IFC, in partnership with the Swiss State Secretariat for Economic Affairs SECO, are launching a four-year advisory project to enhance access to finance for agricultural producers in Azerbaijan, IFC told APA-Economics.
IFC’s Crop and Warehouse Receipts Project seeks to address the critical financial barriers faced by farmers and agribusinesses, thereby boosting productivity.
Agriculture is a vital sector in Azerbaijan, employing 37 percent of the population and contributing only 5.5 percent to the GDP. One of the primary challenges for sector’s growth and higher quality jobs is limited access to finance, caused by lack of collateral and the perceived high risk associated with agricultural lending.
To address these challenges, IFC’s Crop and Warehouse Receipts Project will introduce innovative financial instruments designed to improve access to both pre- and post-harvest finance. These new instruments will support the risk profile of agricultural sector and enable financial institutions increase their lending to farmers and agribusinesses.
Specifically, Crop receipts allow farmers to use pre-harvested crops as collateral, facilitating access to capital for purchasing high-quality seeds, fertilizers, and other inputs. This not only boosts productivity but also expands the customer base for creditors.
Warehouse receipts, on the other hand, enable farmers to use stored goods as collateral for loans or receive payment upon delivery to a warehouse, providing a post-harvest financing solution.
Digital crop and warehouse receipts have the potential to enhance financial inclusion and sustainability but require supportive regulatory frameworks to scale.
IFC’s engagement will include introduction of legislative, regulatory, and policy framework for these new financial instruments, including their digitization. Once the necessary legislation and regulations are in place, the initiative will focus on building the capacities of the financial sector and farmers. This includes developing business models that leverage crop and warehouse receipts for value chain finance. Public awareness campaigns will also be conducted to promote crop and warehouse receipts as viable financial tools.
Azerbaijan became a member of IFC in 1995. Since then, IFC has invested approximately $900 million in the country, financing nearly 60 projects across financial services, infrastructure, and manufacturing. We have also advised on enhancing the business environment, developing the financial sector, improving corporate governance, and strengthening small and medium enterprises as well as the agribusiness sector.
About IFC
IFC — a member of the World Bank Group — is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2024, IFC committed a record $56 billion to private companies and financial institutions in developing countries, leveraging private sector solutions and mobilizing private capital to create a world free of poverty on a livable planet. For more information, visit www.ifc.org.
