Editor’s note: Aysel Mammadzada is an Azerbaijan-based journalist. The views expressed in this article are the author’s own and do not necessarily reflect those of News.Az.
The strength of an economy is not measured solely by the scale of state-led infrastructure projects, industrial facilities or major investments. One of the clearest indicators of a sustainable and competitive economy is the extent to which people are able to turn ideas into businesses, invest capital, create new products, establish jobs and compete in the marketplace.
Azerbaijan has been entering a new economic phase in this regard. The promotion of entrepreneurship is increasingly moving beyond individual incentives and lending programmes. A broader policy direction is becoming more visible, with private initiative, small and medium-sized businesses, investment, exports, innovation and competition increasingly positioned as key pillars of economic development.
The strategic foundation for this approach is not entirely new. Azerbaijan’s “2030: National Priorities for Socio-Economic Development” identifies the development of a socially oriented market economy as a national priority and emphasises the importance of building long-term economic growth on private initiative, a stronger private sector, competition and market-oriented reforms. The document specifically identifies small and medium-sized businesses as an important source of economic growth and employment, while calling for an improved business environment and a stronger role for the private sector in the non-oil economy.
In 2026, this strategic approach is being complemented by increasingly concrete mechanisms.
A decision adopted in February provided for the establishment of a unified Agency for the Development of Small and Medium Business, Investment and Export Promotion on the basis of the Small and Medium Business Development Agency and the Azerbaijan Export and Investment Promotion Agency. The move is intended to coordinate state support for entrepreneurs, investors and exporters more effectively. The decree also called for mechanisms to be developed under which some services currently provided by state bodies to micro, small and medium-sized enterprises, exporters and investors would gradually be delivered by private-sector entities.
This should not be viewed simply as an administrative restructuring. It reflects a broader economic philosophy: the role of the state is not to build businesses in place of entrepreneurs, but to create the rules, infrastructure and opportunities that allow businesses to operate and grow.
In September, this approach took a further practical step when the Coordination Group operating under KOBIA discussed a mechanism for gradually transferring certain business services provided by state institutions to private-sector entities. Under the proposed model, the state would retain policy-making and oversight functions, while some operational, technical and organisational services could be delivered by private-sector providers.
Photo: Report
This approach could become an important stage in the evolution of Azerbaijan’s business environment. The logic of a market economy is not simply about granting businesses incentives. More fundamentally, it is about structuring relations between the state and entrepreneurs so that business owners can devote more of their time, resources and energy to production, innovation and customers, rather than administrative procedures.
The infrastructure already established for this purpose is substantial. In the first half of 2026, more than 312,000 services were provided to entrepreneurs through Azerbaijan’s SME Houses. Around 272,000 were delivered by state institutions, while more than 40,000 were provided by businesses. SME Houses offer more than 400 public and private services in a single location, allowing entrepreneurs to access multiple services without having to navigate numerous institutions separately. Official data also puts entrepreneurs’ satisfaction with the services at 98 per cent.
Another crucial element in creating a more entrepreneurial economy is access to finance.
A promising business idea can remain only an idea if its owner cannot access capital. Azerbaijan has therefore been developing a range of mechanisms, including state guarantees, interest-rate subsidies, preferential loans, grants and platforms connecting entrepreneurs with investors.
In September 2026, new information was provided on the electronic application system for entrepreneurs seeking state guarantees and interest subsidies. Entrepreneurs can submit applications through the Electronic Credit and Guarantee Information System.
KOBIA also supports entrepreneurs’ access to finance through advisory services, assistance in preparing business plans and connections with banks and other financial institutions. Grants of up to 20,000 manats are also available for projects in education, science, research and support-related areas.
The investment promotion mechanism is another important instrument for directing private capital into the economy.
According to information released in September 2026, 633 investment promotion certificates had been issued to 528 business entities. The implementation of these projects is expected to attract more than 9.2 billion manats in investment into local production and create more than 46,000 jobs. The fact that 86.9 per cent of the projects are being implemented in the regions also demonstrates that entrepreneurship policy is not limited to Baku.
More importantly, the investment promotion mechanism is increasingly linked to future economic priorities. Renewable energy, waste management and recycling, information and communication technologies, agricultural machinery production, modern greenhouse complexes and other areas are among the sectors eligible for incentives. This suggests that state support is aimed not simply at creating “more businesses”, but at encouraging businesses capable of generating greater added value.
This is particularly important in the context of one of Azerbaijan’s central economic priorities: the development of the non-oil sector.
In January-August 2026, value added in Azerbaijan’s non-oil and gas sector increased by 2.1 per cent. During the same period, real growth in information and communications reached 10.7 per cent, transport and storage 8.7 per cent, accommodation and food services 4.3 per cent, and trade 3.9 per cent. These figures underline the importance of broadening economic activity across a wider range of sectors.
The future of entrepreneurship, however, lies not only in traditional business sectors.
