SMALL AND MEDIUM SIZED BUSINESSES CRUSHED BY HIGH INTEREST RATE LOANS
Conference on the topic of “relationship between businesses and banks” was held in Baku today. Legal and financial aspects of the development of entrepreneurship were discussed in the event.
The conference was held within the project “Legal advice centers for small and medium businesses”. The project is run by the Public Union on Human Rights Education with the support of OSCE’s Baku Office. Head of the public union, Irada Javadova talked about the situation in this sphere and legal aspects of the problems that arise there. She gave information about the activity of legal advice centers in Baku and Mingechevir.
Deputy Chairman of OSCE’s Baku Office, Mrs. Monica Martinez talked about the work done as part of the programs held for entrepreneurs since 2007.
Member of the Parliament, Ali Masimli talked about the problems of enterprisers needing loans. He noted that annual interest rate for business loans is close to 30%, which is not useful for setting up a business, because repayment of the loan becomes a problem.
In order to stabilize the situation in the financial market, Masimli suggested allocation of 2 billion AZN from the State Oil Fund for development of entrepreneurship. According to the economist deputy, the interest rates on bank loans for entrepreneurship may drop to 10-20%.
Thomas Melzer, Manager of the legal and judicial reforms Project at German Society for International Cooperation, spoke about the results of a study on the improvement of the legal protection of loan takers. According to him, a special law has been drafted, and it will be presented in September. The bill sets a minimum requirement for the loan agreement with the entrepreneurial entities.
Based on a survey conducted among 200 business entitie, expert of the Public Association for Assistance to Economic Initiatives, Samir Aliyev informed about difficulties in applying for business loans, high rates of loan interests and violations of entrepreneurs’ rights.