(MENAFN- Trend News Agency) BAKU, Azerbaijan, December 25. Trend' s exclusive
interview with Alfonso Garcia Mora, Vice President of the
International Finance Corporation (IFC) for Europe, Latin America,
and the Caribbean
What was the purpose of your visit to Azerbaijan and
what was the outcome?
Alfonso Garcia Mora, IFC's Vice President for Europe,
Latin America, and the Caribbean
This was my first visit to Baku as IFC's Regional Vice
President. As you may know, IFC is keen to support Azerbaijan in
unlocking the private sector's potential, and I was very much
looking forward to gaining new insights and discussing new
opportunities. I'm happy to say that I had extremely productive
meetings with the Prime Minister, government officials, private
sector representatives, and partners.
Azerbaijan will host next year's COP29 climate change
summit. In this context, could you, please, elaborate more on the
latest development in the climate area for Azerbaijan?
Alfonso Garcia Mora, IFC's Vice President for Europe,
Latin America, and the Caribbean
We welcome the news that Azerbaijan will host COP 29. It is a
clear sign of the country's strong commitment to the climate agenda
and its decarbonization plans. Azerbaijan's revised Nationally
Determined Contribution committing to a 40 percent reduction in
emissions by 2050, compared to 1990 levels, conditional on
international support.
We are all aware that climate change severely impacts people's
lives in the developing world, hampering efforts to alleviate
poverty. Unfortunately, Azerbaijan is no exception. On average,
floods already impact 100,000 people every year. Almost the entire
country is prone to both droughts and water scarcity, and the
frequency and intensity of these extreme weather events will only
increase.
Large-scale decarbonization and resilience actions are urgently
needed. In fact, the
World Bank Group's Country Climate and Development Repor for
Azerbaijan estimates that $44 billion in investments are needed
until 2060. Based on our report, meeting climate targets cannot be
achieved without a quick ramp up of clean energy investments to
about $1 billion per year by 2030. A significant share of the
required investments should come from commercial and private sector
financing.
Fast-tracking decarbonization is crucial to remain competitive
in the global economy and ensure a prosperous future for
generations of Azerbaijanis. It is in the country's best interest
to invest in the low-carbon transition and climate resilience
measures – and implement the necessary policy reforms.
Seizing the opportunities outlined in this report will help the
country future-proof its economy and safeguard the population from
climate change. IFC is ready to support Azerbaijan to achieve its
climate goals, building on its long-term work in the country.
Could you elaborate more on how does IFC support
Azerbaijan in green transition?
Alfonso Garcia Mora, IFC's Vice President for Europe,
Latin America, and the Caribbean
Azerbaijan has achieved remarkable economic growth and welfare
gains over the past 30 years, driven by the country's oil and gas
sector, which accounts for a
third of GDP, 90 percen of exports, and
71 percen of Foreign Direct Investment (FDI).
Azerbaijan would certainly benefit from diversifying its economy
away from fossil fuels to achieve a successful low-carbon
transition and create sustainable economic growth. Innovative
private sector solutions are a key driving force in this regard,
and we are ready to support the country in taking advantage of the
current window of opportunity to unleash the private sector's
potential in various sectors of the economy.
For example, renewable energy is an important part of our
overall focus in the country. Azerbaijan's offshore wind potential
is estimated at 157 gigawatts, as
an analysi by the World Bank's Energy Sector Management
Assistance Program shows. This is massive, compared to the
country's current total installed capacity of around 8 gigawatts.
An offshore wind
roadma -released by Azerbaijan's Ministry of Energy, the World
Bank, and IFC-shows the country has the potential to install 7
gigawatts of offshore wind power by 2040. Harnessing this wind
power will help create over 69,000 full-time equivalent years of
employment and up to $7 billion in local gross value added.
We are well-placed to work with Azerbaijan in developing its
offshore wind potential and help it reach the next level, by
leveraging private investment. IFC and the World Bank are working
with the government on how to implement an offshore wind
roadma , to initiate offshore wind development, and attract
developers and private investors to the country.
