Azerbaijan Country Profile 2013 Summary
Core Content Overview
The Azerbaijan Country Profile 2013 is part of the Enterprise Surveys conducted by the World Bank Group, specifically the International Finance Corporation (IFC). These surveys aim to assess the business environment and firm performance in non-agricultural formal private sectors across various countries. The report provides a comprehensive analysis of key indicators affecting business operations in Azerbaijan, comparing them with regional and income group averages.
Main Topics Covered
The document covers the following main topics:
- Business Environment Obstacles
- Average Firm Characteristics
- Infrastructure
- Trade
- Regulations, Taxes, and Business Licensing
- Corruption
- Crime and Informality
- Finance
- Innovation and Workforce
Key Points and Findings
Business Environment Obstacles
- A poor business environment increases obstacles to business activities and reduces a country's potential for growth in terms of employment, production, and welfare.
- The report highlights the main constraints identified by firms in Azerbaijan and compares them with regional averages.
- The Graft Index is a key indicator measuring the proportion of times firms were expected to pay bribes for public services.
Average Firm
- The data reflects the characteristics of the average firm in Azerbaijan, including firm age, gender representation in management and ownership, and ownership structure.
- The average firm in Azerbaijan is 11.7 years old, with 2.4% having a female top manager and 4.1% having female participation in ownership.
- All firms in Azerbaijan are privately owned (100.0%), with no foreign or government ownership.
Infrastructure
- Infrastructure is critical for firm competitiveness and growth.
- Electricity and water supply deficiencies are major issues in Azerbaijan.
- Power outages occur on average 0.5 times per month, with 0.1% of sales lost due to these outages.
- Water shortages occur 0.1 times per month, with an average duration of 0.1 hours.
- Delays in obtaining infrastructure services, such as electricity and water connections, are reported to be 4.3 days and 5.0 days, respectively, which are significantly lower than the regional average.
Trade
- Only 2.0% of firms in Azerbaijan are exporters.
- 22.7% of firms use foreign material inputs or supplies.
- The average time to clear direct exports through customs is 2.2 days, and for imports, it is 4.2 days.
- There are no reported losses during direct exports due to theft or breakage.
Regulations, Taxes, and Business Licensing
- Regulations, taxes, and business licensing are crucial for a favorable business environment.
- The average time spent by senior management dealing with government regulation is 0.2%.
- The average number of visits to tax officials is 1.7.
- Closed shareholding companies dominate the private sector in Azerbaijan, with 72.1% of firms classified as such.
- Bank finance accounts for 22.3% of investment, while internal finance is the most common source at 77.0%.
Corruption
- 30.9% of firms in Azerbaijan report experiencing corruption.
- 51.2% of firms expect to give gifts to secure government contracts.
- 41.8% of firms expect to give gifts to obtain a construction permit.
- 38.9% of firms expect to give gifts to secure an import license.
- 38.7% of firms expect to give gifts to obtain an operating license.
Crime and Informality
- 78.8% of firms believe the court system is fair, impartial, and uncorrupted.
- Security costs account for 0.6% of sales, and losses due to theft are reported at 0.0% of sales.
- 97.0% of firms are formally registered when they start operations, indicating a relatively low level of informality.
Finance
- Internal finance is the primary source of investment, with 77.0% of firms relying on it.
- Bank finance accounts for 22.3% of investment, while trade credit and equity are minor sources.
- 7.3% of firms use external financing for working capital.
- The value of collateral needed for a loan is 228.2% of the loan amount, indicating a high requirement for collateral.
- 14.5% of firms have bank loans or lines of credit, and 69.8% have checking or savings accounts.
Innovation and Workforce
- 12.8% of firms have internationally recognized quality certifications.
- 46.5% of firms have their annual financial statements reviewed by an external auditor.
- 32.5% of firms use their own websites, and 64.8% use email for communication with clients and suppliers.
- 31.4% of firms have full-time female workers, with a slightly higher proportion in small firms.