During the first six months of 2026, KOBIA received 87 applications from micro and small businesses for Startup Certificates and issued 35 certificates. The projects covered areas including e-commerce, artificial intelligence, fintech, education, transport and logistics, electric vehicle energy infrastructure, tourism and business process digitalisation. By July 2026, a total of 282 SME entities had received Startup Certificates. The certificate provides a three-year exemption from profit or income tax on income derived from innovation activities.
These figures represent more than tax incentives. They also point to a changing concept of entrepreneurship in Azerbaijan. The modern entrepreneur is no longer simply someone who opens a shop, restaurant or manufacturing facility. Entrepreneurs can also be developers of digital products, users of artificial intelligence, exporters, technology investors and innovators seeking international capital.
The development of the Investment Portal is significant in this context. By July 2026, more than 1,300 entrepreneurs, investors and startups had registered on the platform. It allows entrepreneurs to present projects to potential domestic and foreign investors, while investors can review investment opportunities across different sectors and establish direct contact with project owners.
This is an important direction for deepening Azerbaijan’s capital markets and entrepreneurial ecosystem. One of the fundamental strengths of a market economy is precisely the ability of capital to move beyond traditional channels and seek out new ideas and promising projects.
The next stage for Azerbaijan could therefore be the deepening of this ecosystem.
The International Monetary Fund, in its 2026 assessment of Azerbaijan, also highlighted the importance of increasing the role of the private sector in economic diversification, deepening capital markets, expanding private-sector access to finance and further improving the governance of state-owned enterprises. The IMF also noted that creating a more level playing field in areas where state-owned and private companies compete could increase private-sector participation.
This assessment indicates that the next stage of Azerbaijan’s reforms is not simply about introducing additional incentives. The more fundamental task is to make markets themselves function more effectively.
The strongest form of free entrepreneurship is not an economic system in which businesses constantly depend on government support. Rather, it is an environment in which entrepreneurs can rely on clear rules, fair competition, enforceable contracts, access to finance and predictable markets. State support can then focus on reducing barriers to entering and expanding within the market instead of replacing private initiative.
Photo: Report
The development of entrepreneurship in Azerbaijan’s regions is particularly important in this context. In 2026, new state-support mechanisms presented to entrepreneurs placed particular emphasis on developing industry, processing agricultural products and expanding value-added and export-oriented production in the regions.
Such policies can broaden the geographical distribution of economic opportunity. Entrepreneurship does not have to be concentrated in Baku’s business centres; it can also become a major source of new economic activity across Azerbaijan’s regions.
The liberated territories offer an especially important example. The Shusha SME House provides entrepreneurs with services related to business registration, taxation, licences and permits, investment promotion documents, utility connections and other areas. This forms part of the wider effort to establish a functioning business ecosystem in the region.
In this sense, the Great Return is not only about people returning to their homes. It is also about entrepreneurs returning to — and investors discovering — new economic opportunities.
This is where the development of entrepreneurship and a more market-oriented economy meet. The future of an economy depends not only on managing existing resources, but also on creating new initiatives.
For Azerbaijan, the next major stage is therefore to increase both the number and the quality of these initiatives.
Strengthening competition, expanding private capital’s access to financial markets, ensuring more equal competitive conditions for state-owned and private companies, deepening the startup and innovation ecosystem, expanding export opportunities and investing in human capital will all be important.
The steps taken in 2026 indicate that an increasingly broad institutional foundation is already being established. KOBIA’s new model, SME Houses, investment promotion certificates, electronic licensing, Startup Certificates, the Investment Portal and financial guarantee mechanisms all aim to shorten the path from a business idea to an operating enterprise.
The ultimate objective, however, should not be to create businesses that depend permanently on state support. It is to build a strong private sector capable of standing on its own feet, competing, innovating and entering international markets while making effective use of the opportunities created by public policy.
Oil and gas resources may continue to occupy an important place in Azerbaijan’s economic story. But the central question of the next economic era will not only be “How many resources do we have?” It will increasingly be “How many new ideas, companies, products and entrepreneurs can we create?”
A strong economy is built not only through major state projects, but through thousands of individual initiatives connecting with one another.
One entrepreneur creates a new product. Another opens new jobs. Someone else exports technology. Another processes agricultural products in a region and creates added value. Yet another brings a foreign investor into Azerbaijan.
Each of these initiatives may appear small on its own. Together, however, they create one of the economy’s most valuable forms of capital: an entrepreneurial culture.
This is one of the greatest opportunities of Azerbaijan’s emerging economic phase — to make entrepreneurship not simply an economic activity, but one of the principal engines of the country’s development model.
The growth of free entrepreneurship ultimately means more than more companies and more investment. It means more choice, more innovation, more employment and more economic opportunity.
The next phase of Azerbaijan’s market economy can therefore be built around a simple principle: when an enabling environment created by the state, the initiative of entrepreneurs and the energy of competition come together, economic development can generate broader social value.
The strong economy of the future is not simply an economy built by the state. It is an economy in which anyone with a viable idea can find a real opportunity to turn that idea into reality.
The material was prepared with the financial support of the Media Development Agency of the Republic of Azerbaijan.
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