Technical Assistance Consultant s Report. Armenia: Women s Entrepreneurship Support Sector Development Program

Transcription

1 Technical Assistance Consultant s Report Project Number: July 2014 Armenia: Women s Entrepreneurship Support Sector Development Program Prepared by Nora Alanakyan PEM Consult Yerevan, Armenia For SME DNC This consultant s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents.

2 Report Exploring export promotion programs in Armenia- Where are the women entrepreneurs and businesses? Nora Alanakyan Yerevan, 2014

3 REPORT 1. Introduction The Government of Armenia has requested ADB s support in promoting women entrepreneurship in the country, and a Sector Development Program (SDP). The program comprises an integrated approach to enable women entrepreneurs and micro, small, and medium-sized enterprises (MSMEs) in Armenia to play a greater role in economic development. The program is supported by capacity development technical assistance (TA) to improve the entrepreneurial capacity of women and to increase the capacity of the SME DNC, the project management unit of the German Armenian Fund (PMU GAF), and PFIs to provide support for women's entrepreneurship. In frames of the TA there was a need to explore export promotion programs in Armenia and to reveal women participation in those programs to understand what can be improved for better support to women entrepreneurs. 2. Objectives of the study The assignment goal was to explore export promotion programs in Armenia with the following specific objectives: identification of main stakeholders involved in export promotion; identification of women MSMEs participation in export promotion programs; identification of specific needs of women entrepreneurs to boost their export capacities; and creating a baseline for development of further activities and interventions in regard to women MSMEs support in export. 3. Methodology To fulfill the task, a preliminary list of stakeholders was developed and agreed with the National Project Coordinator. The list involved government agencies in charge of export promotion, donors, industry unions and associations and implementing partners. The study focused on the organizations providing firm- and industry-level assistance rather than assessing agencies providing policy level support. The study did not consider IFI/MFIs providing financial services such as trade financing, loans etc. The methodology of the study involved face-to-face or telephone interviews with the senior management/relevant department managers of 10 stakeholders in a form of semi-structured interviews. The questionnaire form is presented in Annex 1. The scope of the study was to assess main directions and instruments of support, results and targets, sectors, selection criteria for beneficiaries (in case of grant support), % of women enterprises, main barriers and obstacles (expert opinions) as well as identifying ways to increase women participation. However, during the interviews, it was found that few

4 interviewees if any could provide information on the annual targets and achieved results, as well as breakdown of the beneficiary companies. Therefore, answers to the questions 4, 5, and 6 were not received. The share of the exporting women entrepreneurs to the overall numbers of exporting enterprises was based solely on their perceptions and estimates rather on the real statistics. The full list of the organizations initially selected is submitted below. ## Organization Contact Person, Position Notes 1. Armenian Development Agency 2. Industrial Development Foundation 3. Export Insurance Agency 4. Chamber of Trade and Commerce ( Lusine Tumyan, Director of Export Promotion Department Armen Gevorgyan, Consultant to the CEO Tatevik Muradyan, CEO Vladimir Amiryan, Head of International Collaboration Department 5. GIZ, Aram Babayan, Senior Expert on Export Promotion and Food Safety, Private Sector Development in South Caucasus 6. EU Delegation to Armenia Ludovic Ciechanowski, EU Delegation to Armenia, Trade and Private Sector Development 7. IFC 8. Union of Manufacturers and Employers UMB(E)A ( , x 110, l.tumyan@ada.am , , vamiryan@armcci.am , , aram.babayan@giz.de Ludovic.CIECHANOWSKI@eeas.europa.eu Susanna Khalatyan, Program Officer , ususan@mail.ru 9. Republican Union of Employers (RUEA) Gagik Makaryan, President EBRD, Varduhi Chilingaryan, Project /03, chilingv@ebrd.com Specialist, Business Advisory Services (BAS) 11. CARD Karen Harutyunyan, Senior , Agribusiness Advisor 12. SME DNC Ani Khandamiryan, Program Officer Lilit Apujanyan, Head of Business Internalization Department is on vacation until ekonomicheskogo-razvitiia-armenii html 14. UNIDO Anahit Simonyan, Head of Operations, Armenia office 15. Center for International Relations Cooperation, CIRC, Business Support Center, Araksya Grigoryan, National Office Project Coordinator , , a.simonyan@unido.org x216, , araksya@yandex.ru During the initial checkup it was found out that the Export Insurance Agency founded in October 2013 cannot be considered as a stakeholder, as nobody including IDF and other state entities did know anything about their activities. Most likely, the agency is not yet fully operational. IFC does not have direct relation to the export promotion; rather it works towards general improvement of the business environment, and increasing competitiveness of the local enterprises.

