Switzerland and Azerbaijan celebrate 20 years of bilateral cooperation in 2019

This year, Switzerland"s development cooperation is actively engaged in Azerbaijan for 20 years. 20 years of partnership and cooperation brought our countries closely together. Today, our countries enjoy excellent political and economic relations.

At the beginning of the bilateral development cooperation, in 1999, Switzerland supported Azerbaijan with humanitarian assistance to help refugees and internally displaced persons (IDPs). In those early years of the Republic, refugees and IDPs still needed substantial assistance, which was provided by the government of Azerbaijan and by different international organizations, including the Swiss Agency for Development and Cooperation (SDC).

In the following years, while the economic situation of Azerbaijan, as well as the situation of refugees and IDPs, were gradually improving, Switzerland changed the focus of its support. Projects shifted from a humanitarian approach to more long-term development needs, with a focus on value-chain development and infrastructure. The Swiss projects contributed to the development of tourism in Ismayilli and Qabala, for example, orto the rehabilitation of water infrastructure in the territory of the Nakhchivan Autonomous Republic. Later, rural development projects in central Azerbaijan, including Barda, Tartar, Agdam, Agcabadi and Beylaqan, were implemented through the financial support of Switzerland.

As the economy of Azerbaijan further evolved, Switzerland focused its assistance increasingly on more systemic aspects, mainly by improving the framework conditions for the private sector and by providing technical support in macro-economic areas and the financial sector. This was also the time, when Switzerland"s agency responsible for economic cooperation, the State Secretariat for Economic Affairs (SECO), started its active presence in Azerbaijan in 2004.

The increased volume of Switzerland"s cooperation with and support to Azerbaijan required a legal basis. Thus, a Cooperation Agreement between the two governments on Technical, Financial and Humanitarian Cooperation was signed on 23 February 2006. This agreement is valid until today.

Today"s highly technical economic cooperation is characterized by reliable partnership and mutual trust. The technical support focuses on complex macro-economic reforms, ranging from Public Finance Management, Government Statistics to macro-economic modelling. Switzerland is also a long-term supporter of the financial sector development in Azerbaijan. Support clusters around financial infrastructure, such as introduction of leasing, the establishment of a Private Credit Bureau, the introduction of secured transactions and most recently mobile money solutions. All this is done in close dialogue with local authorities and Switzerland strongly supports Azerbaijan in its goal to diversify and reform its economy.

Swiss assistance in figures

Over the last 20 years, Switzerland provided assistance to Azerbaijan in the amount of CHF 91 million, which is equivalent to AZN 154 mio. Most of the support was provided through SECO (CHF 61 million) and SDC (CHF 29 million), while the other Swiss contributions amounted to approximately CHF 1,4 million. Note that the Swiss National Bank also provides technical assistance to the Central Bank of Azerbaijan. Furthermore, the Swiss Investment Fund for Emerging Markets (SIFEM)has invested the amount of CHF 16 million into Azerbaijan.

Our implementing partners

In the early years, Switzerland mostly worked through international organizations and NGOs to deliver its humanitarian assistance. Similarly, many development projects were implemented by Swiss and international NGOs.This however changed in 2015, when most of international NGOs left due to a new and not fully conducive NGO legislation. The technical assistance of SECO on the other hand usually taps the expertise of global institutions such as the World Bank Group (IBRD and IFC), the International Monetary Fund, regional development banks or universities with large networks, such as the Graduate Institute in Geneva. Additionally, SECO also delivers its assistance through highly specialized consultants or by working with local universities (e.g. Khazar University). The International cooperation of Switzerland - as well as the Swiss Embassy in Baku in general - maintains a close dialogue with the local civil society including the local art & culture scene, which it supports through small innovative projects.

Other facts - did you know?

What is the explanation for the close ties between Azerbaijan and Switzerland? In 1992, the two countries joined the so-called Bretton Woods Institutions - the World Bank Group (WB) and the International Monetary Fund (IMF) - together with the Kyrgyz Republic, Poland, Serbia, Tajikistan and Turkmenistan. These countries agreed to form a new constituency (voting group) in these institutions, to be led by Switzerland. Until today, you will find our offices at the WB and the IMF in Washington D.C. Switzerland continues to represent the interests of Azerbaijan and the other constituency members (including Kazakhstan, which joined in 2010) within these two international financial institutions.

The Swiss Cooperation Office to the South Caucasus started its operations in 1999. From its office in Tbilisi it covered the three Republics of the South Caucasus. Today, there are Cooperation Offices in all three countries, with the main office in Tbilisi. The work of the international cooperation in the South Caucasus is guided by a regional four years"strategy and some of our projects work in two or three of the countries, such facilitating exchange and mutual learning.

Switzerland"s cooperation activities in Azerbaijan are executed by the Swiss Cooperation Office (SCO) in Baku, which is a part of the Swiss Embassy located in Icheri Sheher. The Embassy in Baku, which was inaugurated in late 2007 and which represents Switzerland in Azerbaijan and in Turkmenistan, provides the full range of services including visa and consular issues.