Summary of Key Indicators
| Indicators |
Azerbaijan |
Small Firms |
Medium Firms |
Large Firms |
ECA |
Lower Middle Income |
| Corruption Indicators |
|
|
|
|
|
|
| Incidence of Graft Index |
30.9 |
12.9 |
50.1 |
15.2 |
13.3 |
13.3 |
| % of Firms Expected to Give Gifts in Meetings with Tax Inspectors |
11.7 |
12.7 |
10.5 |
9.8 |
10.7 |
10.7 |
| % of Firms Expected to Give Gifts to Secure a Government Contract |
51.2 |
22.3 |
72.4 |
0.0 |
0.0 |
24.4 |
| % of Firms Expected to Give Gifts to Get a Construction Permit |
41.8 |
44.9 |
56.8 |
18.4 |
18.4 |
23.4 |
| % of Firms Expected to Give Gifts to Get an Import License |
38.9 |
8.6 |
73.5 |
15.0 |
15.0 |
10.5 |
| % of Firms Expected to Give Gifts to Get an Operating License |
38.7 |
4.7 |
57.8 |
23.1 |
23.1 |
10.6 |
| Regulations, Taxes, and Business Licensing Indicators |
|
|
|
|
|
|
| Days to Obtain Import License |
5.8 |
7.8 |
4.6 |
3.0 |
3.0 |
15.4 |
| Days to Obtain Construction-related Permit |
13.8 |
11.6 |
23.9 |
10.0 |
10.0 |
83.2 |
| Days to Obtain Operating License |
5.3 |
7.7 |
4.4 |
2.1 |
2.1 |
24.0 |
| Senior Management Time Spent in Dealing with Government Regulation (%) |
0.2 |
0.3 |
0.2 |
0.0 |
0.0 |
11.0 |
| Average Number of Visits or Required Meetings with Tax Officials |
1.7 |
1.6 |
1.7 |
2.2 |
2.2 |
1.4 |
| Open Shareholding Company (%) |
13.4 |
11.3 |
14.9 |
12.1 |
12.1 |
4.7 |
| Closed Shareholding Company (%) |
72.1 |
70.7 |
74.0 |
72.0 |
72.0 |
72.8 |
| Sole Proprietorship (%) |
14.6 |
17.9 |
11.1 |
100.0 |
100.0 |
14.3 |
| Partnership (%) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
2.8 |
| Limited Partnership (%) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
3.9 |
| Other (%) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
1.5 |
| Finance Indicators |
|
|
|
|
|
|
| Internal Finance for Investment (%) |
77.0 |
74.0 |
82.9 |
63.9 |
63.9 |
71.2 |
| Bank Finance for Investment (%) |
22.3 |
25.3 |
16.3 |
36.1 |
36.1 |
14.8 |
| Trade Credit Financing for Investment (%) |
0.4 |
0.0 |
0.9 |
0.0 |
0.0 |
4.6 |
| Equity, Sale of Stock for Investment (%) |
0.1 |
0.2 |
0.0 |
0.0 |
0.0 |
5.8 |
| Other Financing for Investment (%) |
0.2 |
0.6 |
0.0 |
0.0 |
0.0 |
3.6 |
| Working Capital External Financing (%) |
7.3 |
5.1 |
10.6 |
6.7 |
6.7 |
24.5 |
| Value of Collateral Needed for a Loan (% of the Loan Amount) |
228.2 |
259.1 |
201.2 |
55.8 |
55.8 |
187.3 |
| % of Firms With Bank Loans/Line of Credit |
14.5 |
14.7 |
14.6 |
12.1 |
12.1 |
39.1 |
| % of Firms With a Checking or Savings Account |
69.8 |
64.0 |
75.3 |
88.0 |
88.0 |
88.6 |
Infrastructure Indicators
| Indicators |
Azerbaijan |
Small Firms |
Medium Firms |
Large Firms |
ECA |
Lower Middle Income |
| Number of Power Outages in a Typical Month |
0.5 |
0.6 |
0.4 |
0.3 |
0.3 |
1.4 |
| Value Lost Due to Power Outages (% of Sales) |
0.1 |
0.1 |
0.2 |
0.0 |
0.0 |
0.9 |
