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Financial Exclusion Widespread in Azerbaijan, New Report Reveals

Azerbaijan’s financial inclusion landscape has been marred by widespread exclusion, with millions of citizens unable to access basic banking services, a new report from the Asian Development Bank (ADB) has found. The report, titled “Financial Inclusion, Financial Literacy, and Financial Education in Azerbaijan,” highlights the significant barriers that prevent many Azerbaijanis from participating fully in the country’s financial system.

The Extent of Exclusion

According to the report, more than 40% of the population lacks access to formal banking services, leaving them vulnerable to exploitation by unscrupulous lenders. This situation is particularly dire for:

• Rural Residents: Those living in rural areas face significant barriers in accessing financial services due to a lack of physical branches and limited digital infrastructure.
• Women: Women are disproportionately affected by financial exclusion, with cultural and social norms discouraging their participation in the financial system.

The Need for Financial Literacy

The ADB report also highlights the need for improved financial literacy among Azerbaijanis. Many citizens lack a basic understanding of financial concepts, such as:

• Budgeting: The ability to manage one’s finances effectively.
• Saving: The practice of setting aside funds for future use.
• Investment: The act of putting money into assets that generate returns.

This lack of financial literacy makes them more susceptible to financial shocks and less able to make informed decisions about their financial lives.

Recommendations

To address these issues, the report recommends:

• Increasing Access to Financial Services: Through branch expansion and digitalization.
• Improving Financial Literacy: Through education and awareness campaigns.
• Promoting Financial Inclusion: Through policies that support small businesses and entrepreneurship.
• Greater Collaboration: Between government, private sector, and civil society organizations to promote financial inclusion and reduce exclusion.

Implications for Economic Growth

The findings of the report come as Azerbaijan seeks to diversify its economy and increase its attractiveness to foreign investors. However, without addressing the issue of financial exclusion, the country’s efforts to achieve economic growth and development will be hindered, the report warns.