PublicDisclosureAuthorizedPublicDisclosureAuthorizedPublicDisclosureAuthorizedPublicDisclosureAuthorized

FundedbytheEuropeanunion

WORLDBANKGROUP

AZERBAIJAN

RURAL

DIGITAL

NEEDS

ASSESSMENT

AZTAF

AZERBAJANRAPIDTECHNICALASSISTANCEFACILITY

i

?2024TheWorldBank

1818HStreetNW,WashingtonDC20433Telephone:202-473-1000;

Internet:Somerightsreserved

ThisreportwasproducedwiththefinancialsupportoftheEuropeanUnionundertheAzerbaijanRapidTechnicalAssistanceFacility(AZTAF).AZTAFisatechnicalassis-tanceprogramfortheRepublicofAzerbaijan,financedbytheEuropeanUnionandimplementedbytheWorldBank.Thecontentsofthedocumentarethesolere-sponsibilityofWorldBankstaffanddonotnecessarilyreflecttheviewsoftheEuropeanUnion,theWorldBank,itsaffiliatedorganizations,itsexecutivedirectors,orthegovernmentstheyrepresent.TheWorldBankdoesnotguaranteetheaccuracyofthedataincludedinthiswork.

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2024.AzerbaijanRuralDigitalNeedsAssessment.Wash-ington,DC.

Allqueriesonrightsandlicenses,includingsubsidiaryrights,shouldbeaddressedtoWorldBankPublications,TheWorldBankGroup,1818HStreetNW,Washington,DC20433,USA;Fax:202-522-2625;

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ii

Acknowledgments

PreparationofthisreportwasledbyErikJohnson,LeadSocialDevelopmentSpe-cialist(SocialSustainabilityandInclusion(SSI)GlobalPractice),incollaborationwithHimmatSingh(DigitalDevelopmentSpecialist,DigitalDevelopmentGlobalPractice),andIfeyinwaBonhuer(SeniorPrivateSectorSpecialist,FinanceCom-petitivenessandInnovationGlobalPrac-tice).KhalisaShahverdiyeva(Consultant,SustainabilityandInclusionGlobalPrac-tice)providedvaluablecontributionsasamemberoftheteam.TheWorldBankCountryManagerforAzerbaijan,Ste-fanieStallmeister,providedvaluableguidanceaswellasdidSaidaBagirli,NigarSadikhova,LeylaTaghiyeva,andSabinaMajidovafromthecountrymanagementteam.TheworkwascarriedoutundertheguidanceofHeleneCarlssonRex(Prac-ticeManager,SSIGlobalPractice).EditingofthereportwasundertakenbyMargiePeters-Fawcett.

TheauthorsthankpeerreviewersCristob-alCobo,MariaClaudiaPachon,andAnnaO’Donnellfortheirrespectivecommentsandsuggestionswhichwereofbenefit.

Datawascollectedbytheresearchfirm,A2FConsulting,ofwhichteamincludedDitiChatterjee(TeamLeader),Poulo-miDasgupta,andTamilyamMemanova.Azerbaijan’sInnovationandDigitalDe-velopmentAgencyanditsMinistryofAgricultureprovidedsupportthrough-outthedesign,research,andpreparationprocess.