5 Business Support Center does not support export promotion activities, occasionally it is involved in the research studies for revealing export potential of specific Armenian companies or sectors. CARD is not currently involved in the export promotion activities as before. Business Center for Economic Development is the structure recently created by Secretariat of CIS countries, with the mission to provide assistance in the development and deepening of cooperation, search for partners and investors of the CIS countries through creation of the e-portal, board and other means. The specific activities and functions of the Centre as well as their capacity are not clear. Based on these findings, no interviews were conducted with these companies. 4. Armenian Export Overview Over the last decades, Armenia has the low and undiversified export base. The total volume of exports in 2011 was 1.3 billion USD. The export-to-gdp ratio in 2012 amounted 25%. In the structure of exports 64% are products, and 36% are services. For the last decade, the main products in the Armenian exports continue to remain metals and mineral products, and food & beverages providing 88.7% in 2012 vs 90.2% in Within this share, food and beverage sector grew from 14 to 20%. The export of services consists predominantly of travel (56.5% of all service exports in 2012) and transportation (22.2%). ICT sector demonstrates continuing growth making 8.2% of all service exports in The main directions of export of goods are EU countries, while the agricultural products are shipped mostly to Russia, Georgia, Iraq and Ukraine. 5. Export Promotion in Armenia Armenian Government repeatedly announced importance for the export promotion efforts. In 2011 a new Export-Led Industrial Policy was adopted by GoA. This strategy focuses on the formation of an advanced industrial system, aimed at boosting exports, which in turn is supposed to stimulate production of high quality products meeting international standards, expansion of foreign markets and job creation. The main objectives of the Policy include: Cooperation with the private sector to devise strategies to enhance the competitiveness of firms with export potential; Attracting multinational corporations; Improving the business environment; Modernizing enabling infrastructure (including logistics, education and national quality infrastructure); and Building the capacity of the enterprise support agencies Given the limited resources available in the country, the Policy focuses on 11 priority sectors, namely:

6 Metal mining Metallurgy Food production (mostly wine and brandy production) gem and jewelry making Machine-building, Instrument-making and Electrical and Technical production Chemical Industry Textile and apparel Production of construction materials For each of the identified sectors separate concepts were developed. For brandy manufacturing, wine making, jewelry, pharmaceutical/biotech and textile, action plans were developed accordingly. 6. Main Stakeholders For the purpose of this study, the stakeholders were classified into four groups: 1) government agencies, 2) donors, 3) non-profit associations and unions, and 4) implementing partners. The government agencies are represented by Industrial Development Foundation (IDF), Armenian Development Agency (ADA), Export Insurance Agency, and SME DNC. SME Invest, the state funded Universal Credit Organization, is the vehicle directly financing the organizations selected by IDF, is out of the scope of the current study. IDF is the main body in charge of implementing the Export-Led Strategy. It was established in 2012 by the initiative of then-minister Tigran Davtyan. Before, ADA was the sole body responsible for promotion of exports and investment attraction. Currently, ADA mostly implements export promotion activities of the Policy. There are other organizations whose mandate involves export promotion. Among them are non-profit organizations such as the Chamber of Commerce and Industry, Union of Employers and Union of Manufacturers. GIZ Private Sector Development Program, CARD Foundation, and Center for International Relations Cooperation (CIRC) act as implementing partners. There are not many donors supporting export promotion theme in their portfolio. Among the few donors directly or indirectly supporting export promotion, the major actors are EU, EBRD, UNIDO, and IFC. While EBRD implements its program itself through its SBS/ BAS/TAM program, EU Delegation in Armenia operates through its implementing partners: GIZ, and Chamber of Trade and Commerce within the framework of East-Invest Initiative. UNIDO, the specialized UN agency for Industrial Development, has a direct mandate to stimulate country export potential. For this purpose, it has established the Center for International Industrial Cooperation, which works closely with Armenian Ministry of Economy, IDF and ADA.

