ICD and its Azerbaijan Partners Host a webinar introducing Sukuk as alternative financing tool in Azerbaijan

The Islamic Corporation for the Development of the Private Sector (ICD), the private sector arm of the Islamic Development Bank Group (IDBG), organized a webinar on 26 October 2021 aimed at introducing Sukuk as alternative financing tool to finance infrastructure and Public Private Partnership (PPP) projects in Azerbaijan.

The webinar was organized in partnership with the Center for Analysis of Economic Reforms and Communication (CAERC), and the Small and Medium Business (SMB) Development Agency of the Republic of Azerbaijan and in collaboration with the Islamic Development Bank Group (“IsDB Group”) Business Forum (THIQAH).

The ICD and its partners recognize that there is clearly room for the Islamic finance industry to grow, especially given that the features of Islamic finance products can appeal to a much wider investor group. Currently, total global financial assets of the Islamic financial industry are estimated at around US$2.88 trillion and according to some estimates are expected to surpass US$3.69 trillion by 2024.

Sukuk can be structured as a tradable instrument which can be liquidated in the secondary market if an investor needs liquidity or wishes to cash in on the potential capital gain. Sukuk are emerging as a viable instrument to complement, sometimes even substitute, conventional financing for large infrastructure and energy projects.

The webinar informed all interested parties of Sukuk products and provided a platform for dialogue with peers. It showed the future direction of Sukuk potential as alternative financing tool in Azerbaijan.

Mr. Ayman Amin Sejiny, CEO of ICD, said: “ICD remains committed to support the development of the member countries of the IsDB Group and will continue to explore ways to do so. This webinar is yet another example that falls under our high-level plan to help companies in Azerbaijan to access diversified sources of funding”.

Mr. Vusal Gasimli, CAERC Executive Director stated that: “Islamic financial institutes are considered as one of the suitable platforms for increasing the access to the financial services in real sector. Current trends and ongoing projects in Azerbaijan show that there is a proper environment for the role of Sukuk in the financing of infrastructure development. The country is thus ready and open to the use of sukuk as alternative means of financing”. .

Mr. Orkhan Mammadov, Chairman of the Management Board of the Small and Medium Business Development of Azerbaijan, commented: “Improving access of SMEs to finance is among the priority policy directions of our Agency. Although the Government of Azerbaijan with the support of international development finance institutions has been making a noticeable effort over the past years to improve financial landscape for businesses, there are still untapped resources that can be harnessed to promote access to financing and financial inclusion in Azerbaijan.  In this regard, alternative financial tools, such as sukuk, are available and can be leveraged, to foster and promote economic growth of the country in coming years.

Speakers at the first session shed light on an overview of the global Sukuk market, recent developments on Sukuk market, opportunities in Azerbaijan and the need to develop a Sukuk road map for Azerbaijan. The second panel discussion with industry professionals was on the theme “PPP in Azerbaijan: Challenges and Opportunities”.

The highly acclaimed dialogue provided an opportunity to exchange views and gather feedback on Sukuk market and mobilizing financing via Sukuk issuance. The dialogue was meant to drive and promote discussions of sukuk as alternative means of financing, and it provided the participants an opportunity to consider and understand the timeline and road map for sukuk issuance which is expected to ultimately give comfort to potential issuers and get them to start using sukuk as a concrete solution to their financing needs. 

Azerbaijan can address its infrastructure financing challenges with Sukuk. Infrastructure development is one of the most important elements in achieving national and sustainable development goals. Governments across the globe have been using sovereign Sukuk to fund projects and mobilize resources for infrastructure and other economic activities related to energy (including renewable energy), transport, logistics, health, education, water and other sectors.