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TableofContents

Acknowledgements

ii

TableofContents

iii

Abbreviations

v

ExecutiveSummary

1

1.Introduction

0

2.Methodology

2

2.1Overview

3

2.2CommunityandHouseholdSurveySamples

3

2.3SelectionofRespondentsforFocusGroupDiscussions

6

2.4SelectionoftheRespondentsforKeyInformantInterviews

7

3.CommunityDigitalInfrastructure

8

3.1CurrentState

9

3.1.1PolicyandInstitutionalContextfortheDevelopmentofBroadband

9

3.1.2FixedBroadbandMarketServiceProviders

10

3.1.3MobileUsageAzerbaijanInternetin

10

3.1.4EffortstoDigitalLandscapeImprovethe

11

3.1.5BroadbandExpansion:TheChallenges

13

3.1.6PlannedInterventions

13

4.RespondentProfile

16

4.1DemographicCharacteristics

17

4.2SocioeconomicCharacteristics

18

5.DigitalSkillsandUsage

20

5.1HouseholdDigitalConnectivity

21

DigitalAccess

5.1.1

21

5.1.2DigitalDeviceOwnership

21

5.1.3TypeInternetServicesAccessedof

22

5.1.4EaseofConnection

23

5.1.5CurrentServices

24

5.1.6ServiceSatisfaction

24

5.1.7ServicePreference

26

5.2DigitalLiteracy

29

5.2.1InternetUse

29

5.2.2PurposeforUsingtheInternet

30

5.2.3DigitalGovernment

32

5.2.4DigitalSecurity

37

5.3TrainingandCapacityBuildingNeeds

39

6.Recommendations

42

Annex

1

iv

Box

Box1:SelectLevelsofSmartReadinessIndex

5

Figures

Figure1:SelectedRayons

6

Figure2:AgeBreakdownofSample

17

FigureGenderBreakdown3:ofSample

17

Figure4:NumberofMembersperHousehold

18

FigureMaritalStatusRespondents5:of

18

FigureTopFiveDevicesbyOwnership6:

21

FigureTopFiveDevicesbyOwnershipbyRayon7:

22

FigureType

8:ofInternetAccess

22

FigureRayon9:InternetAccessby

23

Figure10:EaseConnectionofInitialInternet

23

Figure11:SatisfactionwithConnectionQuality

25

Figure12:SatisfactionwithConnectionQualitybyRayon

25

Figure13:TopFivereasonsforFavoringMobileConnection(overallsample)

27

Figure14:TopFiveReasonsforDisfavoringMobileConnection(overallsample)

27

Figure15:TopFiveReasonsforFavoringBroadbandConnection

27

Figure16:TopFiveReasonsforDisfavoringBroadbandConnection

28

Figure17:TopFiveReasonsHouseholdsDoNotConnecttoBroadband

28

Figure18:InternetUse

30

Figure19:TopFiveInternetActivities(overall)

31

FigureTopFive20:PurposesfortheInternet

31

FigureTopThreeRayon

21:PurposesfortheInternetby

32

FigureDigitalGovernmente-ServicePortalRegistrations22:

33

FigureDigitalGovernmente-ServicePortalRayon23:Registrationsby

34

FigureTopFourReasonstoUseDigitalGovernmente-ServicePortals24:

35

FigurePerception25:ofGovernmente-Services

36

FigureSecurityPractices26:

37

FigureRayon27:Securitypracticesby

38

FigureFrequencyofCriticallyEvaluatingOnline28:Information

38

Figure29:FrequencyofCriticallyEvaluatingOnlineInformationbyRayon

38

FigureDigitalTraining30:

39

FigurePerceivedNeedFutureDigitalTraining31:for

40

FigureOnlineSkillDemand32:byAgeGroup

40

Table

Table1:FocusGroupDistrictDiscussionsby

7

v

Abbreviations

ASAN

AzerbaijanServiceandAssessmentNetwork

EU

EuropeanUnion

EU4Digital

EuropeanUnionforDigital

FGD

FocusGroupDiscussion

IDDA

InnovationandDigitalDevelopmentAgency

ISP

InternetServiceProvider

KII

KeyInformantInterview

MDDT

MinistryofDigitalDevelopmentandTransport

SVRI

SmartVillageReadinessIndex

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Glossary

Anadministrativedivisionequivalenttoadistrict;theprimaryleveloflocalgovernmentbelowthenational.

Inthecontextofthisreport,acommunityisdefinedasthelocalitywherethedatacollectionwasconducted.Basedonthetypeoflocality,itisasfollows:

?Ruralrayonsvillage

?UrbanareaslocalitieswithintherayonsofNesimiandKhazarfromwherehouseholdsandotherstakeholderswereselected

TheinterconnectednetworkoftechnologythatenablesInternetaccess,digitalservices,anddevices,ultimatelyprovidingresidentswithimprovedcommunication,education,healthcare,andeconomicprospects.

AbilitytoaccessandusetheInternetthroughvariousdevicesandnetworks.Thisaccessenablescommunication,informationgathering,education,entertainment,andvariousonlineservices,significantlyimpactingthehouseholdslifestyleandopportunities.

Ahigh-speedInternetconnectiondeliveredthroughphysicallines(e.g.,cable,digitalsubscriberline(DSL),orfiberoptic)toafixedlocation,suchasahomeorbusiness.