| Number of Water Shortages in a Typical Month |
0.1 |
0.0 |
0.5 |
0.2 |
0.2 |
0.3 |
| Average Duration of the Water Shortage (hours) |
0.1 |
0.0 |
0.2 |
0.2 |
0.6 |
0.6 |
| Delay in Obtaining an Electrical Connection |
4.3 |
6.3 |
1.7 |
2.0 |
2.0 |
43.8 |
| Delay in Obtaining a Water Connection |
5.0 |
3.0 |
6.2 |
5.7 |
5.7 |
33.2 |
| Delay in Obtaining a Mainline Telephone Connection |
N/A |
N/A |
N/A |
N/A |
N/A |
27.6 |
Trade Indicators
| Indicators |
Azerbaijan |
Small Firms |
Medium Firms |
Large Firms |
ECA |
Lower Middle Income |
| % of Exporter Firms |
2.0 |
2.1 |
1.0 |
6.5 |
6.5 |
22.8 |
| % of Firms that Use Material Inputs and/or Supplies of Foreign Origin |
22.7 |
27.1 |
11.9 |
20.0 |
20.0 |
64.8 |
| Average Time to Clear Direct Exports Through Customs |
2.2 |
N/A |
2.7 |
1.0 |
1.0 |
4.4 |
| Average Time to Clear Imports from Customs (days) |
4.2 |
4.2 |
N/A |
N/A |
N/A |
6.1 |
| Losses during Direct Export Due to Theft (%) |
0.0 |
N/A |
0.0 |
0.0 |
0.0 |
0.2 |
| Losses during Direct Export Due to Breakage or Spoilage (%) |
0.0 |
N/A |
0.0 |
0.0 |
0.0 |
0.8 |
Crime and Informality Indicators
| Indicators |
Azerbaijan |
Small Firms |
Medium Firms |
Large Firms |
ECA |
Lower Middle Income |
| % of Firms Believing the Court System is Fair, Impartial, and Uncorrupted |
78.8 |
76.8 |
79.4 |
92.4 |
92.4 |
38.1 |
| Security Costs (% of Sales) |
0.6 |
0.5 |
0.8 |
0.0 |
0.0 |
1.3 |
| Losses Due to Theft, Robbery, Vandalism, and Arson Against the Firm (% of Sales) |
0.0 |
0.0 |
0.0 |
0.1 |
0.1 |
0.4 |
| % of Firms Formally Registered when Started Operations in the Country |
97.0 |
95.5 |
98.6 |
100.0 |
100.0 |
98.4 |
Innovation and Workforce Indicators
| Indicators |
Azerbaijan |
Small Firms |
Medium Firms |
Large Firms |
ECA |
Lower Middle Income |
| % of Firms With Internationally Recognized Quality Certification |
12.8 |
6.2 |
19.1 |
31.3 |
31.3 |
22.6 |
| % of Firms with Annual Financial Statement Reviewed by External Auditor |
46.5 |
45.7 |
48.1 |
43.9 |
43.9 |
34.9 |
| % of Firms Using their Own Website |
32.5 |
23.1 |
42.4 |
53.2 |
53.2 |
59.8 |
| % of Firms Using Email to Communicate with Clients/Suppliers |
64.8 |
55.9 |
73.7 |
86.5 |
86.5 |
85.8 |
| Average Number of Temporary Workers |
1.2 |
0.7 |
2.1 |
0.4 |
0.4 |
3.0 |
| Average Number of Permanent, Full-Time Workers |
28.7 |
10.7 |
36.4 |
142.1 |
142.1 |
29.6 |
| % of Full-Time Female Workers |
31.4 |
33.2 |
28.2 |
26.8 |
26.8 |
39.5 |
Notes
- The sample is stratified by industry, firm size, and geographic region.
- Regional and income group indicators are calculated as averages of country-level data.
- The Graft Index measures the proportion of times firms were expected to pay bribes for public services.
- The report is a co-publication of the World Bank and IFC.
- The data is based on firm responses and does not guarantee accuracy.
