Financial Inclusion and Exclusion in Azerbaijan: A Troubling Reality

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Azerbaijan, a country rich in oil reserves, is struggling to ensure financial inclusion for its citizens. According to a recent study conducted by the World Bank under the Financial Literacy and Consumer Protection Project financed by the Swiss government, a staggering 51% of the population does not borrow money, and those who do prefer informal credit over formal institutions.

The State of Financial Inclusion

The report highlights that only 36.4% of the population in Azerbaijan is financially included, compared to neighboring Armenia (17.2%) and Georgia (39.7%). Moreover, the country has a relatively low number of commercial bank branches per 100,000 adults, with only 10.7 branches compared to 22 in Armenia and 27 in Georgia.

Awareness vs. Usage

The study also reveals that while awareness of bank services is high at 98%, actual usage is lower, with only 84% of adults having used bank products. Furthermore, a mere 15% of adults use bank credit, with urban areas showing higher usage rates than rural areas.

Saving Habits

The report sheds light on saving habits, with 45% of the population saving money, equally split between formal and informal methods. Interestingly, propensity to save is higher in urban areas (25% more than rural) and among women (18% more than men).

Recommendations for Improvement

Experts recommend increasing financial literacy through modern technology and adapting curricula to improve consumer protection and financial inclusion. As a result of the project, the Central Bank of Azerbaijan has finalized its financial literacy strategy for the country.

The Global Implications

The study serves as a wake-up call for policymakers in Azerbaijan to address the issue of financial exclusion and promote inclusive financing. With an estimated 2 billion working-age adults globally lacking access to formal financial services, it is crucial that governments and institutions prioritize financial inclusion to ensure equal access to banking and payment services.

Date: August 8, 2016