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A Descriptive Study of Social and Economic Conditions 55 LIFE IN NAKHICHEVAN AUTONOMOUS REPUBLIC: A descriptive study of social and economic conditions Supported by UNDP/ILO Ayse Kudat Senem Kudat Baris Sivri Social Assessment, LLC July 15, 2002 55 56 TABLE OF CONTENTS Summary and Next Steps Preface Characteristics of the Region History Governance Demographics Household Demographics and Employment Conditions Employment/ Unemployment Education Economic Assessment Government Expenditures NAR’s Economic Statistics Household Expenditure Structure Income Structure Housing Conditions Determinants of Welfare Agriculture Sector in NAR Water Electricity Financing Feed for Livestock Magnitude of Land Holding Subsidies Markets NAR Region District By District Infrastructure Sector Energy Power Generation Natural Gas Project Water Supply Transportation Social Infrastructure 56 57 Health Education Enterprise Sector People’s Priorities Issues Relating to Income Generation Trust and Vision Money and Banking Community Development ARRA Damage Assessment for the Region Other Donor Activities 57 58 Summary and Next Steps The 354,000 people who live in the Nakhichevan Autonomous Republic (NAR) present a unique development challenge for the Government of Azerbaijan and for the international community. Cut off and blockaded from the rest of Azerbaijan as a result of the conflict with Armenia, their traditional economic structure and markets destroyed by the collapse of the former Soviet Union, their physical and social infrastructure hampered by a decade or more of lack of maintenance and rehabilitation funding, NAR’s present status is worse than much of the rest of the country and its prospects for the future require imagination and innovative thinking. This report deals with the challenges of NAR today and what peoples’ priorities are for the future. The next phase of the UNDP assignment will be to chart the options for the future and propose through a participatory process a specific program of actions to liberate the people of NAR from the constraints imposed on them by the past and by the blockade which has cut them off from the rest of their country. The people of NAR are well-educated, 75% living in rural areas, in a climate that requires irrigation to sustain most agricultural activities. The markets for NAR’s traditional agricultural products – wine, grapes, tobacco, and fruits – largely disappeared with the collapse of the former Soviet Union, and the Armenian blockade has either slowed the opening of new markets or made expensive the supply of critical inputs, including electricity, that would allow the region to move to new products. Agriculture is now largely for self-sufficiency although there has been some production for export such as sugar beets. If agriculture has had a difficult time re-establishing NAR’s traditional agricultural advantages, industry has been decimated with production essentially collapsing and many people engaging in informal trading with Iran and Turkey and others migrating either seasonally or permanently outside the region to send back money to families. Poverty assessments of Azerbaijan as a whole and both quantitative and qualitative work on poverty in NAR show that the region is among the poorest in the country for those who permanently reside there. Indeed, data indicate that as many as 88% of NAR residents are either poor or very poor. In addition, there is little room for regional assistance since 75% of the region’s budget is subsidized by the national government and its imports, 75% of which comes in the form of electricity, is more than twelve times its exports. While NAR has not been a focus of donor attention, there is considerable evidence that small-scale projects that have been funded, especially in community development and water supply, have been successful and could be scaled up. It is also clear that the dynamism of the population has been shown in creating new opportunities in informal trading and some areas of agriculture that people themselves feel could be substantially expanded with limited external assistance, especially in sugar beets, vegetable oil and some areas of fruits and vegetables. In terms of physical infrastructure, a survey of 58 59 peoples’ priorities undertaken especially for this study showed that roads are currently the highest priority followed by water supply and sewerage and the provision of reliable electricity. Improvements in health area the highest priority for social infrastructure. In agriculture, further investments in livestock, particularly in the new areas of small livestock, appear to be the highest priority while on the urban size investments for home improvements and small commerce activities are dominant. A district by district assessment concentrating on agriculture also shows a number of areas where people feel modest investments could have high pay- offs in terms of improving income and household welfare. The next phase of the consultants work will take this assessment of the current status along with peoples’ priorities and, in a participatory process that includes looking at international best practice, establish a strategy and program of activities that will improve the lives of the people of the region. 59 60 Preface The Nakhichevan Autonomous Republic (NAR), an enclave of 354,000 people cut off from the rest of Azerbaijan as a result of conflict with Armenia, presents unique challenges to overcome its blockaded status, its overall poverty and inadequate social and physical infrastructure, and its lack of access to more traditional means of participating in Azerbaijan’s economic development. The United Nations Development Program (UNDP), recognizing the special challenges of assisting the people of Nakhichevan, is funding this pre-feasibility assessment, a two-phase investigation of economic and social challenges and strategies for the futures. The investigation is unique in that its qualitative and quantitative primary data collection and participatory discussions with key stakeholders is combined with the overall framework of development priorities and programs for Azerbaijan as a whole to produce a specific program of assistance to meet the special needs of the people of Nakhichevan. Phase I, the subject of this report, focuses on data collection and analytical work on the data. The data collection comprises extensive field research in NAR, semi-structured interviews with local population and focus groups in key locations. In addition, systematic needs assessments surveys were conducted based on a representative sample of economic micro-regions with NAR. More specifically, the data collection efforts focused on the following areas: • Labor and socio-economic conditions in NAR: population trends, employment and unemployment, household income and expenditures, sources of income, gender issues, etc; • Access to social services and infrastructure: in particular, health care, education, electricity, and telephone/communications; • Economic development: industry, internal and external trade (including formal and informal activities as well as cross-border trade, with a special emphasis on agriculture given the 72% of the population that lives in rural areas; and • Peoples priorities, expectations, and perceptions as expressed in surveys done specially for this assignment with individuals, households and industries as well as surveys done previously by Government and development agencies. Phase II, building on the data and needs/preferences from Phase one, will focus on: (i) further in-depth study of the socio-economic situation of people in NAR; and (ii) the preparation of a set of recommendations for the development of a targeted socio-economic strategy. Phase II will identify areas of socio-economic interest and concern and propose a framework for the implementation of a comprehensive program of socio-economic development of NAR that could be pursued by the region itself, by the 60 61 Government of Azerbaijan, and by the international donor community. Phase II will concentrate its attention on: • Assessment of potential population groups which can benefit from a comprehensive socio-economic development program in NAR; • Identification of the institutional mechanisms and policy framework required for the implementation and coordination of the program at the local, regional and national levels in both the public and private sectors. Phase I details the current socio-economic situation of NAR and what people feel about their situation. Phase II builds on Phase I and provides options for moving forward proactively into the future. All quantitative surveys were carried out by the Azerbaijan State Statistical Committee with funds made available through this project. Other sources of funding were also available for the 2001-2002 Budget Survey. 61 62 Characteristics of the Region The Nakhichevan Autonomous Republic (NAR) is an enclave between the Islamic Republic of Iran, Turkey, and Armenia, which has no border with Azerbaijan proper.15 68 percent is mountainous, and 50 percent is 1,000-2,000 meters above sea level. Irrigated lands comprise more than 80 percent of the agricultural area in the NAR; only 33.2 percent of all land is suitable for agriculture. According to the results of the 1999 census in NAR, the population is 354,000. Of these, 99,600 (28.1 percent) live in urban areas, and 254,500 (71.9 percent) live in rural areas. Men make up 49.3 percent (174,500 people) and women make up 50.7 percent (179,600) of the total population. The Nakhchivan Autonomous Republic is a land of mountains. Located
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