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Eight Years on the path from Support to Development 29.12.25

Eight years have passed since the establishment of KOBIA, the institution specializing in providing support and services to SMEs.

Eight years have elapsed since the Small and Medium Business Development Agency (KOBIA), the body specializing in the provision of targeted support and services to micro, small, and medium-sized enterprises (SMEs), commenced its operations. Established by the Decree of the President of the Republic of Azerbaijan dated 28 December 2017, the Agency has become one of the key indicators of the consistent and systematic state support provided under the leadership of the Head of State for the development of entrepreneurship, particularly the SME sector, and over the past eight years has evolved into an institutional pillar of SME development.

Over the past eight years, an extensive infrastructure network covering Baku and the regions of the country has been established to ensure greater accessibility of support and services provided to SMEs. At present, SME Houses—where “G2B” and “B2B” services are delivered to entrepreneurs within a single space—are operating in the cities of Baku, Khachmaz, Yevlakh, and Shusha. During this period, more than 1.4 million services have been provided to entrepreneurs at SME Houses by public and private institutions. The establishment of the “Ganja SME House” has been completed and it will be made available to entrepreneurs in the near future.

Taking into account entrepreneurs’ need to enhance their business knowledge and skills, this area has been a priority in KOBIA’s activities over the past years. To date, nearly 10,000 free consultancy services have been provided to entrepreneurs at the Agency’s SME Development Centers, and 5,200 training sessions have been delivered to 64,800 entrepreneurs. Traditional training mechanisms have been complemented with innovative and digital solutions, creating more flexible and convenient opportunities for entrepreneurs. The SME Model Enterprise established at Azerbaijan Technical University has enhanced business knowledge and skills by teaching entrepreneurs efficient and cost-effective management practices through hands-on training. More than 2,200 entrepreneurs have benefited from the video training platform, which offers 180 training videos, training materials, and self-assessment tests.

A total of 48 SME Friends currently operate across 47 cities and districts of the country, including the liberated territories of Lachin, Zangilan, Kalbajar, and Fuzuli, providing on-site services to entrepreneurs. The SME Friends network has become one of the most reliable partners for entrepreneurs over time by contributing to effective coordination with public and private institutions and ensuring the prompt resolution of challenges they face.

To identify the needs and challenges of SME entities and convey them to relevant authorities, KOBIA has established a number of effective communication channels. Nearly 700 sectoral meetings have been held in Baku and the regions with the participation of more than 22,500 entrepreneurs. Almost 50 public discussions have been organized within the framework of the Public Council under KOBIA. During these meetings, entrepreneurs’ challenges were identified, discussed jointly with government institutions, support was provided for their resolution, and entrepreneurs were informed and educated. Surveys involving nearly 20,000 entrepreneurs have also been conducted.

Protecting the interests of SMEs is a key area of KOBIA’s activities, and over the past eight years, the rights of a significant number of entrepreneurs have been restored in this field. KOBIA has obtained international ISO certification in “Quality Management, Customer Satisfaction, and Guidelines for Handling Complaints in Organizations.”

Over the past eight years, a number of new support mechanisms targeting SMEs have been introduced. To date, nearly 240 SME entities have been granted “Startup” certificates, exempting them from profit and income taxes for a period of three years in connection with innovative activities. Grants totaling AZN 2.2 million have been allocated to 129 SME projects in the areas of education, science, research, and support. Seventy domestic market studies have been conducted for SMEs. Support has been provided for the sale of products manufactured by nearly 140 SME entities through major retail chains. Approximately 2,000 SME entities have been facilitated to participate in local and international exhibitions, enabling entrepreneurs to promote their products and expand sales and export opportunities. Two SME cluster companies have been established in Guba and Sumgayit, and “SME Cluster Certificates” providing tax and customs incentives have been issued to them.

Significant steps have also been taken in the digitalization of the SME sector. The e-SME House portal, which provides entrepreneurs with a wide range of electronic services across all stages of business development, has been launched in beta version. The portal will become fully operational from the new year.

Over the past eight years, the Agency, in cooperation with partner institutions and the private sector, has implemented a number of social projects and programs for SMEs. Within the framework of the “Karabakh SMEs” project, support has been provided to 220 veterans and family members of martyrs to start businesses. Under the “Youth Business Workshop” project, 65 young people have received support to launch their businesses. Support has been provided to 70 women entrepreneurs within the framework of the “Women Entrepreneurs in Successful Partnership” project. Mentorship and financial support have been ensured for the implementation of startup ideas under the “From Us to Business” startup project. Within the “Investment Journey” project, hundreds of business entities operating in the regions have been informed about the securities market. The Social Entrepreneurship and Employment Centers established in Masalli and Sumgayit have provided vocational training and employment support to 250 socially vulnerable individuals. A total of 850 young people have participated in the “SME Volunteers Program.”

Since 2022, the “Dayag” Award established by KOBIA has been presented to business entities to promote wider public recognition of entrepreneurial success, encourage a business-oriented mindset, and further strengthen cooperation between the public and private sectors.

A total of 122 Memoranda of Understanding and other documents have been signed with relevant institutions of 34 countries and 27 local and international organizations, covering areas such as SME support, expansion of relations between local and foreign entrepreneurs, implementation of joint projects, and exchange of experience. Six joint business councils have been established with Qatar, Saudi Arabia, Ukraine, Iraq, Vietnam, and the United Arab Emirates. More than 15 international events have been organized and hosted with the participation of KOBIA to date. Within the framework of COP29, nearly 30 local and international partners have already joined the “Baku Climate Declaration for the Green Transition of SMEs” proposed by KOBIA.

As a result of this consistent and systematic activity, the number of SMEs increased by nearly 74% during 2018–2024, exceeding 424,000. Currently, SME entities account for 99.7% of all registered business entities nationwide. During 2018–2024, the value added generated by SMEs more than doubled, rising from AZN 9.8 billion to AZN 21.1 billion. The share of SMEs in total value added increased from 13.4% to 18.5%. Employment in SME entities grew by 47.6%, exceeding 417,800 persons. SME turnover increased by 54.5% during 2019–2024, reaching AZN 48 billion, accounting for 37.4% of the country’s non-oil turnover.

The systematic state support provided to SMEs and the results achieved over the past eight years have led to high international recognition of KOBIA’s activities. In a competition held by the Observatory of Public Sector Innovation of the Organisation for Economic Co-operation and Development (OECD), Azerbaijan’s SME House model was selected as an innovative practice and recommended for implementation. According to the final results of the “SME Policy Index – 2024” report, Azerbaijan’s position improved across 9 out of 12 indicators compared to the 2020 assessment report. In 2023, the International Council for Small Business (ICSB) awarded KOBIA a certificate of recognition for exemplary performance in supporting the SME sector. In the European Union’s “Business Environment in Azerbaijan – 2024” report, based on a survey assessing European companies’ evaluation of public institutions, KOBIA emerged as the absolute leader.

In the coming years, improving the quality and effectiveness of support and services provided to SMEs, ensuring greater accessibility for entrepreneurs, introducing new support mechanisms aligned with business needs, supporting the digitalization and green transition of SMEs, and promoting sustainable business models will remain among KOBIA’s key priorities.