MANY OPPORTUNITIES, LESS INFORMATION

Global Entrepreneurship Week is traditionally held in Baku in mid-November with the support of the Confederation of Entrepreneurs of Azerbaijan (ASK), where businessmen discuss their problems trying to find solutions to them with the participation of government agencies.

This time, ASK conducted a survey among the businessmen. The results of the survey were rather unexpected.

Poor awareness of laws

Indeed, despite almost weekly meetings, forums, and conferences with entrepreneurs, it became known that most of them lack knowledge on a number of points important to their activities. For example, 52% of 500 respondents nationawide were unaware of the legal framework that encouraged them to expand their business. 31% said that they did not understand the essence of existing legislative acts.

On the one hand, such complaints are understandable. Experts have repeatedly pointed out the need to make the legal acts easier to understand for various sectors of society. Furthermore, many of the existing laws are being revised due to contradictions and gaps. Changes are made to the Tax Code every year. If large enterprises have a separate team for analysing the amendments to laws and other regulations, the representatives of medium and small businesses often have to do all this work independently. There are a number of private firms that provide consulting services in various fields but businessmen point out the high cost of their services.

To solve the existing problems, many representatives of medium-sized businesses prefer to work with one specialist specialised in audit and accounting. But, as it turned out from the survey, this is also not easy: entrepreneurs report that they suffer from a lack of personnel and are not satisfied with their professional level.

Analysts note that in order to eliminate these problems, it is necessary to expand and modify the forms of educational work among business people and to increase the number of advisory services provided through government agencies involved in working with business.

The idea behind new structures known as KOB Dostu (friends of small and medium-sized enterprises), which yet to expand their activities in Baku and other regions of Azerbaijan, is precisely to help entrepreneurs in this area. According to the chairman of the board of the Agency for the Development of Small and Medium Business (KOBIA) Orkhan Mammadov, a network of 18 KOB Dostu offices operates in 16 cities and regions of the country. They establish cooperation with micro, small and medium enterprises to identify and implement their initiatives, potential opportunities, and provide support at all stages of the creation and development of new SMEs. "KOB Dostu provides field services to entrepreneurs. During 2019, ten KOB Dostu began to operate in Absheron, Sumgait, Sheki, Gabala, Fizuli, Shamakhi, Imishli, Shamkir, the Khazar district of Baku and the Main Customs Department."

KOBIA also began work on attracting consulting companies to conduct research on the domestic market based on requests from entrepreneurs. According to Orkhan Mammadov, "thanks to state support in market research, the expenditures of micro, small and medium-sized entrepreneurs in this area will decline. On the other hand, stimulation of competitive production will contribute to the creation of new goods and services, facilities and enterprises, and will increase production in the private sector."

By the way, entrepreneurs are happy with the work of government agencies like KOBIA. Most of them recognise the existence of the necessary system to support business development. They are also quite satisfied with the operation of the "single window" system, which in recent years allowed businessmen to significantly save both time and money due to processing of many routine works through this system.

At the same time, 45% of the surveyed entrepreneurs are also satisfied with the certification standards in the country. However, the representative of the Confederation of Entrepreneurs of Azerbaijan in Montenegro, Serbia, Bosnia and Herzegovina, Seyran Mirzazadeh, believes that Azerbaijani middle-level manufacturers still cannot bring the level of manufactured goods to international standards. This remains one of the main obstacles preventing the expansion of Azerbaijani goods to European markets.

Azerbaijani businessmen do not use or cannot effectively use online services for sales to access foreign markets. They still use contacts through their friends or acquaintances. "But this can turn into effective way of doing business. Another problem is that our businessmen are not engaged in advertising and marketing in foreign markets," S. Mirzazadeh said.

The solution to these problems also depends largely on the lack of qualified personnel and the level of knowledge, which urges bringing the standards of vocational and higher education to the level of market requirements.

Competitive environment

Apparently these problems are also associated with the low level of access of entrepreneurs to financial resources. 43% of respondents indicated the lack of money as one of the main obstacles to expanding the business.

Another issue raised by businessmen was the lack of penalties against entrepreneurs who violate the principles of fair competition. The issue of urgency to adopt a Competition Code has long been raised in Azerbaijan at various levels. In fact, it was developed more than 10 years ago by the then Ministry of Economic Development and was even adopted by the parliament on December 14, 2007. However, then the ministry decided to substantially modify the draft code. Since then, the document has not been discussed in parliament.

Recently, the assistant to the First Vice-President of Azerbaijan, Gunduz Karimov, announced that the code would be ready in 2020. "In Azerbaijan, we take measures to institutionalise relations between state bodies and entrepreneurs. In 2018, a number of reforms were carried out in this direction and the corresponding amendments to the Tax Code were adopted. The next step is the implementation of reforms in the judicial system," G. Kerimov said, adding that the adoption of the Competition Code is also planned within the framework of these reforms.

According to experts, this will significantly improve the business environment in the country and will allow regulating the market at the legislative level. Thanks to this code, it will be possible to create healthy competition, regulate the actions of companies within the framework of the law, prevent a monopoly, which eliminates the ability of dominant companies to dictate prices in the market. "To create a competitive environment, it is necessary to determine the size of companies, and those who will regulate and dictate conditions on the market. We have large companies that are called not monopolists, but dominant, because they dictate their own rules in the market. And the legislation will prevent this factor," economist Samir Aliyev said.

Situation with gender equality in the business environment still causes some concern, although there are already positive developments. According to Deputy Minister of Economy Niyazi Safarov, about 200,000 women in Azerbaijan are engaged in entrepreneurial activities without creating a legal entity. However, the proportion of women entrepreneurs or enterprise managers in the large business sector is still small.

According to Hijran Huseynova, Chairwoman of the State Committee for Family, Women and Children, women entrepreneurs need to expand their access to new markets and advertise their products abroad through established trade chambers. Indeed, the development of women's entrepreneurship is more a social issue and can play an important role in reduction of poverty in the country, strengthening the role of women in economic processes.

According to the head of ASK Mammad Musayev, business problems are so interconnected that they can only be solved with an integrated approach.

However, businessmen say that they are quite optimistic about further improving the business environment in the country. Over the next year, 59% of entrepreneurs expect revenue growth. This is manifested by the monthly growth in the country's GDP in the share of the private sector involved in the non-oil segment (83%). At the same time, during the ten months of this year, 63% of the funds allocated to fixed assets also accounted for the non-oil sector, which is 7% more than last year.

Given that in 2020 the government and entrepreneurship will establish a new stage of relations based on 'friendship and interaction', according to the new Minister of Economy, Mikayil Jabbarov, the private sector will be able to further strengthen its position in statistical reports.