Fund Small and Medium Entrepreneurship Development National Center of Armenia (SME DNC of Armenia)

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1 Fund Small and Medium Entrepreneurship Development National Center of Armenia (SME DNC of Armenia) Moscow, June 19, 2008 Social Responsible Entrepreneurship for SMEs Workshop, BSEC, KAS

2 Structure of the Presentation PART 1 - Government Policy on SME Development PART 2 - SME Sector in Figures PART 3 - SME Development National Center of Armenia Goals and Activities PART 4 - Impact of SME Development National Center s Activity PART 5 Cooperation with International/Foreign Organizations

3 PART 1 GOVERNMENT POLICY ON SME DEVELOPMENT

4 Small and Medium Entrepreneurship (SME) sphere is considered as one of priority directions for development of Armenian economy. The Government of the Republic of Armenia performs continues steps towards the development of SME sphere, particularly towards the direction for creation of state support system for SME. SME development policy is aimed at full value utilization of the potential of SME sphere in the context of economic, social and political development of the Republic of Armenia and enhancement of its role as well. One of the basic documents as for this policy is considered the document Concept for SME Development Policy and Strategy in Armenia adopted by the Government of RA in August In this document the economic, social and political objectives of SME development policy as well as the main directions for their realization are introduced. The adoption of the abovementioned document provides preconditions for adoption of the Law of RA On State Support of Small and Medium Entrepreneurship, which in its turn for the first time defined the criteria for SME units in the Republic of Armenia as well as the basic directions for state support of SME. Since 2001 annual programs for state support of SME are being elaborated and implemented. These programs are aimed at realization of the main directions for state support of SME sphere fixed by the Law of RA on State Support of Small and Medium Entrepreneurship.

5 Social objectives of SME development The social objectives of SME development policy in accordance with Concept for SME Development Policy and Strategy in Armenia are: Creation of new jobs Increase in population s incomes and purchasing capacity Establishment and reinforcement of social justice in the society Decrease of emigration and promotion of immigration Improvement of moral-psychological atmosphere in the society Regulation of internal migration

6 The Classification Criteria of SME units in Armenia Classification SMEs Micro Small Medium Sector (number of employees) Industry and other production activities Construction and energy production Science and education Transport, trade and services

7 PART 2 SME sector in figures

8 Dynamics of SME contribution to GDP for

9 Share of SMEs in Export for

10 SME Development Index in Armenia, (calculated by the UN methodology)

11 The SMEs contribution to generation of new job places is significant. During 2007, in accordance with preliminary estimations, the number of created SMEs has made nearly 14thousand, consequently providing 19,6 thousand new job places, from which 52.8% or 10, 3 thousand in the marzes of the RA, and 47.2% or 9,7 thousand - in Yerevan.

12 PART 3 SME Development National Center- Goals and Activities

13 About SME Development National Center of Armenia Center of Armenia The Fund "Small and Medium Entrepreneurship Development National Center of Armenia (SME DNC of Armenia) was established by the Decree No 282-N of the Government of RA, dated March 19, The SME DNC of Armenia is the core national body in the RA called up to implement State Support to the small and medium entrepreneurship (SME) and the programs directed to the development of the sphere, as well as the provision of the connection between SMEs and State structures. The supreme governing body of the SME DNC of Armenia is the Board of Trustees. The Board of Trustees consists of 13 members, representing Administration of the President of RA, the Government of RA, as well as number of influential public organizations (Union of Banks of Armenia, Union of Entrepreneurs of RA, Chamber of Commerce, Union of Business Support Organizations, etc.). The SME DNC of Armenia implements its activity through Central Office located in Yerevan and the branches established in all Marzes of RA.

14 BRANCH OFFICES Aragatsotn Marz Ararat Marz Armavir Marz Gegharkunik Marz Lori Marz Kotayk Marz Shirak Marz Syunik Marz Vayots Dzor Marz Tavush Marz

15 Goals of SME DNC of Armenia To provide support to Start-up and operating SMEs To enhance the efficiency and competitiveness of SMEs To ensure the availability of business development services to SMEs To expand financing opportunities for SMEs To promote innovations and support the introduction of new technologies To support the establishment of Start-up businesses To stimulate the business activity of SMEs in the international market place To develop more business opportunities in Armenia

16 The Main Directions of Assistance The SME DNC of Armenia provides support in the following directions: Finance Information Consulting Training The Support is provided through the following programs: Business information and consulting Market promotion of goods and services produced by SMEs Loan Guarantees provision Innovations and modern technologies application Business training Support to start-up entrepreneurs

17 Business Information Within the program measures directed to collection analysis and dissemination of SME related information are being implemented: Business and information guides, reference books and professional literature Supplier and customer information Equipment and work stations Innovations and new technologies Business related legal acts Possible sources of financing opportunities Intellectual property rights protection Other, as requested

