To renew the flow of money and investments

To get
started on the subject of creating fully-driven small entrepreneurship
environment in Azerbaijan, let’s humbly admit that there currently is no
ground to build any properly working institution on. Needless to say, that in
the aftermath of the great financial crisis of 2008, Azerbaijan had steadily
overcome its consequences, and the tendencies of its growth had been wrongly
understood at that time. In reality, so called flawless performance was due
to artificially created and supported stimulants and Azerbaijan met its fate
6 years later, when the first devaluation of the local currency took place,
followed by the rapid downfall of the ‘perfect’ market that allegedly
“withstood” the demolishing winds of 2008 crisis’ aftermath. Oil
sector ,that had long been the leading breadwinner of the country,
experienced a significant downturn and revealed the economical problems and
faults within the government. The country that had been relishing upon the
only industry for decades saw fruits of poor governing when it had been left
with meager scoops of what it possessed before. To find a way out and regain
its possessions and renew the flow of money and investments back in the
country, the government took steps to analyze the existing problems underlying
such miserable performance country- and worldwide and came out with a rather
unexpected idea about it all – there weren’t problems, there was a huge
pitfall and handful of its results. The banking system, the artery of the
economy, was at its lowest, as it failed to deliver the most primary of its
services – lending. The artery and the vessels were clogged up, as no
individual who thought to lend a loan to start something of his own, could do
it easily. And even if they eventually managed to overcome that lending
barrier, they were thrown back by the limitations of legislation. This and
other problems are drawbacks that cannot make it easy for entrepreneurship,
and especially small entrepreneurship and startups to emerge and grow. To
have a different look on the problem, I have decided to actually converse
with entrepreneurs and startupers and ask them their opinion, and what they
do in order to become successful during this volatile time of Azerbaijan’s
economy. As Tamerlan Ismayilov, the head of Brandup Agency said, the main
thing is not to cut the spendings, as before in order to get a new customer,
the company was spending “x” amount of money and now when the situation has
worsened they need to spend “2x”. Also he added that the well-combined team
plays huge role in staying afloat. The head of and other several
businesses and projects Baba Agayev said that for him the network, marketing
and sales are the most important things. As he said: “You need to find the
right marketing path and strategy for your company and keep that path until
you accomplish your goals.” To my question about latest legislations and
taxes, they answered that they have mixed feelings about it. I have also
talked to them about my solutions to their concerns, and they noted that in
early steps of business those kind of boosts would help them to progress a
lot and already pass onto second stage of progression which is to tighten
things up and implement an already written strategy. In this essay, I want to
emphasize the importance of development of policies that would boost the
progression of small entrepreneurship and start-up ecosystem in Azerbaijan.
These two ecosystems can contribute to the increase of competitiveness in
Azerbaijani market and also to growth of Azerbaijan’s economy. Given that,
the most crucial priority of Azerbaijan’s current economic policy is
sustainable long-term growth, which cannot be imagined without the
development of small entrepreneurship and startup ecosystems. As studies of
foreign policies show, more than 50% of income of the government come from
these types of businesses, and moreover, 64% of net new private-sector jobs
are also derived from small businesses and startups (1). In this particular
essay, I want to touch policies and ecosystems of developed countries and to
the ways of implementation of them in Azerbaijan. As it is known to us, the
main center of startup companies is located in San Jose, Los Angeles, San
Francisco and others, and these cities have the most efficient and
sustainable ecosystem. Besides these, the country’s legislations also support
the creation and development of startups as it is the main way to sustain
growth of economics in today’s mostly digital world. And over the last 5
years Azerbaijan is showing a big interest in development of these ecosystems
and better conditions for startups and small entrepreneurs. As I mentioned
above for development of startups and small businesses, the ecosystem is
really vital, and the USA is considered to have the best one, starting with
Silicon Valley and as recent news reported, some new innovative centers were
established in Boston, which exceed the Silicon Valley by a few criterion.
Also, we cannot forget about the importance of research centers in this
ecosystem, and other innovative companies such as IBM, Space X, Intel, and
etc. set various researches in information and technology field. Also, the
USA has a leading ecosystem because of venture companies which are helpful in
early investment periods of small entrepreneurs and startups. Also, events
and conferences play a huge role as well, as Texas’s famous SXSW, and it
should be mentioned that Twitter and Foursquare were presented in there at
first their steps. Moreover, business incubators help small and innovative
entrepreneurs as, as the main office of one of the first and largest
incubators – TechStars- is allocated in the United States. Everything
specified above are just examples of what should a great ecosystem look like.