Oftenusedinterchangeablywithmobiledata,mobilebroadbandiswirelessInternetaccess,deliveredthroughcellularnetworkstypicallyusing3G,4G,or5Gtechnologies.

Onlineplatformsandtoolsprovidedbythegovernmenttodeliverpublicinformationonservicesandresourcestocitizensandbusinessesefficientlyandconveniently.

Coverstopicsrelatedtopastparticipationindigitaltraining,theperceivedneedfordigitaltraining,in-demanddigitalskills,andthemodeofpreferreddigitaltraining.

Digitalgovernmentservices(or

governmente-services)

Trainingandcapacity-buildingneeds

Householddigitalconnectivity

Digitalinfrastructure

Mobilebroadband

Fixedbroadband

Community

Rayon

1

ExecutiveSummary

Thisreportidentifiestheuniquetechnologi-calchallengesandopportunitiesthatarebe-ingfacedbyvariousAzerbaijanicommunitieswhenusingdigitaltoolsandservices,partic-ularlywithregardtoruralareas.ThefindingswillsupporttheGovernmentofAzerbaijaninitsdesignoftheinterventionsnecessarytocre-ateamoreequitabledigitallandscapeforall,aswellastobridgethegapthatexistsbetweentheurbanandruralareas.Theassessmentiscomprehensive,thethreefolddatacollectionofwhichincluded(a)asurveyofhouseholdandvillageneeds,(b)focusgroupdiscussions(FGD),and(c)semi-structuredinterviews.Tocompre-hendthecurrentexistingdigitallandscape,thesurveyestablishedthecurrentdigitalskillsandneedsofvillagehouseholds;theFGDsinclud-edadiversepopulationsegmentthatprovidedqualitativeinsightintocommunitydigitalaccessandusage;andtheinterviewswereheldwithlo-calstakeholders(i.e.,Internetserviceproviders(ISP),smallbusinesses,andlocalgovernmentof-ficials).Thesethreeapproacheshelpedtoiden-tifythevariouschallengesrelatingtoruralandurbancommunities,aswellastheopportunitiesavailabletothem,thusinformingthestrategiesbywhichtoestablishAzerbaijan’sdigitalfuturemoreinclusively.TheassessmentwasconductedundertheAzerbaijanRapidTechnicalAssistanceFacility(AZTAF),financedbytheEuropeanUnion(EU)andimplementedbytheWorldBank.

a)CommunityDigitalInfrastructure

WhileAzerbaijanhasmadeprogressinex-pandingitsdigitalinfrastructureandofferingdiverseInternetservices,therearesignificantdisparitiesbetweenurbanandruralareas,assuggestedbythedata.Someareas,suchastheadministrativedistricts(fromhereon,rayons)ofOghuzandHajigabul,alreadyhaveinplace

advancedfiber-opticnetworks,whileinothers(e.g.,certainareasintherayonofSharur)havenohomebroadbandaccesswhatsoever.Thosehouseholdsthatdohavebroadbandaccess,however,typicallyrelyonWi-FiInternetconnec-tion.Despiteeffortstomeettheneedsoftheirvariouscustomers,ISPsoftenfacechallengesinexpandingtheirservices,theresultofseveralfactors.Theseincludethedifficultyofinstallingcablesincertainbuildingsduetothesalinesoilandthelackoffacilitiesduringconstruction;thehighercostofbroadbandconnectioninruralar-eas,thusdeterringadoption;thetomodifythetelecommunicationlegalandregulatoryenvi-ronmentinordertoovercomenetworkinstal-lationchallenges(e.g.,sharingofinfrastructure,streamliningpermits,andprocessauthorization,

amongothers)soastoreducecostsandfacil-itatebroadbandnetworkconstructioninruralareas.

