Orkhan Mammadov: Islamic finance tools can narrow SME funding gap

Islamic financial tools can help reduce the financing gap faced by small and medium-sized enterprises (SMEs), Orkhan Mammadov, Chairman of the Board of the Small and Medium Business Development Agency (KOBIA), said at the 20th IsDB Global Forum on Islamic Finance, held in Baku within the framework of the Islamic Development Bank (IsDB) Group's 51st Annual Meeting, Report informs.

Mammadov noted that Azerbaijan has potential to develop Islamic finance as a complement to the financial system: "SMEs face a shortage of accessible and long-term financing. Islamic finance tools – murabaha, musharaka, and ijara – can expand access to capital and partially close this gap."

Mammadov emphasized that the regulatory framework for Islamic finance is being strengthened, with a special regime of the Central Bank of Azerbaijan allowing new products to be tested. Banks are already introducing Islamic finance tools with IsDB support.

He added that market awareness of Islamic finance remains low, and financial literacy in this area needs to be improved.