7 IFC ongoing projects in Armenia are mostly aimed at investment climate reform and increasing competitiveness of Armenian enterprises through improving resource efficiency, food safety, introducing agribusiness standards and implementing corporate governance. Increased exports are not the specific objective for these projects, but indirect outcome. At the moment of writing this report, World Bank has approved the USD 50 million loan for the Trade Promotion and Quality Infrastructure Project for Armenia. It is designed to improve effectiveness of the government in delivering trade promotion and quality infrastructure services to firms. The Project is comprised of four components: (i) Improving the effectiveness of the trade promotion and quality system of the country (results-based financing - RBF), (ii) Promoting investment and exports, (iii) Modernizing the national quality infrastructure, and (iv) Project management and monitoring and evaluation. The project design anticipates that results of the Component 1 will be complemented by the investments financed through Components 2 and 3 of the project and other sources including the government and donor funds outside the project. Thus, the project is designed to ensure the critical institutional strengthening needed to maximize the effectiveness of the investments takes place. The Project was approved on July 3, 2014 (file:///c:/users/acer/desktop/export%20promotion/background%20docs/wb%20trade%20promotion %20Project%20Description.pdf). The last group of stakeholders consists of non-profit associations and unions such as the Chamber of Trade and Commerce, as well as two business associations the Union of Manufacturers and Businessmen (Employers) of Armenia (UMB(E)A) and Republican Union of Employers of Armenia (RUEA). In fact, these two unions look quite similar in their nature. Government agencies Industrial Development Foundation The Industrial Development Foundation was established in 2012 to implement the actions envisaged in the sectorial strategies and action plans of the Export-Led Industrial Policy. The Chairman of the Board is the Minister of Economy. The main areas of IDF operations are: 1. Provision of access and involvement of multinational corporations, including in the free economic zones (conferences, investment forums) 2. Provision of subsidies for loans extended for production purposes 3. Provision of market information, promotion of Armenian goods in the target markets, presentation of Armenian products 4. Development of quality infrastructure through co-financing the costs for international certificate acquisition 5. Providing the participation in the international trade shows on co-financing basis 6. Establishment of business relations, visits of representatives of foreign distributors and other structures to Armenia 7. Financing the development, organization and delivery of trainings

