BAKU, Azerbaijan, October 20. The International Finance Corporation (IFC) is exploring opportunities in Azerbaijan in desalination and wastewater treatment, and is ready to support its renewable energy sector, Wiebke Schloemer, IFC’s Director for the Western Balkans and South Caucasus, said in an exclusive interview with Trend on October 20.
New projects and investment priorities in Azerbaijan
She pointed out that a thriving private sector is central to Azerbaijan's plans to diversify its economy, driving growth, creating jobs, and strengthening competitiveness. Supporting this ambition requires targeted and sustained engagement from international partners.
"Through the World Bank Group's Country Partnership Framework, IFC works to help build a more dynamic and inclusive economy by mobilizing private investment across infrastructure, energy, agriculture, water, transport, and digital connectivity. Water is an important part of this agenda. As water scarcity becomes an increasing constraint on communities and businesses, improving water security will require both better resource management and investment in new infrastructure. IFC is exploring opportunities in areas such as desalination and wastewater treatment, where private-sector expertise and financing can complement public investment.
More broadly, this is part of the World Bank Group’s effort to mobilize significantly more private capital for development. In FY26, the World Bank Group mobilized a record $112 billion in private capital, more than three times the $35 billion mobilized in FY22. Combined with the Group’s own financing, this brought total financing and mobilization in developing economies to more than $200 billion [worldbank.org]. In Azerbaijan, the World Bank Group has mobilized around $100 million in private capital in fiscal year 2026," said Schloemer.
The IFC director added that the objective is not simply to provide more public or development finance, but to use our financing, expertise, guarantees and other instruments to address risks and barriers that keep private investors on the sidelines, and help create investment opportunities that can attract capital at scale.
"In agriculture, we promote innovative financial tools, such as crop and warehouse receipts, to help smallholder farmers access working capital and connect to global value chains. We also promote construction value chain sustainability standards through the development of a green building roadmap and the introduction of EDGE certification, a green building standard developed by IFC specifically for emerging markets. IFC is also exploring investment opportunities in transport, logistics, and digital infrastructure to further strengthen Azerbaijan’s connectivity," she explained.
IFC’s vision for supporting green corridor projects linking Azerbaijan to Europe
Schloemer noted that supporting green corridor development between Azerbaijan and Europe means investing in the infrastructure that makes it viable.
"Realizing Azerbaijan’s ambition to export clean energy to Europe requires a strong, reliable grid and transmission network — the backbone of any sustainable energy corridor. Building this infrastructure is central to both Azerbaijan’s energy goals and broader regional cooperation across the South Caucasus. IFC stands ready to support Azerbaijan's renewable energy sector, which holds immense potential, including an estimated 157 gigawatts of offshore wind capacity, according to an analysis by the World Bank’s Energy Sector Management Assistance Program," she added.
IFC’s perspective on Middle Corridor's development
"The first phase of the Trans-Caspian Transport Corridor (TCTC), also known as the Middle Corridor, has focused on establishing a viable and resilient transport route. The next phase must be about turning it into an economic corridor, and its success will be measured not only by freight volumes, but by the businesses, jobs, and investment it generates. World Bank Group analysis projects a multifold increase in non-oil freight by 2040, provided that coordinated investment and reform follow.
Realizing this potential requires more than transport infrastructure. Countries along the route need predictable business environments, access to finance, reliable energy, and efficient logistics — conditions that can unlock growth in manufacturing, agro-processing, and warehousing. Private investment will be essential to achieving this, and IFC sees a strong role in PPP transaction advisory, project preparation, and financing, complemented by World Bank and MIGA instruments. Regulatory clarity, transparent pricing, and border efficiency remain critical to investor confidence," the IFC director said.
Schloemer believes that for Azerbaijan, the opportunity extends beyond transit: its strategic location can attract companies that choose to invest, produce, and create jobs there, not only move goods through.
She went on to add that Azerbaijan holds a strategic position along the Trans-Caspian Transport Corridor.
"As freight volumes grow, infrastructure upgrades are critical to meeting demand and improving regional connectivity. IFC is well-placed to support these modernization efforts, including investment in railcar fleet renewal, logistics and warehousing centers, to enhance freight capacity and reliability. Such investments can help cement Azerbaijan’s role as a cost-competitive regional transit hub and contribute to more resilient corridor infrastructure overall," Schloemer noted.
IFC’s role in supporting MSMEs and private-sector development
In Azerbaijan, IFC is committed to broadening financial access for small businesses by partnering with local banks, she said.
The IFC director recalled that the World Bank Group has finalized a new MSME Strategy to unlock financing and create jobs, and launched it at the Annual Meetings in Bangkok.
"It addresses a defining development challenge: over the next decade, 1.2 billion young people will enter the workforce in developing countries, while only 420 million jobs are projected to be created. MSMEs account for 90 percent of firms in emerging markets, making them central to closing this gap. The strategy focuses on making businesses visible, connected, enabled, and funded: using digital payments and transaction data to establish creditworthiness; connecting businesses to markets and shared services; simplifying regulations; and expanding financing through banks, fintechs, guarantees, risk-sharing, and securitization. It calls for a World Bank Group-wide effort to mobilize private capital and unlock the potential of small businesses to grow, become more productive, and create jobs.
In line with this strategy, in Azerbaijan IFC is committed to broadening financial access for small businesses by partnering with local banks, the primary lenders to MSMEs. These partnerships, with both existing and new financial institutions, will continue to grow. At the same time, IFC is supporting the development of a wider range of financing solutions beyond traditional bank lending. This includes asset-based finance, supply chain finance, including factoring (financing against invoices), risk-sharing instruments, leasing, and other products that can help financial institutions better serve MSMEs. Such solutions can enable businesses to access financing based on receivables, inventory, equipment, and other business assets, rather than relying primarily on traditional real-estate collateral," she added.
Schloemer pointed out that IFC is also working with the Azerbaijan Banks Association and other market stakeholders to support the development of a national asset-based financing framework, including the broader ecosystem needed to expand factoring and other forms of alternative MSME finance.
"This combination of investment, risk-sharing solutions, and advisory support can help strengthen the capacity of local financial institutions while increasing access to finance for smaller businesses," she explained.
She noted that as Azerbaijan diversifies its economy and modernizes its energy sector, IFC remains committed to supporting these national priorities — and that requires the financial sector to keep pace with evolving investment needs.
"IFC provides both investment and advisory services to promote smart solutions and strengthen local banks’ capacity. A concrete example is IFC’s $20 million local currency facility to Bank Respublika, half of which was earmarked for MSMEs and low-income households. IFC intends to scale similar initiatives in line with the country’s needs. Those investments are not only good for the environment, but also a driver of cost-competitiveness, reducing energy and resource costs for businesses," noted the IFC director.
Balance between supporting traditional sectors and fostering innovation
Schloemer noted that balancing support for traditional industries with investment in innovation is central to Azerbaijan’s long-term growth.
"Hydrocarbons will remain important in the near term, but the country’s fiscal strength and energy expertise provide a solid foundation for diversification. Azerbaijan’s renewable energy potential is substantial — an estimated 23 gigawatts of solar and 157 gigawatts of offshore wind — positioning it as a credible regional energy exporter. Expanding cross-border transmission infrastructure would deepen its integration into global markets.
Beyond energy, IFC sees strong opportunities in digital infrastructure, agribusiness, and SME development. Its global experience demonstrates that combining established sector strengths with forward-looking investment produces more resilient, diversified economies. IFC is well-positioned to support Azerbaijan in pursuing that path, one that builds an innovative and cost-competitive economy capable of competing in regional and global markets," she concluded.