Annexes for press conference:

Annex I - Concrete examples of cooperation projects over the past 20 years

Swiss Agency for Development and Cooperation (SDC):

SDC implemented various projects in the field of humanitarian assistance to refugees and internally displaced persons (IDPs), development of tourism, support to capacity building of government officials etc. since it started its operations in Azerbaijan. Later, the main focus of the SDC projects in this country was the development of rural areas and the agricultural sector. In particular, projects were implemented in the Nakhchivan Autonomous Republic (NAR) and various districts of central Azerbaijan, including Agdam, Barda, Tartar, Agcabadi and Beylaqan.

In NAR, SDC implemented a big project to rehabilitate and revive kahrizes (kahriz - a traditional water supply system that brings ground water to the surface, provides clean potable water, and is also used for irrigation) for more than 10 years, rehabilitating 125 kahrizes in the entire NAR. This helped improve the livelihoods and the living conditions of hundreds of people in rural areas, especially in arid and semi-arid villages. NAR fully integrated the rehabilitation technology and well capacitated staff into its government structure. This means that NAR continues to rehabilitate further kahrizes and keeps maintaining the rehabilitated ones. Kahriz rehabilitated by the project are functional, widely used and well maintained until today.

The projects implemented in central Azerbaijan focused on improving capacity building of refugees and IDPs in agriculture, development of livestock, supporting SME development in rural areas, particularly in dairy and feed production, improving veterinarian services, access to market for the poor and vocational education and training. SDC projects also supported people"s capacities in vegetable growing by improving farmers" knowledge on onion and strawberry production, easing access to quality seeds and to markets.

Current support by SDC focuses on Women"s Economic Empowerment, Climate change adaptation and Art and Culture activities. Switzerland is the most substantial supporter of the local art scene in Azerbaijan.

State Secretariat for Economic Affairs, SECO:

Azerbaijan, as a member of the Swiss Constituency in the Bretton Woods institutions, is an important partner for SECO"s economic cooperation. The technical cooperation is focusing on non-oil private sector development and diversification, improving access to finance for SME through a strengthened financial market infrastructure, assistance for macroeconomic stability and improving the public financial management framework in the country.

SECO has been supporting various government institutions like the Ministry of Finance, the Ministry of Economy or the Chamber of Accounts to improve public finance management system. For example, it provides technical assistance on specific elements of Public Finance Management (PFM) such as improving public debt management framework, introducing financial programming model to be used for macroeconomic forecasting, improving performance of supreme audit institution, i.e. the Chamber of Accounts etc. By doing so, SECO supports the Azerbaijani government in its efforts improve transparency and accountability as well as efficiency of public finance management.

Further, SECO has been supporting the financial sector regulators like the Central Bank, the State Committee on Securities, the Ministry of Finance and the Financial Market Supervisory Authority (FIMSA) created in 2016, to improve legislative and institutional framework and capacities to better regulate the financial sector and increase the level of financial inclusion. Moreover, SECO has been financing several projects to address sectoral level issues in the financial sector. Most recent support led to the establishment of a private credit bureau and the secured transaction system. SECO currently supports efforts to improve capacities of local banks in risk management, non-performing loans resolution, SME banking and innovative financial products. All of these served to improve performance of the local financial sector and increase access of SMEs and rural population to finance in Azerbaijan.

Until recently, SECO has also been active in implementing infrastructure projects. Achievements in the fields of real estate registration, as well as improving access to potable water in greater Baku, Ganca and Shaki helped improve services for population in different parts of the country. Nowadays, registration of real estate can be comfortably done electronically from home at any time of the day.

Together with its implementing partners, SECO also has an active engagement in improving the overall business environment. It has implemented several projects in Azerbaijan which improved the inspections framework and reduced compliance costs. The organization contributed to an improved legal framework of licenses and permits. SECO currently continuesits engagement in the area of investment climate, focusing on the following elements: improving inspections in agriculture, seed testing and registration framework as well as agri-finance options in Azerbaijan in order to continue to contribute to the non-oil sector development in Azerbaijan. SECO also currently tests the introduction of highly innovative electronic and digital financial services, which would allow people to pay using their phones.

Annex II - Glossary

Embassy - As the official representation of Switzerland, the embassy covers all matters concerning diplomatic relations between the two countries. It represents Swiss interests in the areas of political, economic and financial affairs, development assistance, legal arrangements, science, education, culture and tourism.

SCO - Swiss Cooperation Office

A Swiss Cooperation office represents and coordinates the development assistance financed by Switzerland, sometimes up to three agencies (SDC, SECO, HSD). All our SCOs are integrated into the respective Swiss embassies in the host countries.

SECO - State Secretariat for Economic Affairs

SECO"s Economic Cooperation is the specialized agency for economic cooperation and is part of the Federal Department of Economic Affairs, Education and Research.

SDC - Swiss Agency for Development and Cooperation

SDC is part of the Federal Department for Foreign Affairs and is the Agency responsible for humanitarian assistance and development cooperation

HSD - Human Security Division

HSD is an agency specialized in peace and confidence building; it is part of the Federal Department for Foreign Affairs

SNB - Swiss National Bank

This is the National Bank of Switzerland. The SNB is a fully independent authority. It decides on its own to engage in technical cooperation with selected partner countries, usually the ones from the Bretton Wood voting groups. SNB cooperates with the Central Bank of Azerbaijan.

SIFEM - Swiss Investment Fund for Emerging Markets

SIFEM is a government owned investment fund, through which Switzerland makes impact investments into developing and emerging economies. SIFEM has invested CHF 16 mio. into Azerbaijan.