Vol. 6, No. 15-16 (August 15, 2013)

Azerbaijan’s information and communication technologies sector: Some development peculiarities

Fuad Aliyev & Zaur Valiyev
ICT Marketing Center
Baku, Azerbaijan 

The development of the information and technology sector is a key aspect of Azerbaijan’s future, according to the 2012 “Azerbaijan 2020: Future Look” concept paper.  That sector has been growing at an annual rate of more than 20 percent over the last decade, a trend that is projected by the Communication and Information Technologies Ministry to continue.  Indeed, it may at some point become a more important source of national income than the oil and natural gas sector.

The Azerbaijan government has been actively promoting this latter trend through a variety of agencies and institutions, although overall state spending on this sector is estimated between AZN 45-60 mln. and only represents about two percent of the state budget.  The latter amount, in turn, is dispersed across a number budget sectors.  Thus, the “financial support for executive bodies” section features, as part of its “general public services” item, expenses for the Ministry of Communication and Information Technologies (MCIT).  The MCIT expenses are also included in the budget’s “education” section as part of the “other services in education” item.  They also feature in the “culture, arts, information, body training and other activities” section under the latter’s “radio, television and publishing” item.  The budget’s “transport and communication” section involves expenses, under the “communication heading,” for MCIT and “Azercosmos LLC.”  The “transport and communication” section features the MCIT expenses for sectorial reforms, as well as salary, pension improvement, and other similar measures.  Finally, the budget’s “industry and construction” section features some related infrastructural expenses, including the construction of Regional Information Centers, the establishing of the centralized radio monitoring network, as well as the MS program licensing for 10,000 governmental PCs.      

Notwithstanding the seemingly low share of public expenditure allocated to ICT needs, the impact of that spending, together with private sector actions, has been impressive as the following table shows.

The number of Internet users per 100 inhabitants has grown from 8 to 70 over the last seven years, the kind of growth partly associated with significant decreases in Internet access tariff per capita monthly income and Internet access tariff (20 hours per month) from 4.5 to 0.5 AZN and from 5 to 1.5 AZN respectively.  Consequently, a significant share of income in the telecommunication sector is Internet generated: over 70 percent of it comes from Internet service payments.

Notably, the largest share of income in ICT lies with the mobile communications sector.  The number of mobile subscribers has grown seven times over the last ten years to now reach 10 million, the average ratio of mobile phone users being 1.10 to 1.00.       

Azerbaijan’s achievements in this area have been recognized in a number of international reports.  According to the World Economic Forum’s 2013 Global Information Technologies report, Azerbaijan currently ranks 56th among 144 countries for “networked readiness index,” five places higher than a year ago.  Furthermore, it came 9th among those countries in terms of government support for the ICT sector and 1st for the extent of the population’s mobile service usage.  The UNDP’s Global E-Government Readiness report ranked Azerbaijan 96th among 190 countries, while the E-Government development index ranked it sixth among 33 countries evaluated.  And the E-readiness index this year said that the country had risen from 66th to 64th place.

The ICT Development Index and ICT Price Basket Index ranked Azerbaijan 68th out of 155 countries for 2011, up 13 places from a year earlier and making Azerbaijan one of the ten countries which have dramatically improved their standing on this measure.  Among CIS countries, Azerbaijan also advanced, this time to sixth place.  As far as the ICT Price Basket Index is concerned, Azerbaijan ranked 52nd among 161 countries and second among CIS states.  That report noted that Azerbaijan has the highest level of internet use among the Commonwealth. 

The core features underlying the comparative development of ICT across the globe are reflected in four international reports and five indexes.  Three of these indexes have demonstrated an improvement of Azerbaijan’s positions, a development one could take as expressive of the rapid growth and growing potential of the ICT sector in Azerbaijan.