Armenia Progresses in Small Business Development Says Expert

YEREVAN (Noyan Tapan)–The Small Enterprise Foundation (SEF) opened its new department in the town of Sisian recently. SEF was set up two months ago and is currently operating within the framework of World Vision’s microenterprise development programs in Armenia.

World Vision Armenia Director Robert Dira told Noyan Tapan that SEF had already issued loans worth a total of 200,000 US dollars. World Vision supports projects whose cost is from $200 up to 10,000 and over. The average size of each loan is $7,000–with the monthly interest rate at 1.5-3 percent depending on the allocation term of loans (from 1 to 36 months) The repayment of loans is made monthly.

For the past year of its work World Vision issued over 200 loans worth a total of $600,000. On the whole–the organization has already funded 1,200 business projects with a total cost of $1 million–including grant allocation programs. 3,150 jobs have been created within the framework of these programs.

The organization also arranges training for business persons and managers in marketing and accounting skills–in addition to providing consultation. At first–World Vision tries to allocate small sums–then gradually increases them. Many customers borrow for a second or third time–some already have a possibility to borrow large sums from banks. 98 percent of World Vision’s customers successfully fulfill their commitmen’s.

The average growth of net profit of enterprises that borrowed loans is 80 percent–40 percent of the net profit being reinvested in business activities. SEF is going to open its departmen’s in about 10 cities and towns of Armenia–including Ijevan–Giumri–Goris–Kapan–Noyemberian–etc.. Also–it is planned that newly established public organizations – so-called credit associations – will be involved in the governing bodies of these departmen’s.

The participation of public representatives would promote the implementation of both credit and social programs. According to Mr. Dira–there is a potential for setting up at least 15-20 thousand small enterprises in Armenian cities and towns which would require an investment amount in excess of $10 million. Pointing out that high taxes are the main obstacle for small business development in Armenia–Dira said that in many developing countries small business is taxed much less than big business. Comparing Armenia with such countries as Malaysia–the Philippines–Thailand–Pakistan–India and others–Dira noted that small business in Armenia is growing more rapidly and–therefore–has good prospects.

With the political situation in the Transcaucasus taken into consideration–Armenia is developing more rapidly than many of the CIS countries and even more rapidly than some countries of the West.

Dira believes Armenia to have made great progress over the recent years–in particular–in the sphere of wholesale and retail trade. It still remains a big problem how to find sales markets–especially outside Armenia. In this connection–Dira pointed out that Armenian businessmen’should pay attention to the organization of collective purchases of goods which would increase the profitability of this kind of activity.

According to Dira–the service sector is developing comparatively slower and businessmen are very passive in this sphere. The highest activeness is being observed in the retail trade sector. Production is also on the rise.

World Vision has been operating in Armenia for 10 years now. Over 80 percent of the organization’s annual budget (about $650 million) is made up of private donations.

World Vision implemen’s its microenterprise development programs with the assistance of the Lincy Fund–USAID–GTZ–World Vision Germany–World Vision Taiwan–and World Vision US.


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