What are IFC's other plans on cooperating with
Azerbaijan in 2024 and which sectors look most promising and
attractive for IFC?
Alfonso Garcia Mora, IFC's Vice President for Europe,
Latin America, and the Caribbean
IFC is eager to support the country in developing its non-oil
sectors, boosting competitiveness, and helping to unlock the
private sector's vast potential. Harnessing the private sector's
capital and knowhow through public-private partnerships (PPPs) in
infrastructure and healthcare is a priority, as well as attracting
more private investment in key sectors such as renewables,
pharmaceuticals, transport, and logistics, among others.
We see significant prospects in digital infrastructure.
E-mobility is an emerging area across the region. In Azerbaijan,
the transport sector's share of total energy consumption is
22.6
percent . To reduce environmental impact, investments will be
needed to accelerate the roll out of charging infrastructure for
privately financed electric vehicles and the renewal of urban
transport, including the country's bus fleet.
The government has already implemented
tax break for electric vehicles. However, the large-scale
adoption of clean vehicles will require policy and regulatory
changes. Steep increases in fuel efficiency
standard , incentives to replace old internal combustion engine
vehicles, and efforts to make freight transport operations more
efficient, should be priorities. IFC can support Azerbaijan's
efforts by helping develop regulatory, policy, and institutional
frameworks to facilitate the e-mobility market as well as by
providing financing for private sector projects.
Last but not least is digital financial services, which could
improve access to finance through innovative solutions.
IFC has supported Azerbaijan over many years. What are
the key results of your work?
Alfonso Garcia Mora, IFC's Vice President for Europe,
Latin America, and the Caribbean
Over the past decades, IFC has invested over $850 million in
Azerbaijan, financing nearly 60 projects in financial services,
infrastructure, and manufacturing. IFC has also implemented over a
dozen advisory services projects focusing on the business
environment, financial sector development, corporate governance,
micro, small, and medium enterprises (MSMEs), and agribusiness.
As part of our efforts to support country's diversification
agenda, IFC, in partnership with the Swiss State Secretariat for
Economic Affairs SECO has been working with the government to make
it easier for companies to invest in the non-oil economy. That work
has contributed to fundamental business reforms, including in
registration, inspections, licensing and permitting systems.
IFC provided strategic advice on adopting three laws. The Law on
Tourism aims to introduce methods to reduce time and costs for the
private sector, including market and competition-based means of
regulation and quality assurance. The Law on Food Safety introduced
new methods to quality control the food chain and modernize the
national food safety management system. The Law on Investment
Activity provides investment protection guarantees to help attract
more investment. IFC has also provided advice on small and medium
enterprises (SMEs) and Agricultural Insurance laws.
Together with SECO, we've also supported a series of regulatory
reforms to improve the country's financial infrastructure and boost
access to finance for smaller businesses. For example, the adoption
of a modern law on credit bureaus led to the creation of the first
private credit bureau in 2018. In addition, IFC supported the
development of a secured transactions law. This allows small
businesses, which often lack assets like real estate, to use their
movable assets-inventory, accounts receivable, and equipment-as
collateral. The reform helped create a movable collateral
registry.
Our support provided to the Central Bank of Azerbaijan through
IFC's Electronic and Digital Financial Services project included
the development of Payment Systems and payment services law, and
facilitated the adoption of the open banking roadmap, identifying
steps for sharing of Application Programming Interface by financial
institutions.
To ease access to finance and further strengthen the financial
sector, IFC has launched its Asset-Based Finance (ABF) project,
which aims to support the enhancement of the legal framework
governing prudential regulation of ABF products.
To boost access to finance for smaller businesses and women
entrepreneurs, and help build the financial sector's resilience, in
January 2023, we signed a financing package of up to $40 million to
Bank Respublika, our long-standing client in the country.
Our work in Azerbaijan has had a positive impact on the private
sector, but I believe the future holds even bigger opportunities.
Through investment and advisory work, IFC aims to boost green
growth, strengthen transport corridors and connectivity, enhance
financial inclusion, and support sustainable (or climate smart)
agriculture.
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