Azerbaijan, Baku, July 14 / Trend U.Ismayilova /
A state guarantee is vital for enhancing agriculture loans in Azerbaijan, Azergarant IC Deputy Board Chairman Shukur Huseynov said.
"This type of insurance is waning, as in Azerbaijan most insurers are private companies, which creates problems for developing this type of insurance," Huseynov said.
The share of public funding in agricultural insurance premiums is 50 percent. However, even a 60-percent state guarantee cannot reduce the level of risk in this area, Huseynov said. This is the major reason why insurers are not interested in providing such insurance services.
"If the country develops serious mechanism to protect both farmers and insurers, insurance companies will provide insurance services for agricultural loans," Huseynov said.
The Azerbaijani Microfinance Association (AMA) presented the "Insurance Mechanism for Agricultural Loans" project with the support of the Oxfam humanitarian organization July 13. The AMA intends to submit the document to the Finance Ministry for approval in future.
The aim of developing the mechanism is to provide financing to small farmers, as well as to support the development of Azerbaijani agriculture.
Based on amendments to the law agricultural development in 2007, the share of state funding in agricultural insurance increased from 25 to 50 percent.