Now I will discuss what we have in Azerbaijan and about the ways of improving
it. As you know just 5-10% of the total number of Azerbaijani startups can be
called successful by specialist. It is obvious is that state is taking steps
to develop venture market(2). Also, state created High Tech Park in 2012 in
order to boost some projects of small entrepreneurs. As a solution, I would
offer to bring the biggest startup events to Azerbaijan, to open one branch
of Techsters in Azerbaijan and let new startupers and small entrepreneurs to
develop their projects there. Unfortunately, most places like this in
Azerbaijan are just for startupers, and there is almost no opportunities for
small entrepreneurs. Besides, Azerbaijan has developed and implemented a
whole range of measures aimed at the formation and strengthening of the
national innovations system, as Ilham Aliyev signed a legislation which
concept is “Azerbaijan 2020: A glance of Future”. As a solution to further
improvement and development of our ecosystem, I would suggest to co-operate
with Islamic Development Bank (IDB). As you know, Islamic banking is
characterized mainly as “interest-free financing.” This system was
first used in Egypt in 1963-66 on the basis of a banking model developed by
an Egyptian economist. (3) Today Islamic Banking is covering huge areas, as
you can find the branches of these kind of banks in Western Countries as
well. In my opinion, the use of funds of interest-free banking institutions
in the development of the economy of Azerbaijan acquires special
significance.Up to this date, Azerbaijan has been actively involved in the
activities of this organization, owning its shares for a total amount of 9.76
million US dollars. As a solution, I would suggest to closely link startup
launches and small business investments via Islamic banking whereby you will
be sharing all the risks with the bank which considers your project feasible
by doing multilateral business and financial analysis. Due to emergence of
the need to create viable startups and overall business ecosystem in
Azerbaijan, some rudimentary skills that build the foundation of such
necessity have to be taught in schools. In other words, youngsters have to
learn to adjust to cruelness and harshness of today’s market and set their
goals and learn how to think big from early ages. And thus, school
curriculums need to be altered in a way to impact the future of our country
and shift their focus from traditional ways and subjects taught to preparing
the young according to demands of new era. This new way will open a lot of
new opportunities for our youngsters and they will see the world in totally
different way, and the most importantly they will interpret the importance of
money. As for tendency 4 out of 10 students in Azerbaijan are majoring in
Business and Economics but after their freshman year they feel like it
doesn’t fit their interests, teaching basic skills in school with new path
will encourage students to follow more prosperous careers which could fit
their interest the best. The fundamental knowledge about money and economics
that will be taught in school will cease people from panicking and making
quick decisions which harm the economy even more. And moreover, in long term,
it will help create a calm response to upcoming market recessions. In
conclusion, it is safe to say that the impact made on the development of
business environment cannot be assured without using the tools mentioned
above to put the economy on its tracks. To function correctly and safely,
startups and small entrepreneurship need to be founded on safe grounds, be
properly supported by particular governmental institutions, and act within
clearly-structured legislation. Without considering all these factors, the
economy can be driven into a much more hazardous direction and the way back
up will be even more challenging to achieve. As we mentioned above the
incubators and venture capitalism played a huge role in the progression of
some businesses in their early stage, based on the experience of foreign
institutes and ventures, executed right, these tools can spark a surge of
many small businesses which earlier on couldn’t have simply seen a clear way
of developing. A few touches of foreign banking model could also do the
economy some good in terms of remodeling the lending system as was shown in
the perfect example of Islamic Banking System, where small entrepreneurship
and startups are constantly being backed up due to interest-free financing so
broadly practised. And finally, allowing the youngs to get a sense of
business world through teaching them plain knowledge behind functions of
economy and money and preparing them for a greater world they will have to
face on their way to success – this is a small fee we have to pay to ensure a
better and safer future for small entrepreneurship and economy as a whole.
Bibliography: 1. Advocacy: The voice of small business in government. U.S
Small business administration, 2. Mustafali, Tarlan.
“Prospects for the development of start-Ups in Azerbaijan.” MBA Program of
Azerbaijan State Oil and Industry University, 2017. 3. Lewis, Mervyn, and
Latifa M. Algaoud. Islamic banking. Elgar, 2001.


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