Azerbaijan's State Fund for ICT Development may start financing "start-ups" in the next few months, Communications and Information Technologies Ministry official Elchin Zeynalov said Wednesday.
The Fund was established to implement the state policy on development and support of small enterprises in the scientific and technical fields, providing them with direct financial assistance and personnel training, which in turn will help to create new jobs.
Zeynalov, head of strategic planning, investment and scientific potential at the communications ministry, said the Fund will begin its work fully after administrative issues are resolved, which is possible this fall.
Financial support for "start-ups" and creative ideas contribute to the development of the ICT in the country, Zeynalov said.
Unfortunately, in this respect, the situation currently is not particularly inspiring and requires proper development, Zeynalov believes.
However, he said, there are development prospects, and considering that innovative ideas will receive due financial support, quite a lot of them will appear.
"ICT is one of the fields that require long-term investments and the return is dependent on the success and profitability of projects," Zeynalov noted.
The Fund defines three mechanisms of financing - investments, grants and credits. Priority will be given to export-oriented projects. Grants will be awarded primarily for the development of innovative ideas after detailed study.
Depending on the project, the Fund may invest in the purchase of shares in a company, along with grant support, Zeynalov said.
"For example, if the owner decides to sell part of the equity in the company for further development of the project which has already reached the level of return, the Fund can become a shareholder," Zeynalov said. "The interest rate determined by the Fund is quite reasonable considering that interest rates in the country's financial market today start from 15 percent and more."
At present, there is a great demand for ICT products and services due to underdevelopment of this market in the region, evidenced by global financial institutions, he believes.
"The Azerbaijani ICT market is relatively small. This situation is also typical for other markets in the region where hi-tech product manufacturing is not developed," Zeynalov said, adding that this allows noting the existing demand for such products.
According to him, small businesses are unable to invest large amounts of assets in scientific research. Spare financial resources for this purpose belong to large corporations.
"It is necessary to offer them the most suitable conditions in order to attract and deploy their production in Azerbaijan."
The idea dwells upon the application of the lowest possible taxes and customs duties, which will ensure the inflow of foreign investments to Azerbaijan, Zeynalov noted.
Each Azerbaijani citizen may avail of the advantages of the ICT Fund's financing. Financial aid to enterprises will be arranged through contests. Businesses can borrow small, medium and large loans.
The amount of small credits ranges from 10,000 to 50,000 manats (up to over $63,000) for a three-year term, while medium credits are worth 50,000 to 500,000 manats and provided for a period of up to five years; large loans are allocated in the amount from 500,000 to 1 million manats for ten years. The annual interest rate should not exceed 5 percent.
The maximum grant available is up to 300,000 manats, provided for a period of 36 months. The amount of small grants is designated at 10,000 to 100,000 manats, while medium grants could be from 100,000 to 200,000 manats and large ones -- from 200,000 to 300,000 manats.