ICD and ABDF Launch Shariah-Compliant AZN 200 Million SME Financing Program in Azerbaijan
Agreement Overview
The Islamic Corporation for the Development of the Private Sector (ICD) and the Azerbaijan Business Development Fund (ABDF) have formalized an agreement to introduce a Shariah-compliant financing program aimed at small and medium-sized enterprises (SMEs) in Azerbaijan. This initiative was announced during the IsDB Group Annual Meeting’s Private Sector Forum held in Baku. The program is set to deploy up to AZN 200 million to support the private sector in Azerbaijan over the next two years, from 2026 to 2028.
Local Currency Financing
For the first time, the program will provide financing in the local currency, Azerbaijani manat (AZN). This approach is designed to mitigate currency risk for SMEs by integrating ABDF’s AZN funds with ICD’s multi-currency resources, which include USD and EUR. The financing will be facilitated through Murabaha, a Shariah-compliant sales contract, aimed at local partner financial institutions. This strategic move addresses the foreign exchange challenges that have historically impeded the growth of Azerbaijani SMEs, particularly those located outside major urban centers.
Targeted Support Areas
The financing program emphasizes support for rural and liberated regions, as well as businesses led by women and youth, alongside initiatives focused on the green economy. This targeted approach aims to enhance employment opportunities and foster a more inclusive economic landscape in Azerbaijan.
Dr. Khalid Khalafalla, Acting CEO of ICD, stated that the program is designed to provide accessible Shariah-compliant financing tailored to the specific needs of Azerbaijan’s economy. He emphasized that the introduction of local currency financing addresses a critical gap in development finance, highlighting the partnership with ABDF as a means to create lasting impacts for Azerbaijani SMEs.
Strategic Partnership Implications
Mr. Ulvi Mansurov, CEO of ABDF, remarked that this partnership with ICD is a significant advancement in broadening access to international financing for Azerbaijani entrepreneurs. He noted that the collaboration aims to merge ABDF’s resources with ICD’s expertise in Islamic finance, thereby creating sustainable financing opportunities for SMEs throughout the nation. Mansurov expressed confidence that this cooperation will enhance the involvement of local financial institutions in international financing operations, thereby supporting the development of the real sector and contributing to inclusive economic growth in Azerbaijan.
This agreement marks the inaugural formal partnership between ICD and ABDF, laying the groundwork for long-term collaboration. The initiative aligns with ICD’s mission to mobilize Islamic finance for private sector growth and inclusive prosperity across its 56 member countries. Through this multi-currency facility, ICD collaborates with national partners to deliver targeted impacts and establish a robust institutional framework for sustainable SME growth.
Institutional Background
The Azerbaijan Business Development Fund (ABDF) operates as a state-owned development financial institution under the Ministry of Economy of the Republic of Azerbaijan. Established in December 2024 through the merger of the Entrepreneurship Development Fund and the Azerbaijan Investment Company, ABDF consolidates the country’s primary concessional financing and state investment vehicles. With total assets approximating AZN 1.5 billion (around USD 882 million), ABDF’s core mandate is to stimulate private sector growth, drive economic diversification, and channel financing to priority sectors and regions, particularly focusing on SMEs.
In August 2025, S&P Global Ratings upgraded ABDF’s long-term issuer credit rating from BB- to BB, reflecting its strengthened risk position and its crucial role in coordinating between the public and private sectors.
The Islamic Corporation for the Development of the Private Sector (ICD) is a multilateral development finance institution and a member of the Islamic Development Bank (IsDB) Group. Founded in November 1999 and headquartered in Jeddah, Saudi Arabia, ICD aims to support economic development in its member countries by providing financial assistance to private sector projects in accordance with Shariah principles. With an authorized capital of USD 4.0 billion and over 25 years of operational experience, ICD enhances IsDB’s activities by promoting capital market development and best management practices.
For further details, visit the Azerbaijan Business Development Fund and the Islamic Corporation for the Development of the Private Sector.
Media Contact:
For media inquiries, please contact: icd.communication@isdb.org.
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Published on 2026-06-17 18:41:00 • By the Editorial Desk