8 The main direction of IDF program are currently training courses for the industries, assistance in getting international certificates, establishment of the quality laboratories in Armenia, and provision of 3% subsidies for loan interest rates. These loans are provided through SME Invest Universal Credit Organization and are intended for capital investments and working capital the industrial companies from the sectors supported by Export-Led Industrial Strategy. Armenian Development Foundation Armenian Development Agency was established by GoA in 1998 with the support of the World Bank to facilitate foreign direct investments and promote exports. ADA is called to be a one-stop-shop for foreign investors in setting up their business in Armenia, helping in project implementation, perform a liaison role and provide information on investment opportunities in Armenia, laws and regulation. As for export promotion, the ADA is supposed to find markets, undertake market studies and seek partners with the eventual goal to increase volume of exports. ADA also organizes international conferences, business forums, and trade fairs. ADA coordinates the work of the Secretariats of the Business Support Council and IT Development Support Council, the main channels for the business community to discuss their concerns with the GoA. As a state agency, ADA experiences problems with financing. The organization was established with the World Bank funding, and managed to attract funds from the other donors in the past. Currently most of their funding comes from state financing, which is not sufficient and limits their operational capacity and export promotion opportunities. Among the export promotion instruments used by ADA, are participation in the trade shows, production of industry and general export catalogs, works on developing umbrella brands for country production (for example, Wines of Armenia), dissemination of promotional information through Armenian Embassies, matchmaking, and B2B events. In fact, the functions of ADA and IDF currently look duplicating and not clear. To address the shortcomings and inefficiencies of the enterprise support framework, ADA and IDF will likely merge into the Investment, Export Promotion and Industrial Development Agency. SME DNC Within SME DNC there is a Department called Internationalization of the Business responsible for export promotion. However, currently they have only one export promotion tool, Enterprise Europe Network (EEN), the online catalog where 145 Armenian companies are registered. Out of them only 17 are women businesses representing the following industries: Textile Production Trade

9 Production of alcohol Production of dairy products Dried fruit production Design of clothes Production of construction materials Education Production of cosmetics and IT These figures show that women enterprises count for less than 12 percent of the overall companies ready for international cooperation. This correlates with the overall estimated share of women enterprises within the general cohort of the Armenian enterprises. SME DNC provides assistance in organizing informational/educational seminars for SMEs, registering them in the EEN, assisting in negotiating, exchange of information, and concluding the agreements. According to the SME DNC Annual Work Plan for 2014, it is envisaged to provide assistance to 250 SMEs, organize informational/educational seminars for SMEs, increase number of enterprises registered in EEN, by 30. It is anticipated that about 80 SMEs will receive letters of interest from abroad about 30 SMEs will receive assistance in negotiating, exchange of information, concluding agreements, and 3-4 enterprises will make agreements with the partners. However, since joining to EEN in 2008, only 2 women businesses have made deals with foreign partners both for trade imports. In fact, SME DNC does not have funds for export promotion activities other than registering enterprises in the EEN. Two other projects of international cooperation relate to Black Sea Basin Joint Operational Programme. The overall objective of the Local/Regional Economic Development (LRED) project is the building of local LRED main players entrepreneurial and administrative capacities to enhance social, information, trade and other links on local level, as well as between partner countries hence encouraging national governments to scale-up cooperation opportunities. The second project Black Sea BI-Net relates to establishment and cooperation between business incubators. Donors UNIDO United Nations Industrial Development Organization (UNIDO) is mandated to assist developing and transition countries in achieving sustainable industrial development as well as supporting the private sector. It encourages production processes that will neither harm the environment nor place a heavy burden on the country's limited energy resources. For , UNIDO Armenia project portfolio relates to SME development, investment and export promotion, trade capacity building, cleaner production, renewable energy and energy efficiency, hazardous waste management and ozone layer protection. Export promotion is directly linked to the mandate of UNIDO.

