August 1, 2007

ACDI/VOCA Launches Secured Transactions Initiative in Azerbaijan

As an innovative initiative under its $6.4 million SME Support through Financial Sector Development project, ACDI/VOCA has been working to increase the use of movable property as an efficient form of collateral for small business loans. Currently in Azerbaijan, there is no effective system for banks or nonbanks to safely accept movable property as collateral, because there is no centralized register, making secured transactions ineffective, inefficient and costly. Passing a new secured transaction law and establishing a related filing office would make it easier for banks to provide capital to small and medium-sized companies.

To create such a system and increase key stakeholder awareness, ACDI/VOCA, in cooperation with USAID’s START Participant Training Program, organized an international study tour for 10 participants, including government officials and financial sector professionals. The tour was conducted in Sarajevo, Bosnia-Herzegovina by CReDILS LLC, a private company that maintains the Bosnian movable property electronic filing and registration office. The Azeris learned how to create both the legal and technical framework and how to establish a secured transaction electronic filing system registry for recording notices of collateral agreements.

Since returning from the tour, the participants with ACDI/VOCA’s assistance are now working with the Azerbaijan State Register on Immovable Property to create the legal framework for such a system. ACDI/VOCA has also engaged in the process the Azerbaijan Economic Commission within the Milli Meclis and the Azerbaijan Cabinet of Ministers.

ACDI/VOCA’s $6.4 million USAID-funded SME Support through Financial Sector Development project increases access to credit by working with banks and nonbank financial institutions, including microfinance organizations, to improve their capacity as well as to increase the amount of capital available.