Over the past year, the Small and Medium Business Development Agency (KOBİA) has actively fulfilled its mandate by making significant contributions to enhancing the business environment. This has been achieved through the revision of legislation and the enhancement of state services tailored to the SMB sector.
The Agency has persistently supported the establishment of new SMBs, fostered the growth of existing ones, safeguarded entrepreneurs' legal rights, facilitated access to sales markets, knowledge and innovations, and financial resources during that period of time.
Based on information provided by KOBİA to “AZERTADJ”, the agency offers various support and services to business entities intending to start a business and expand their entrepreneurial activities. The aforementioned support and services cover different stages of the business. There are already three SMB Houses operating as unified centers for business has with the opening of the "Baku SMB Houses" by the President of Azerbaijan, Mr. Ilham Aliyev last year. Currently, three SMB Houses operate across the country, located in Baku, Yevlakh, and Khachmaz. In these SMB Houses, about 50 public and private entities render 300 different services for entrepreneurs. The main purpose of the SMB Houses is to provide entrepreneurs with services from both government (G2B) and private (B2B) entities in a single location, ensuring entrepreneur satisfaction through the principles of efficiency, transparency, courtesy, responsibility, and convenience. The positive trend is observed in the number of entrepreneurs utilizing the services of the SMB Houses.
In 2023, SMB Houses provided services to over 371,000 entrepreneurs as well as more than 99,000 entrepreneurs were rendered with services in the first quarter of 2024.The satisfaction level with the services rendered for entrepreneurs at SMB Houses is approximately 98%. Establishment of SMB Houses is envisaged in other cities and regions of the country, including the liberated areas, and necessary measures are underway in this direction.
Additionally, over 550,000 manats in grant funds were allocated accross 32 projects last year to support financing education, science, research, and support projects for SMBs.
In total, more than 1 million manats in grant funds have been channelled to 58 projects for financing education, science, research, and support projects for SMBs up to date.
In 2023, 42 micro and small entrepreneurs were awarded with "Startup" certificates, that qualify tax exemptions for income generated from innovation activities for a period of three years. Totally, 145 entrepreneurs have received these certificates up to date. Efforts are also underway to establish SMB clusters, another support mechanism designed to offer tax incentives to entrepreneurs. Currently, received applications from business entities in this regard are under evaluation. Several tax incentives for SMB cluster companies and their participants are stipulated in the legislation. Specifically, SMB cluster companies are exempt from profit tax for a period of 7 years from the date of their registration in the relevant register. They are also exempt from land and property tax for the land used in SMB cluster activities, as well as from value-added tax (VAT) on the import of technological equipment and machinery. SMB cluster stakeholder is exempt from profit or income tax on the portion of profit or income generated from the sale of goods provided under a contract concluded with the SMB cluster company for a period of 7 years. The commercial legal entity intending to benefit from the incentives provided for SMB clusters shall obtain a certificate provided by SMB cluster company.
For this purpose, the commercial legal entity can apply to KOBİA. KOBİA provides state support for conducting internal market research to stimulate the competitive production of SMBs. 80% of the expenses incurred for each internal market research conducted upon the application of a micro-entrepreneurship entity are covered by the state, while 50% of the expenses for research conducted upon the application of a small entrepreneurship subject are covered by the state. The maximum amount of support to be paid for each internal market research includes 20,000 manats. To date, over 50 internal market research studies have been conducted through both entrepreneur applications and the initiative of KOBİA.
In 2023, within the framework of 10 exhibitions, 79 SMBs showcased their products free of charge, while the agency provided support for the sale of products from over 25 entrepreneurial entities at 8 retail outlets within trading networks. In 2023, nearly 14,000 SMBs, startups, and individuals intending to start a business benefited from KOBİA's free training and consultancy services aimed at educating entrepreneurs and enhancing their knowledge and skills.
Support has been provided for SMBs in developing 697 business plans for various sectors such as agriculture, manufacturing, services, etc. Last year, 424 entrepreneurs and individuals aspiring to start businesses benefited from the agency's free video training sessions. Additionally, 37 entrepreneurs and managers attended specialization courses in Germany to gain international experience. Over 20 entrepreneurs have already benefited from the resources of the SMB Model Enterprise that has been in operation at Azerbaijan Technical University since March of this year. The Model Enterprise is a center for education and experience based on efficient and competitive management practices, aimed at enabling the effectiveness and competitiveness of small and medium-sized industrial enterprises. The engineers and technical teams of SMBs benefiting from the Model Enterprise's resources study methods through practical experiences and apply these methods in their own companies. This not only enhances the productivity and competitiveness of the employees, but also of the company itself. The expansion of the agency's SMB friend network has continued, providing on-site support and services to SMBs and fostering government-business collaboration over the past year. SMB friends operate in nearly 50 cities and regions across the country to be closer to entrepreneurs and support on-site resolution of their applications. One of the current pressing issues for businesses is investing in and establishing businesses in the liberated territories. KOBİA has received over 1950 applications in this regard as of May 1st of this year. More than 1450 of these applications are domestic, while over 500 are from foreign sources.
Among the total applications received, over 980 are investment projects. These projects encompass various sectors, with 48% allocated to trade and services, 22% to industry, 22% to agriculture, and the remaining 8% distributed across construction, tourism, healthcare, education, and culture sectors. The agency offers support and services to entrepreneurs seeking comprehensive information on the economic and investment prospects of the liberated territories, professional consultancy services, facilitation of communication with pertinent government bodies as well as aid in finding local partners. KOBİA provides information on the economic and investment potential of Karabakh to both local and foreign businessmen within the framework of meetings with foreign delegation teams and other events. Several entrepreneurs who established their businesses in our liberated territories have utilized and continue to benefit from various support and services provided by the agency. The service window operates in the State Service Center located in the village of Aghali, Zangilan district, where KOBİA carrying its services tailored to small and medium-sized businesses. Simultaneously, SMB-friend offices are located in the liberated territories. It bring KOBİA closer to entrepreneurs to support the establishment and development of businesses in the region. KOBİA conducts surveys and organizes field meetings to explore the challenges encountered by entrepreneurs and to comprehend their developmental requirements.These surveys are conducted using both internal resources and by engaging professional companies in various areas.
Simultaneously, various applications are submitted to the agency by SMBs. As a result of these measures, it is worth noting that the main challenges faced by SMBs relate to accessing financial resources, and sales markets, lack of experienced personnel, etc. It is also essential to enhance awareness among entrepreneurs regarding the state's support mechanisms, incentives, legal procedures, and the adoption of innovations and digital solutions.
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