Support to the Development of Small Family Businesses in the Shaki-Zaqatala Economic Zone through ABAD Regional Centre in Balakan

Project Summary

There are a multitude of families in Azerbaijan engaged in areas of agro-food production, weaving, arts and crafts, and supplying the market with their own products. However, experience shows that many families encounter serious difficulties and impediments in delivering their products to a wider range of customers through large retail chains, big supermarkets, etc. Other obstacles in the successful distribution and sale of products include the absence of basic business, financial and legal knowledge, low quality of products, lack of proper product certification and marketing skills and failure to meet customer-oriented design and packaging. Such situation negatively affects the competitiveness and profitability of family businesses in Azerbaijan.

Achieving economic diversification, maintaining the high development pace of the non-oil sector, increasing competitiveness, minimizing urban and rural disparities, enhancing export possibilities and investing in regional development have long been in the agenda of the Government of Azerbaijan, and have gained new momentum since the adoption of the Development Concept “Azerbaijan 2020: Look into the Future”. The Concept undertook to pay special attention to the processing of agricultural products as a sphere of special importance in terms of developing the non-oil industry, to implement complex measures to increase productivity of existing agro-processing enterprises through the application of modern technologies, and to create new enterprises.

Driven by this goal, the State Programme on socio-economic development of the regions of the Republic of Azerbaijan for 2014-2018 was approved in February 2014 with the main objective of providing impetus to the development of the non-oil sector, diversifying the national economy, continuing measures for rapid development of the regions of Azerbaijan, and improving infrastructure and social services in rural areas. The Programme envisaged the establishment of the necessary infrastructure in the regions, acceleration of entrepreneurial development aimed at production of export-oriented and competitive products, raising the employment level of the rural population and minimization of poverty level.

According to the most recent data (2016) of the State Statistics Committee of Azerbaijan, only 6% of all countrywide registered small entrepreneurs (individuals and legal entities) are located in the Shaki-Zaqatala Economic Zone. Women dominate with 52% in the overall income generation. However, there is a sizeable disparity in the income generated by male (5.4%) and female (0.7%) entrepreneurs.

The number of the state-registered unemployed persons in 2015 was 803, but the real figure is estimated to be much higher. According to local NGOs, the economy of the Zone is facing serious challenges, including with regard to the development of family businesses, and despite a favourable business environment and state support in different sectors.

Many households lack the required knowledge and professional skills, technical equipment for qualitative production and subsequent effective distribution of their products in the markets, as well as access to financial services. According to the World Bank report, Enhancing Financial Capability and Inclusion in Azerbaijan, issued in May 2016, family households the Shaki-Zaqatala had the lowest level of financial inclusion in the country at 32.3% of its population. Moreover, their low income prevents them from applying innovations and new techniques to increase productivity. As a result, family businesses face decline, unemployment rises and its population, in particular the youth, migrate to urban areas.

In light of the above-mentioned analysis, the action will be implemented in the Shaki-Zaqatala Economic Zone by focusing on the Balakan region.

Covering all 6 districts of Balakan, Gakh, Gabala, Oguz, Sheki and Zagatala, the project acts in line with the 2030 Agenda for Sustainable Development and will contribute to the Sustainable Development Goal 8: “Promotion of sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all"; this will create conditions for sustainable, inclusive and sustained economic growth, full and productive employment, shared prosperity and decent work for all, and promote sustainable agriculture.

 

Project Objectives

Overall objective:

  • Contribute to the socio-economic development of the regions of Azerbaijan by fostering the creation of modern and sustainable family businesses in rural areas, and enabling equal opportunities and inclusivity in line with European standards and practices.

Specific objectives:

  • Support community-based family businesses to produce high quality competitive value-added products in the Shaki-Zaqatala Economic Zone.
  • Address the challenges that prevent and impede the development of community-based family businesses and rural entrepreneurship, economic regeneration and job creation in the Shaki-Zaqatala Economic Zone.

 

Expected Results

  • Pilot families will be selected, trained and equipped.
  • Pre-production and pre-sale system will be established.
  • Family brands will be created.
  • Production and sale process will be organised.

 

Project Accomplishments

2017:

  • The project document was signed.

2018:

  • In addition to the targeted number of families in the amount of 30, the project managed to enrol 14 more thus resulting in total number of 44 families to have joined “ABAD”. Moreover, within selected 44 families the Project will extend its assistance to 12 Internally Displaced people (IDP) thus enhancing living conditions of such vulnerable families;
  • Out of the selected families, 66% of the households will be involved in handcraft production and 34% in food production. 
  • 13 trainings have been conducted on capacity-building for members of selected families and ABAD staff. As a result of the trainings, participants were trained in development of small and medium-sized businesses, certification and monitoring of products, packaging and logistics, branding and sales, international trade in small and medium-sized businesses, international communication and anti-corruption, integrity and gender equality.;
  • To supply families with small-scale equipment and production facilities necessary to manufacture products in line with market demand, the Project had procured equipment for selected families. By doing so the Project marked a significant point of covering 22 families out 44, thus achieving 50% coverage of equipment needs of families in the first phase of the project.
  • The project Lead Expert prepared financial and production plans tailored up to the needs and requirements of each family group for the creation of a pre-production and pre-sales system. 

2019:

  • The project completed all technological trainings. As a result, future entrepreneurs are able to exploit the equipment provided and start production;
  • Registration of families in the tax authorities continues;
  • From August to September the Hazard Analysis and Critical Control Point (HACCP) training is being held, offering international expertise for ABAD staff and some families.
  • Support to the organisation of a visit to the Croatian Chamber of Trades and Crafts in the Republic of Croatia (delegates from ABAD and Project team). The aim of this trips is to get familiar with the European experience in developing family businesses, meet with few small-scale producers of food and handicraft products, as well as discuss about technical topics and sales channels. The focus areas will be value-chain agricultural products and manufacture of handicrafts and other hand-made products;
  • From September to October the first products will be produced. 

 

Status:

Ongoing

Project start date:

November 2017

Estimated end date:

December 2020

Focus area:

  • eradicate poverty in all its forms and dimensions
  • Project office:

    UNDP in Azerbaijan

    Implementing partner:

    AZE-State Agy for Pub. Service

    Full project information  

    Funding Support by

    Donor name

  • United Nations Development Pro
  • Aze-government
  • European Commission
  • Amount contributed

    $827,293

    Delivery in previous fiscal year

    2019 $228,400

    2018 $414,583

    2017 $0

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