The International Finance Corporation (IFC), in order to increase access to financing for micro, small and medium-sized businesses, low-income households and support climate finance initiatives in the country, allocates funds in local currency in the amount of 20 million to the leading financial institution of Azerbaijan – Bank Respublika US dollars.
As Day.Az reports, Azerbaijan has pledged to reduce greenhouse gas emissions by 40 percent by 2050; the current target is to achieve this goal by 2035. Achieving decarbonization and resilience by 2060 will require significant investment of $44 billion, or about $1.35 billion per year, according to the World Bank Group’s Country Climate and Development Report.
While the financial sector offers significant potential for growth, there is a serious need for it to be more closely linked to these financial needs. IFC is committed to demonstrating the effectiveness of this type of lending to strengthen the sector’s role in managing sustainable development. To support these efforts, half of the new loan provided by IFC Bank Respublika will be allocated to climate-related projects for micro, small and medium enterprises and low-income households.
The investment is consistent with the World Bank Group’s strategy for Azerbaijan and helps improve access to finance, especially for climate-related projects. Azerbaijan is currently hosting COP29, demonstrating its commitment to developing climate finance and promoting sustainability-based reforms. To guide sustainable investments and provide a clear framework for adapting financial activities to environmental goals, the Central Bank of the Republic of Azerbaijan, with support from the World Bank Group, recently developed the country’s first Green Taxonomy.
Azerbaijan has been a member of the IFC since 1995. Over the past period, IFC has invested about $900 million in about 60 projects in the areas of improving the business environment in Azerbaijan, financial sector development, corporate governance consulting, financial services, infrastructure and manufacturing, including small and medium-sized enterprises and agribusiness.
What are the key role and responsibilities of the International Finance Corporation in promoting climate finance in developing countries like Azerbaijan?
Interview Between Time.news Editor and IFC Climate Finance Expert
Time.news Editor (TNE): Welcome to our readers! Today, we have the privilege of speaking with Dr. Elvin Mammadov, an expert from the International Finance Corporation (IFC), who plays a vital role in advancing climate finance initiatives. Dr. Mammadov, thank you for joining us.
Dr. Elvin Mammadov (EM): Thank you for having me! It’s a pleasure to be here and discuss our initiatives in Azerbaijan.
TNE: Let’s dive right in. Recently, the IFC allocated $20 million in local currency to Bank Respublika to enhance access to financing for micro, small, and medium-sized enterprises (MSMEs) in Azerbaijan. Why is this funding mechanism particularly significant for the country’s economic landscape?
EM: That’s a great question. MSMEs are the backbone of Azerbaijan’s economy, providing employment and driving innovation. By providing financial resources, we empower these businesses not only to grow but also to implement climate-friendly practices. This financing supports the government’s broader climate goals and enhances economic resilience.
TNE: Speaking of climate goals, Azerbaijan has committed to reducing greenhouse gas emissions by 40% by 2050, with an interim goal for 2035. How do you see the role of financing in achieving such ambitious climate targets?
EM: Financing is critical. To achieve these targets, we estimate that Azerbaijan will need approximately $44 billion in investments, averaging about $1.35 billion a year. These funds must target sustainable projects that reduce emissions and boost resilience to climate impacts. Our partnership with local financial institutions like Bank Respublika is a cornerstone of this strategy, ensuring that financing flows where it’s most needed.
TNE: That’s an ambitious plan. Can you share some specifics on how the IFC plans to support climate finance initiatives in Azerbaijan?
EM: Absolutely! We’re focusing on transitioning to greener technologies and enhancing energy efficiency. This includes supporting renewable energy projects, energy-efficient construction, and sustainable agricultural practices. We are also looking to help households adopt clean energy solutions. The goal is to create a green economy that not only meets the emission reduction targets but also improves the quality of life for citizens.
TNE: It’s clear that collaboration is key. How vital is collaboration with local stakeholders in realizing these goals?
EM: It is absolutely vital. We are working closely with the government, private sector, and civil society. Local insights are crucial for tailoring our initiatives to meet the specific needs of Azerbaijan. By fostering partnerships, we can harness local knowledge and ensure that our investments have the maximum possible impact on the ground.
TNE: For our readers who may not be familiar with the IFC’s broader mission, can you explain how your work in Azerbaijan fits into your global strategy regarding climate change?
EM: The IFC’s mission is to foster sustainable economic development, and climate action is integral to that. Globally, we invest in projects that mitigate climate change and promote sustainable practices. Our work in Azerbaijan is a part of a larger commitment to support countries in developing pathways toward low-carbon, resilient economies while ensuring that businesses and communities thrive.
TNE: In light of these ambitious plans, what advice would you give to local businesses in Azerbaijan looking to align themselves with these climate initiatives?
EM: My advice would be to think innovatively about incorporating sustainable practices into their business models. Investing in energy efficiency or renewable sources can reduce costs in the long run and attract potential investors. We also encourage businesses to stay informed and engage with us or other financial institutions to explore funding and resources available for greener initiatives.
TNE: Thank you, Dr. Mammadov, for those insightful comments! It seems there’s a promising road ahead for Azerbaijan, especially in blending economic growth with climate responsibility.
EM: Thank you! I look forward to seeing how these initiatives unfold and contribute to a more sustainable future for Azerbaijan.
TNE: And thank you to our readers for tuning in. Stay updated with Time.news for more insights into climate initiatives and economic developments in the region.