18 Business Consulting The Business Consulting Support Program is aimed at enhancing the availability of consulting services to SMEs. In the framework of the program the consulting support is provided in the following directions: Legal advise Business activity analysis Development of investment and business plans Management and marketing Accounting and financial management Tax and customs regulations Innovations, new technologies and intellectual property rights protection

19 Business Training The main purpose of the training services support program is the provision of availability of business education and training to SMEs. The training topics include: Clarifications on the tax and customs legislation of RA Management Marketing Labour legislation of RA Business law Sales techniques and skills Human resource management Time management Customer services Financial management Business ethics, as well others as requested

20 Financial Support Loan Guarantees Provision Program The Loan Guarantees Provision Program is directed to the solution of the problem of pledge and the expansion of the credit opportunities in the remote regions through provision of loan guarantees to SMEs. The program allows entrepreneurs to qualify for better loans by guaranteeing up to 70% of the principal of the loan for up to 3 years. The maximum amount guaranteed cannot exceed 10 million drams.

21 Start-up Entrepreneurship Support Program The Start-up Business Support Program is aimed at overcoming problems of lack of business skills, insufficient knowledge of marketing and financial planning, and the unavailability of business consulting and training services. The program includes both training and consulting components. In the course of the training participants discuss their business ideas. The most active participants having prospective business idea become long-term beneficiaries and partners of SME DNC of Armenia

22 Market Promotion of Goods and Services One of the main preconditions for successful business activity in the market economy is the adequate presentation of goods and services in the market. To achieve this goal the SME DNC of Armenia provides support in the following directions: Implementation of ISO Quality Management System and other international standards; Design and publication of: Information brochures Posters and advertisements Labels Packaging with company logos Design and creation of web sites Participation in exhibitions Other, as requested

23 Innovations and modern technologies application support program Taking into consideration the importance of innovations, introduction of new technologies and new products in the current stage of Armenia, SME DNC of Armenia has initiated a support program for the implementation of research and development activities aimed at introducing innovations, applying new technologies and producing new products in SMEs operating in RA marzes and in Yerevan.

24 PART 4 Impact of SME Development National Center s Activity

25 Impact of SME DNC s activities During , due to the support provided by the SME DNC of Armenia on provision of loan guarantees, support to start-up businesses, promotion of products/services produced by SMEs to markets, innovations and modern technologies application, training, information and consulting support, start-up and operating SMEs have received the support, out of which 95% operate in the marzes of the RA, particularly in remote and boundary communities.

26 PART 5 Cooperation with International/Foreign Organizations

27 Implementation of the joint projects with international/foreign donor organsations aimed on SME sector development OSCE UNDP JICA EOMMEX UK DFID CNA CBI USAID Etc.

28 Enterprise Europe Network in Armenia In 2007, in the framework of initiative taken by the European Commission to launch Enterprise Europe Network the tender was announced to select partner organizations and, as a result, the Fund Small and Medium Entrepreneurship Development National Center of Armenia (SME DNC of Armenia) as a host partner organization became the member of the network.

29 Currently, the Enterprise Europe Network is present in 27 EU member countries, EU candidate countries - Turkey and Macedonia, members of the European Economic Area (EEA) - Norway and Iceland, as well as starting from Israel, Switzerland and Armenia. The Enterprise Europe Network is made up of around 600 organizations providing tailored business services in more than 40 countries, including chambers of commerce and industry, regional development agencies and university technology centers employing around 4000 experienced professionals.

30 The Enterprise Europe Network provides comprehensive support to the network member SMEs in the directions as the follows: Providing information on EU s making policies, legislation, standards, possible sources of financing, business cooperation opportunities and other EU issues, Supporting SMEs to establish new business cooperation, identify new would-be business partners and conduct market researches, Supporting to carry out the negotiations and endorse a cooperation agreements, Supporting SMEs to evaluate their efficiency and opportunities for doing cross-border business activities, Assisting to SMEs applying innovations for R&D activity and commercializing of their innovative undertakings, providing feedback from the enterprises, response on interested issues.

31 Japanese International Cooperation Agency (JICA) The trilateral Protocol was signed between Japanese International Cooperation Agency (JICA), Ministry of Trade and Economic Development of the RA and the SME DNC of Armenia in June 2005, according to which the project on ''Human Resources Development of Small and Medium Enterprises in Armenia'' is to be implemented by SME DNC of Armenia in the period of The main objectives of the project are further expansion of training programs of the SME DNC of Armenia, development of business development service (BDS) market in Armenia, and improvement of business knowledge of Armenian SMEs.

32 Thank you for your attention SME DNC of Armenia Violeta Virabyan Web site: