say that over the years, the national economy has demonstrated a record-breaking growth of 3.2 times. At the same time, the development of the regions to a certain extent ensured the growth of the non-oil economy and non-oil exports to 2.8 and 4.1 times, respectively.

It is important to note the success of infrastructure projects. Their implementation has changed the image of Azerbaijani provinces, which can be proven without any statistical evidence. The renovated roads, modern hotels, rural homes are not inconvenient any more, as it was in the past due to lack of electricity, gas, drinking water, etc. The figures explicitly confirm the above.

Over the past fourteen years, thirty power plants (versus nine in 2004) generating 2500 mW of energy have been constructed. This year their capacity will reach up to 2900 mW. In 2004, the level of gasification in Azerbaijan was 51%, while today it reaches 93%. By the end of 2018, this level will increase to 95%. In 2004, uninterrupted supply of drinking water throughout the country was 26%, while it is 67% today. Also, four reservoirs (Takhtakorpu, Shamkirchai, Goytepe and Tovuzchai), 12.3 thousand km of roads, and 443 bridges were constructed since 2004. As to the transport system, seven airports have been constructed, six of which are international and operating in the regions.

A lot of work has been done for the renovation of the social infrastructure. More than 3100 schools and 642 medical facilities have been constructed or repaired in addition to 43 Olympic sport complexes built during this period.

Less imports, more exports

Back in 2004, much of that realized today was considered only as an ambitious plan and not everyone believed in the success of this endeavor. After all, the state program started with only $1.8b. At the same time, the first program was mostly aimed at solving infrastructural and other basic problems of regions, that is, the projects that do not provide for a direct return of the invested funds. But as time showed, thanks to the growth of foreign exchange reserves and the success of the first projects, the state programs continued, expanding and improving. Today, when the country's currency reserves increased 23 times reaching $42b, more ambitious tasks are set for the regions.

Most of the program for import substitution and ensuring the country's food security is implemented in the regions. Despite the measures taken during this period, there are still serious gaps in a number of areas that can be eliminated easily if necessary conditions are created for the development of enterprises.

According to President Aliyev, in 2017, Azerbaijan imported wheat ($227m), cigarettes ($160m), medicines ($211m), knitwear ($100m), detergents ($100m), glassware ($80m), mineral fertilizers ($55m), etc. “As we can see, we spend more than $1b annually for the import of the above products, although we can reduce the costs thanks to import substitution. Therefore, we need to build milk processing plants, pharmaceutical enterprises, knitwear factories, manufacturing enterprises, cigarette factory, carbamide plant, as well as plants for the production of glassware and so on,” said Aliyev.

In parallel with the decrease in imports, the government and businesses have to increase the country's export potential, which will finally reduce dependence on the oil factor. Certain achievements in this area have already been made. For example, only in 2017, it was possible to export $1.5b of non-oil products, of which more than a third is fruits and vegetables. After all, agriculture has always had a leading position in non-oil exports. Thus, it is quite understandable that the regional state programs are focused on the development of agriculture. The new goals set in state programs resulted in the development of completely new farming systems, the so-called agro-parks. Azerbaijan already has 43 agro-parks covering 183 thousand hectares of land. These new large associations of farms should take the production of agricultural products to a qualitatively and quantitatively new level, ensuring the growth of productivity and the establishment of the entire production chain - from raw materials to finished products.

At the same time, Azerbaijan is increasing the export of non-food products, albeit at rates slower than in the agrarian sector.

Investment shake-up

All the projects mentioned above, as well as the fulfilled and planned goals, should be constantly supported financially. Over the past fourteen years, $231b has been invested in the national economy. Half of this amount is foreign capital. 93% of investments has been made over the last fourteen years. Today Azerbaijan is one of the leading countries in terms of investment per capita. This process continues, and this year, Azerbaijan expects an inflow of at least $15b, which is almost equivalent to last year's indicator.

However, there are certain negative nuances that cause concern among the country's leadership. In fact, local investors are mainly interested in regional projects. Although the state creates all conditions, including tax and other benefits, incentive measures, facilitated credit conditions, local executive authorities sometimes impede the implementation of projects, pursuing their personal interests. Potential investors are imposed unnecessary conditions, and have a green light if only they fulfil them. “We have fewer such cases, but they still exist and it is necessary to fight them,” said President Aliyev. He instructed to analyze investment activities in each region. This will help to identify the reasons for the backlogs and somehow encourage local authorities to attracting investors more actively.

The president also urged big businesses to attract small and medium-sized enterprises in their projects, thus helping them to develop and stay afloat. “Big businesses should be aware of their social responsibility. After all, they are not limited to certain charitable activities only,” said President Aliyev.

It is likely that all these points will be taken into account in the new State Program for the Development of Regions, which is already at the preparatory stage. Dozens of sectoral programs, plans and projects have been developed and are being implemented based on these state programs. Many of them are included in the Strategic Roadmaps for the National Economy and the Main Sectors of Economy. Basically, yhe state programs outline the measures required for the development of both the regions and the entire non-oil economy of Azerbaijan. The initiative launched by President Aliyev fourteen years ago turned into a unique model for the economic development of independent Azerbaijan. The new state program should become its logical continuation, but on a qualitatively new level, with even more ambitious goals and plans.