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 Press release - USAID Project Assists Mortgage Market Development (ACDIVOCA)

 Press release date: 10.02.2006

Azeri version



USAID Project Assists Mortgage Market Development

February 10, 2006

USAID initiated the new SME Support through Financial Sector Development Project in Azerbaijan in September 2005 and entrusted its realization to ACDI/VOCA, the US non-profit international organization that has broad experience in development of SMEs around the world.

The project has been working on issues of development of the primary and secondary mortgage markets in Azerbaijan by supporting the newly established Azerbaijan Mortgage Fund. This week the project organized a round table seminar entitled "Azerbaijan Mortgage Market Development" on February 8, 2006 in Park Inn Hotel, Baku. Officials from government agencies, private banks and donor organizations gathered in order to discuss current legal and regulatory obstacles that Azeri financial institutions may encounter in the foreseeable future and ways to avoid them as well as international best practices in the mortgage field.

Muhammad Junaid, Chief of Party of the project, told the audience about the objectives of the project and activities that ACDI/VOCA intends to implement in Azerbaijan within the next 3 years. He outlined three main initiatives that the project will pursue: i) increase supply of capital to the financial sector for funding SMEs; ii) propose policy reforms to remove obstacles for SMEs to access capital and iii) increase technical and management capacity of financial sector to serve SMEs. He also emphasized the importance of the developed mortgage market and modern lending procedures in Azerbaijan for strengthening country's non-oil sector.

Officials from the Milli Mejlis (Parliament), Azerbaijan Mortgage Fund, Azerbaijan Banking Training Center as well as Mr. Claude Bovet, Senior Mortgage Expert, and Senior Lawyer, Ms. Natavan Rustamova delivered their presentations on particular legal issues. In particular, some inconsistencies between the Civil Code and various legal acts were discussed that should be resolved to avoid any future legal impediments to providing mortgages on a broad scale.

Numerous aspects of the development of mortgage market were discussed including the need to have full participation of banks and other financial institutions, the need to have mortgages be made at market rates and the interest and necessity of providing government support to encourage home ownership. Mr. Bovet commented that the government should be careful to provide the right types of subsidies that will encourage the development of a sustainable market. He discussed the use of both demand and supply side assistance and the effects each could have on the banks and other financial sector participants. He also disclosed that in all countries of the world the government only plays a secondary role in the market and that the enormous demand for housing finance can only be satisfied with full participation of the capital markets.

USAID-funded 3-year project aims at cooperation with the Government of Azerbaijan, banks and non-banking financial institutions, international donor organizations and legal entities to increase access to credit for small and medium enterprises (SMEs) in the country. For more information, please contact the project at the following address.

86 Nizami street, apt 22, Baku, Azerbaijan - (994 12) 598 - 1243/44/45 -

February 2006


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