Private Sector

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PRIVATE SECTOR COMPETITIVENESS

Armenia continues to face critical economic challenges despite significant progress in macro-economic and structural reforms. Many aspects of economic development, which are necessary for ensuring the sustainability of economic growth (business-enabling environment, private sector capacity, etc.), have not adequately progressed. The previous high growth rates were due to a narrow economic base; however, in the long run, Armenia’s most critical needs are to diversify its economy and improve its ability to compete internationally.

USAID’s goal is to sustainably transform private sector competitiveness with the overarching objectives of increasing private investment and export growth, and expanding employment. This will be done by supporting Armenia’s small and medium-sized enterprises in high potential sectors, supporting workforce and entrepreneurship development, improving small and medium-sized enterprise (SME) access to finance and improving the business enabling environment.

FINANCIAL SECTOR

The global economic and financial crisis in 2008 adversely affected the financial sector of Armenia; however, it has largely recovered and the banking sector has stabilized. Armenian banks offer a limited range of products and services for businesses and SME access is constrained due to tightened lending criteria and focused lending on existing clients and larger corporations.

USAID assistance in the financial sector is targeted at removing these impediments and fostering the development of the financial market. USAID Development Credit Authority loan guarantees support lending to SMEs with a focus on women-owned and managed rural enterprises. Current and future efforts also aim to facilitate access to credit for small- and medium-sized enterprises and to improve tax policy and administration.
 

CURRENT ACTIVITIES

Enterprise Development and Market Competitiveness (EDMC) project is designed to raise incomes and employment in Armenia by promoting growth in selected value chains with export potential, with the overall goal of assisting Armenia to develop a more competitive and diversified private sector. To achieve these objectives, the project will (1) develop more productive enterprises and value chains by stimulating innovation, (2) enhance workforce skills and entrepreneurial development, (3) improve business environment by reducing regulatory burdens and addressing competitiveness challenges, and (4) facilitate effective financial intermediation. 

• Jul 2011-Jul 2016, $17.5m. Implemented by the Pragma Corporation.
  

Innovation Through Technology - This public-private partnership supports innovative startup creation and new product development in the IT sector through providing access to the latest technologies, business and market knowledge, trainings, certifications, targeted coaching, networking, and financial support.

• Aug 2012-Aug 2015, $470,800. Implemented by Microsoft Innovation Center Armenia Foundation.

Partners for Financial Stability (PFS) activity is designed to address the financial constraints to enterprise competitiveness through targeted technical assistance and capacity building for the Central Bank of Armenia (CBA), the Union of Armenian Banks and other key financial sector stakeholders. The activity will assist a) the Government of Armenia and the CBA institute reforms in legal, institutional development and investment promotion areas, and b) financial intermediaries learn best practices and enhance their capacity in managing risk, reducing transaction costs, and developing new products for value chains. The program will also facilitate public-private dialogue to improve access to finance for businesses.

• June 2010-June 2013, $1 million buy-in to the USAID/EGAT’s new regional “Partners for Financial Stability” program implemented by Deloitte Consulting

The Tax Reform Project (TRP) will improve business competitiveness in Armenia through targeted interventions aimed at reducing tax compliance burden for individuals and businesses. The project will assist the State Revenue Committee (SRC) and Ministry of Finance (MOF) to improve revenue policy formulation and tax administration policies and procedures and their implementation, and strengthen SRC’s human and institutional capacity to provide enhanced and more efficient taxpayer services. 

• Sep 2012-Sep 2016, $6.5m. Implemented by Deloitte Consulting.

The Entrepreneurship and Civic Activism for Young People program supports hands-on economics and civic education for youth and enhances business and entrepreneurship talents of young Armenians, providing the base for them to become the future skilled labor force and entrepreneurs of Armenia.

• March 2011-Jan 2015, $811,000. Implemented by Junior Achievement of Armenia.

Business Environments for Agile Markets (BEAM) - this Washington-managed project provides targeted short-term assistance to the Armenian government and other stakeholders to build their capacity to formulate strategy, and make and implement policy that improves business enabling environment, facilitates trade and investment, and supports enterprise growth.

• March 2012-Aug 2013, $500,000. Implemented by Carana Corporation.

Support to Rapid Regulatory Simplification - the project provides assistance to the Armenian government in regulatory reform, potentially utilizing the guillotine approach, to stimulate private sector growth, investment and job creation.

• June 2012-Nov 2013, $400,000. Implemented by the Organization for Security and Cooperation in Europe (OSCE).

Portable DCA Guarantee - facilitates a debt financing for on-lending to micro, small and medium enterprises (MSME), with a special focus on women-owned or managed microenterprises, and those located outside the capital city and in rural areas.

•  Sep 2011-Sep 2016, up to $750,000. Implemented by General Financial and Credit Company Universal Credit Organization.