Davos to support Azerbaijan's efforts on digital transformation
Review by Caliber.Az

ANALYTICS  26 May 2022 - 12:31

The traditional annual World Economic Forum (WEF) ends today (26 May) in Davos, Switzerland. This year, its participants discussed global political and security issues in connection with the war in Ukraine as well as prospects of economic development amid energy and food crises. As a permanent participant in the WEF forums, Azerbaijan has been trying to use the Davos platform as much as possible to coordinate its business interests in the rapidly changing world. So, this time the main focus of the Azerbaijani delegation was green energy issues, increasing energy supplies to Europe, and digitalization of the economy.  

The 51st Davos Forum gathered over two thousand participants, including heads of states and governments from fifty countries (excluding Russia which is under sanctions), and after a two-year break caused by the coronavirus pandemic, the WEF was held in the face-to-face format again. The theme of this year's forum was "History at a Turning Point: Government Policies and Business Strategies," and the main discussions covered the situation in aggression-stricken Ukraine and the consequent urgent humanitarian issues and problems of global security. The next most important topics were the crisis in the global food and energy markets and the resulting increase in inflation, high volatility in financial markets, and the need to reduce trade barriers for developing countries. Discussions were also held on the prospects for global economic recovery after the COVID-19 pandemic, fighting climate change, using technologies of the fourth industrial revolution, and digitalization of world economies.

According to the established tradition, the block of economic issues took up a significant amount of time on the agenda of the five days (May 22-26) of the forum meetings. Azerbaijan is a traditional participant of the Davos Forum and has been repeatedly awarded the highest ratings by the WEF in recent years. Thus, our country was among the leaders in the post-Soviet space in terms of the pace of industrial development and market reforms, the competitiveness of the economy, the development of the ICT sector, tourism, human potential, etc. In recent years, Azerbaijan has actively used the WEF platform to promote business interests in various regions of the world, as well as to attract investments, technologies, and know-how, and to implement world best practices in the country.

"At a joint business dinner on the topic "Oil and Gas" within the framework of the WEF, a conversation was held on the impact of regional processes on energy markets, the importance of the transition to a safe and sustainable energy system, the high potential of renewable energy sources in Azerbaijan and the possibilities of using this energy in all spheres of the economy, based on the principles of the "green" energy space," Azerbaijani Economy Minister Mikayil Jabbarov, who took part in the forum in Davos, wrote on his Twitter account the day before.

The WEF forum, as well as a number of other profile areas, is seen as a very good opportunity to demonstrate our potential in the field of renewable energy sources (RES) and attract potential foreign investors to Azerbaijan. In particular, in the next ten years, the country plans to introduce about 1500 MW generating capacities in the field of alternative energy, and this task is to be solved mainly by attracting private investors. There have been many recent successes in this area. Thus, in the first quarter of 2022 implementation of two major international projects in the field of RES started: the Saudi Arabian company ACWA Power launched the construction of the 240 MW complex of wind farms, producing one billion kilowatt-hours of electricity per year, and the works on construction of the 230 MW Garadagh solar power plant by Masdar company from the UAE were initiated. Investments in these two projects alone are estimated at over $500 million.

By 2030 it is planned to bring the share of renewables in the domestic energy system up to 30% by creating wind, solar and hydroelectric facilities in various regions of Azerbaijan, including in Karabakh and East Zangazur. To this end, since last year, the Ministry of Energy with the support of the Japanese company TEPSCO has been working on a draft concept of the "Green Energy Zone". Not so long ago, the draft document was submitted to the government, and it is expected that by the middle of this year, the development of the general plan of the future "Green Energy Zone" will be completed. In particular, the possibility of building a wind power station of about 100 MW in the Kalbajar-Lachin zone is being studied. Also in the Karabakh region, it is planned to modernize and build several dozen small hydropower plants and a solar plant of about 200 MW. Today a considerable number of companies from Turkiye, Israel, Great Britain, the European Union, the Republic of Korea, as well as Arab and CIS countries are planning to take part in RES development projects in the liberated territories of the republic, and aspects of these initiatives were also discussed during the Davos Forum.

The forum also addressed the issue of increasing hydrocarbon supplies from Azerbaijan to Europe. "We are currently working with our partners to increase gas supplies to Europe," Economy Minister Mikayil Jabbarov said in Davos, noting also that investments in the sector have been insufficient over the past few years due to the changed policies of financial institutions towards fossil fuels, including natural gas. Therefore, the level of additional commercial risks that local and foreign companies in Azerbaijan could take now and ways to manage these risks sustainably are the issues on our agenda today, the minister believes. At the same time, the republic intends to use the support of international institutions for a smooth transition to "green energy", he stressed.

As Jabbarov noted on his Facebook page, prospects of global cooperation in the post-crisis period, sustainable economic activity, economic diversification, encouragement of investments in sustainable infrastructure and development of the non-oil sector, as well as application of digital solutions in Azerbaijan were no less important areas of discussion in Davos during the panel "Strategic Outlook: Eurasia".

Here it is necessary to emphasize the importance of WEF in attracting portfolio investments to Azerbaijan, as well as in the issue of using the opportunities of the platform in Davos for the implementation of measures of digital transformation of the country's economy. "Azerbaijan attaches special importance to relations with the WEF, in particular in matters of diversifying the country's economy and attracting new investments, as well as in the processes of digital transformation," Rashad Nabiyev, Minister of Digital Development and Transport of Azerbaijan, noted during the February meeting with WEF President Borge Brende.

The most active cooperation with the WEF is observed within the framework of digitalization of the national economy. In particular, at the initiative of the Davos structure, a branch of the Center of the Fourth Industrial Revolution was recently established in Baku. The activity of the first in the CIS countries Azerbaijani WEF Center is designed to make an important contribution to accelerating the introduction of modern technologies, digitalization and application of innovations in our country, and this work is promoted on three main platforms. "These platforms include the development of artificial intelligence and machine learning, the Internet of Things and urban transformation, as well as digital trade," believes Tamerlan Taghiyev, executive director of the Center for Analysis and Coordination of the Fourth Industrial Revolution.

Digitalization of the country is one of the most complex and demanding tasks to be implemented by the Azerbaijani government in the coming years. Thus, based on the basic network infrastructure, the country will have to accelerate the development of the digital economy, expand innovative production and the service sector, and create prerequisites for the formation of human capital, including in the software business, startups, etc. These tasks are to be solved within the strategic program - "National Priorities for Socio-Economic Development: Azerbaijan 2030" and the "Strategy for Socio-Economic Development of Azerbaijan 2022-2026" implemented within the framework of this document.

In particular, one of the goals of the digital transformation of the national economy is to increase its competitiveness, focus on innovative trends and be more fully included in the international division of labour. Work in this direction has already begun: with the support of Turkiye, Israel, and a number of European countries, as well as with the support of the potential of the WEF, Azerbaijan will accelerate the development of IT startups, IoT technologies and other elements of Industry 4.0.

Caliber.Az