Azerbaijanhasembarkedonacomprehensivejourneytoenhanceitsdigitalgovernance,im-proveservicedelivery,fosterinnovation,andensurethatitsdigitalizationisclimate-pos-itive.Oneofthecountry’skeyinitiativeshasbeentheestablishmentofserviceandassess-ment(ASAN)centers,whichisanetworkthatnotonlypreventscorruptionandincreasescus-tomersatisfactionbutalsomakespublicservicesmoreeasilyaccessibleandlessbureaucratic.Inaddition,underthegovernment’sInnovationandDigitalDevelopmentAgency,anonlinegovernment(gov.az)portaloffersacentralizedportalforpublicaccesstovariousgovernmentservices.Anotherportal,.az,providesapersonalizedspaceinwhichtomanageinter-actionwithgovernmententities.Intermsofitseducationsector,Azerbaijanhasdopteddigita-lizationtoenhancethelearningexperienceofitsstudents.Furthermore,therehasbeenasignif-

2

icantamountofinvestmentinitse-healthcareinitiatives(e.g.,electronichealthrecords,tele-medicine,appointments,andhealthinforma-tion)toimprovethedeliveryofhealthcareandmonitorpatientoutcomes.AzerbaijanalsohascommittedtotheCOP29GreenDigitalActionDeclarationaspartofitscommitmentnotonlytoslowthepaceofclimatechangebutalsotoenhanceaccessibilityofgreendigitaltechnolo-gies.

Azerbaijanisactivelyenhancingitsdigitalin-frastructureandregulatoryframeworktofur-therstrengthenitsoveralldigitallandscapeforthefuture.OneofitsprincipalstrategiesistocollaboratewiththeWorldBankandtheEuro-peanUnion’sEU4DigitalInitiativethroughtheAZTAFprogram,aninitiativethatwillaligntheEuropeanUnion’snormsandpracticesindigitaltransformation.Azerbaijanhastakensignificantstrideinitsdigitaldevelopment,particularlyinexpandingitsbroadbandInternetaccessthroughtheOnlineAzerbaijanprojectimplementedbyapublic-privatepartnership,whichhassignedaMemorandumofUnderstandingwiththeUnit-edArabEmiratesGovernmenttostrengthenAzerbaijan’sdigitalinfrastructurebydevelopingitsdatacenters.

b)HouseholdDigitalConnectivity

MosthouseholdsinAzerbaijanhaveInternetaccessviaWi-Ficonnectiontoafixedbroad-bandservice—moresousedtoaccessasmart-phoneincomparisontotheuseoflaptops,desktops,andtablets.Thisisprovidedbylo-calISPstothehome.ThereareneverthelessvariationsinthequalityandspeedofInternetconnection,forcingsomeuserstoaccessmobiledataonlywhenoutsidethehome.Variousdatacollectedshowthat(a)theusageofcomputersisnotdeterminedbygender;(b)itisfareasiertosetupamobileInternetconnectionthanafixed

broadbandconnection;(c)broadbandpenetra-tionisrelativelyhigh;and(d)whilethereisasig-nificantgapbetweenurban(99percent)andru-ral(87percent)households,mostneverthelesshaveaccesstotheInternet,eitherthroughonlyfixedbroadbandorfixedbroadbandandmobileInternetcombined.Thequalityoftheconnec-tion,however,varies,whichcallsforsignificantimprovement.Ontheonehand,speedandreli-abilityacrossrayonsarereasonsonewouldpre-fertohaveacombinedmobileandfixedbroad-bandconnectioninthehomeifabletodoso;ontheotherhand,however,themostcommoncomplaintistheinabilitytodoso,withmorethan90percentofhouseholdsaccesstheirIn-ternetconnectiononlywiththeirmobilephone.

c)DigitalLiteracy

Ingeneral,reactionfromtheresearchregard-ingtheuseofasmartdeviceandtheInternetispositive.ItiswellrecognizedthattheInternethastremendouspotentialintermsofeducation,entertainment,bankingandpaymentservices,andretailshopping,amongotheroffers.Nev-ertheless,reservationexistsaroundthenega-tiveimpactsofdigitaltechnologyandInternetaccess,amajorconcernbeingthatofthehealtheffectsrelatingtoexcessivescreentime,partic-ularlyonvisionandsleeppatterns.Also,whilethereisafascinationwithartificialintelligence(AI),itneverthelessisapprehensivetomany.

TheshareofrespondentsintheoverallsamplewhousetheInternetis98.9percent,brokendownto98.6percentinruralareasand100per-centinurban.ThisismuchhigherthantheshareofindividualswhousedtheInternetinEuropeandinCentralAsiain2021(88percent).1TheuseoftheInternetisprimarilyfacilitatedbysmart-phone(98percent),thepredominantmethodforcommunication,inadditiontotelephone/videoconnection(89percent),instantmessag-

1Ritchie,H.,E.Mathieu,M.Roser,andE.Ortiz-Ospina.2023.“Internet.”O(jiān)urWorldInD.

/Internet

.

3

ing(86percent),andsocialnetworkparticipa-tion(75percent).

InruralAzerbaijan,digitalgovernmentservicesappearunderutilizedandpoorlycomprehend-edbythegeneralpublic.InsightfromFGDsre-vealsthatwhilesomeindividualsusebasicdigi-talpaymentplatformsandeducationalportals,thebroaderspectrumofgovernmente-servicesremainslargelyuntapped.Surveysreflectthatregistrationongov.azand.azportalsre-mainssomewhatlow,at13percentand12per-cent,respectively.Surveydataalsoindicatethatthemostcommonuseofagovernmente-ser-viceisforeducation(43percent)andpaymenttransfers(42percent).Overall,asignificant37percentofrespondentsratededucatione-ser-vicesasuseful,followedbythepaymentser-vices(25percent).Thevastmajorityofrespon-dents(69percent)reportedthattheydonotengageinregulardigitalsecuritypractices.Themostcommonsecuritypracticeisastrongpass-wordwithregardtoWi-Fi,at43percent,withasignificantmajority,at37percent,neverhavingcriticallyevaluatedthesecurityinformation.This

indicatesapotentialvulnerabilitytomisinfor-mation,mostlikelyduetolimiteddigitalthreatawareness.

Accesstoacomprehensivevarietyofdigitalservicesistypicalamongmicro-sizeenterpris-es,despitethelimitintheirdigitaltechnologyskills.Insightfromkeyinterviewswithmicro-sizebusinessesthatareownedbywomenrevealsthattheneedfordigitalskillsfortheirwork,par-ticularlyinruralareas,isindeedhigh.Themostcriticalneeds,accordingtotheintervieweesaretraining(i)toenhancedigitalliteracy(e.g.,computerusage,Internetnavigation,softwareapplication);(ii)ine-commerceskillsandonlinefinancialmanagement;(iii)indigitalmarketingandbusinessdevelopment;(iv)forgovernmentsupportandresources(e.g.,governmentpro-grams,financialresources).Toaddressthesetrainingneedsacrossruralregions,government

interventionsmustbeabletoenableindividualsandbusinessestothrivewithinthedigitalecon-omy.Furthermore,theagriculturesectorwouldbenefitfromtheadoptionofsmartfarmingmethods,includingnewtechniques,precisionfarming,digitalmarketing,ande-commerce,allbywayoftheInternet.

d)TrainingandCapacityBuilding

Thereisahighdemandfordigitalskillstraininginruralareas,reflectedby66percentofsur-veyrespondents,preferablywithface-to-faceoronlinecourses.Thisfindinghighlightsthefactthatmostoftherespondentshavehadnoopportunitiestoaccessanysuchprograms.Thedemandintrainingishighestforonlinebanking,buying/selling,andaccesstohealth-relatedin-formation.Theneedtoinvestinruralcommuni-tiesishigh,notonlytoincreasethedigitalcon-nectivityinfrastructureandestablishtrainingcenters,butalsotoempowerpeoplewiththenecessaryskillstothriveinadigitalage.

CommunitiesinAzerbaijanhavevaryingde-greesofdigitalliteracyneeds,eachofwhichrequirespracticaltrainingtoitsownspecif-icneeds,particularlyintheruralareaswhereresidentsseekeconomicadvancement.Olderindividuals,incontrasttoyoungergenerations,primarilyseekbasicInternetnavigationskillsandinformationonhealthissues.Youngpeoplearemoreinterestedincoding,datamanagement,andonlineentrepreneurship.RuralresidentsinBardaRayon,forinstance,haveexpressedastrongdesireforpracticaltraining,suchase-commerceanddigitalmarketing,inrelationtotheiragriculturalproducts,whileintherayonsofGakhandAghdash,thepriorityisforbasiccom-puterandonlinebankingtraining.Therefore,basicandadvanceddigitalliteracytrainingpro-gramsmustb