WNAM MONITORING: Azerbaijan’s information and communication technology (ICT) sector has emerged as a major force behind the country’s non-oil economic growth in recent years. It is central to the national strategy for economic diversification. In 2024, significant strides were made in this sector, particularly in digital transformation, the growth of the startup ecosystem, and the operation of technology parks.
The development of a sustainable economic model necessitates focusing on the non-oil sector, where the ICT sector plays a crucial role. In the modern world, effective and swift economic transitions depend on the adoption of digitalization and innovative technological solutions. Azerbaijan has made considerable progress in these areas, with the past year being especially noteworthy.
A historic achievement in the transition to digital government
Last year, Azerbaijan made significant strides in digital transformation and e-governance. New services within the digitalization of public services became more accessible to citizens, with record numbers of transactions conducted via the ASAN service and e-Gov platforms.
Additionally, the adoption of digital currency and blockchain technologies in both the public and private sectors expanded, enhancing the transparency and security of financial transactions.
A key milestone was the elimination of the need to physically present an ID card. Information from the ID card can now be submitted through the Electronic Government Information System, allowing citizens to share their digital identity data through the myGov application.
Moreover, all courts in Azerbaijan have been integrated into the Digital Document Circulation subsystem, enabling citizens to obtain a certificate of conviction digitally through myGov. The Digital Bridge national information exchange system and updated versions of the myGov platform were also launched, resulting in a 73% performance increase for the Digital Bridge system compared to the previous year.
These advancements in digital government have earned Azerbaijan high international recognition. For the first time, Azerbaijan was included in the Very High EGDI countries, the highest category in the United Nations’ Electronic Government Development Index (EGDI).
There was a 21% increase in the country’s online public services and telecommunications infrastructure indicators. Additionally, Azerbaijan’s rank in the Electronic Participation Index (EPI) improved from 98th to 88th, reflecting a 28% improvement. These accomplishments underscore Azerbaijan’s significant progress in digital transformation.
The development of the startup and innovation ecosystem also saw notable progress. In 2024, the number of startups, especially in agrotech, healthtech, and fintech, increased, with new projects gaining access to international markets. Financial support for startups was bolstered by grants from the Innovation Agency and subsidies from technology parks.
Steps to enhance technological infrastructure were also taken. Broadband internet services were expanded, pilot projects for 5G technology were successfully completed, and large-scale implementation is planned for 2025. International cooperation was strengthened through digital partnership programs, attracting new investments to the sector, particularly through projects with the European Union and the Asian region.
These successes contribute significantly to the development of Azerbaijan’s ICT sector and the strengthening of the non-oil economy. Digitalization efforts not only enhance the sustainability of the Azerbaijani economy but also improve the quality of services provided.
Digital transformation and cyber risks
The rapid deepening of digitalization necessitates more advanced systems in cybersecurity. The State Service for Special Communications and Information Security of Azerbaijan has made significant strides in ensuring the digital security of state institutions.
A more functional and secure e-mail system has been provided to state institutions, along with the introduction of Extended Detection and Response (XDR) systems to strengthen security measures. Recent cyber incident investigations highlighted the importance of a centralized antivirus system, revealing a cyber attack group operating in 135 countries and infecting 270,741 computers. Of these, 7,790 attacks targeted computers in Azerbaijan, with 35 state institutions affected due to the lack of connection to the centralized antivirus system.
To enhance cybersecurity effectiveness, the Service launched a platform ensuring centralized coordination of tasks. This platform facilitates discussions on task implementation and records work done, increasing transparency and speed of execution.
These efforts have bolstered Azerbaijan’s position in international rankings. In the International Telecommunication Union’s Global Cybersecurity Index 2024, Azerbaijan achieved an advanced level, scoring 93.76 out of 100 points based on the new methodology.
These results confirm the effectiveness of Azerbaijan’s strategic measures in cybersecurity and the strengthening of its digital security, paving the way for a more sustainable and secure digital transformation process.
Technological communities’ access to venture capital is expanding
The development of the digital economy hinges on the application of modern technologies, necessitating the formation of technological communities. The growth of Azerbaijan’s startup ecosystem is closely tied to the emergence of angel and venture cultures, with financial accessibility for startups and innovative projects being crucial for sustainable development.
One significant step in this regard is the establishment of the third angel investor club, DIVIDA, supported by the Innovation and Digital Development Agency (IDIA) under the Ministry of Digital Development and Transport of Azerbaijan. The club’s main mission is to support angel investors in Azerbaijan, promote the development of the local ecosystem, and foster regional networking by connecting startups and businesses from Central Asia, Georgia, and Türkiye with angel investors.
Additionally, during the traditional InMerge Innovation Summit, IDIA and several partners established the second venture fund in the country, InMerge Ventures, with a capital of $4 million. This fund aims to provide larger-scale financial support to startups, with plans to create additional funds in the future.
To centralize the activities of technology communities, the first Azerbaijan Innovation Centers (AIC) were launched in Baku and Sumgayit. These centers serve as platforms for the exchange of experience, ideas, and knowledge for technology entrepreneurs, startups, and innovators, providing the necessary infrastructure for efficient operation and rapid development.
Future plans include establishing a second, larger Innovation Center in Baku and additional AICs in different regions of the country. These steps will expand the innovative environment both locally and regionally. Thus, financial resources for the development of Azerbaijan’s technological ecosystem are becoming more accessible, and opportunities for networking and experience exchange in this area are expanding.
ICT sector in figures and a look into the future
The latest statistics reveal continued growth in Azerbaijan’s information and communications sector. In the first 11 months of 2024, sector revenues increased by 12.5% compared to the same period in 2023, reaching 3.2 billion manats ($1.882 billion). The ICT sector’s share in the gross domestic product rose to 1.8%, up from 1.7% the previous year.
As part of the Online Azerbaijan project, which aims to provide 100% of the country’s territory with high-speed and stable broadband internet, 1,445,900 homes, apartments, and business entities gained internet access in the past year, bringing the total number to 2,965,300.
The Digital Bridge national information exchange system also saw significant progress, with over 1 billion transactions conducted in the past year. The number of integrated information systems exceeded 150, and the volume of daily transactions reached 1.5 million.
Key priorities include creating added value in the ICT sector, accelerating infrastructure development, providing a favorable environment for technology entrepreneurs and startups, increasing access to financial resources, and strengthening resilience to cyber threats. These strategic steps are expected to drive significant progress in the sector in 2025.
Statistical data suggest substantial expectations for the digital economy’s expansion in 2025. Further development of e-commerce and digital payment systems will be a primary focus, with plans to strengthen legal regulations to create a more attractive environment for investors.
The expansion of the 5G network is anticipated to mark a new stage in digital services quality, encouraging the broader application of Internet of Things (IoT) technologies in agriculture, urban management, and the energy sector. Increased investments in cybersecurity and training local specialists will be crucial against the backdrop of rising digital activities.
New educational programs will be introduced to enhance digital knowledge and skills. Strengthened cooperation between universities and technology companies will help train qualified ICT personnel, accelerating digital transformation in the country.
In summary, Azerbaijan’s ICT sector achieved significant milestones in digitalization and innovation in 2024. In 2025, this progress is expected to continue, with the digital economy playing a key role in the non-oil sector. As the country’s position strengthens, its competitiveness in regional and global markets will increase.