10 Trade Capacity-Building: UNIDO is providing assistance to the Armenian Development Agency in its efforts to strengthen its institutional capacities, facilitating business linkages between Wallonia region of Belgium and Armenia business communities through identification and appraisal of business partnership opportunities and development of a package of investment projects. UNIDO has also established a Centre for International Industrial Cooperation in Armenia. The objective of the center is to facilitate international cooperation between Armenia and foreign investors, enterprises, as well as organizations. It should acts as a catalyst for economic, technological, industrial and scientific exchange. Currently the Center is involved mostly in the activities related to implementation of the textile sector development in cooperation with IDF and ADA. UNIDO is in the process of launching program of support for textile industry upgrade through CIRC Center activities. The official start will take place in September EBRD EBRD is one of the major stakeholders in Armenia whose mandate involves export promotion activities. EBRD operates in Armenia for more than 10 years, and manages several programs such as Small Business Support (SBS), Enterprise Growth Program, Trade Facilitation Program and others. In the framework of its Trade Facilitation Programme (TFP), EBRD provides guarantees to international confirming banks, taking the political and commercial payment risk of international trade transactions undertaken by banks in the countries of operations (the issuing banks). In Armenia EBRD cooperates with 10 banks. EBRD TAM/BAS program promotes economic transition through advice and mentoring at the enterprise level, development of a sustainable infrastructure of business advisory services and efforts to improve the policy and regulatory environment for business. Another direction of the program is to work with commercial service providers (e.g. consulting companies providing ISO certification). In EBRD implemented the regional program in Armenia and Georgia called Women In Business (WIB) under the umbrella of BAS/TAM Program. The program included BAS projects tailored to women entrepreneurs, workshops/seminars/training courses offering business training, study tours for women active in ICT sector to Taiwan, visibility and dissemination activities of market economy best practices and success stories of women entrepreneurs. Special emphasis was given to link the startup entrepreneurs with the EBRD-funded microfinance institutions as well as 70-90% subsidies were provided to choose the appropriate type of assistance, including qualified consultants. The program is expected to restart in 2015, and will include mentorship and coaching components to be supported by Cherri Blair Foundation. The standard export promotion tools applied by EBRD usually include trainings on export marketing, norms and regulations; preparation to ISO and HACCP systems; study trips; development of export catalogs; and matchmaking activities.

11 Pilot Export Promotion Program currently being implemented for Central Asia countries is likely to be expanded to Armenia as well. Under this program, trainings are provided on ISO, norms and regulations, marketing and sales. The trainings mostly target the service providers. EBRD may also provide custom-tailored trainings for specific businesses on their request. International Finance Corporation As a part of World Bank group, IFC promotes sustainable economic growth through private sector development. Through a mix of investments and advice, IFC supports sectors that are the engines of economic growth and job creation. IFC current portfolio in Armenia stands at $146.5 million including debt and equity investments in the financial markets, manufacturing and mining sectors. IFC advisory services provide advice on the financial sector, resource efficiency, sustainable energy, business regulations and food safety. Current projects in the pipeline are: 1) IFC Agribusiness Standards Advisory Program in Europe and Central Asia, ) Armenia Food Safety Improvement Project, present 3) Europe and Central Asia Resource Efficiency Program, 2010 present 4) Armenia Investment Climate Reform Project, Present 5) Improving Corporate Governance Practices in Europe and Central Asia Associations and Unions RUEA Republican Union of Employers of Armenia established on 15 November 2007 is a self financing, nonprofit organization with a mission to assure improvement of business environment and advocacy of business community. RUEA unites 6 territorial and 5 industry unions and has about 12,850 members, including SMEs and sole entrepreneurs. Among its members there are organizations such as Federation of Agricultural Associations, IT Society, Union of Poultry Breeders and other structures. RUEA is a member of International Organization of Employers (IOE) since April The Union is partnering with many international organizations including ILO, Dutch Employers Cooperation Programme (DECP), Centre for international Migration and Development (CIM), European Training Foundation (ETF) and others. The Union looks to be closely associated with HaiConsult consulting company. Export promotion, according to the President, is within the mandate of the organization. The Union currently has 2 main programs:

12 1. Increasing competitiveness of the enterprises through implementation of the ISO quality management systems, such as ISO 9001, (HACCP), (Environmental management), (IT security), work safety and BRC. Most of the implementation works look to be implemented by HaiConsult specialists. Another direction, according to the President, is diagnostics of the enterprises and offering solutions in the various aspects. In terms of export promotion activities, one can mention establishment of links with various Employers' Unions abroad, advice for packaging, help in presenting product samples etc. 2. Green Economy is the new program serving as a first step towards implementation of ISO Not directly using mechanisms of export promotion, the Union nevertheless creates market links, and increases competitiveness of the enterprises to meet requirements of the overseas partners. UMB(E)A The Union of Manufacturers and Businessmen (Employers) of Armenia (UMB(E)A) was founded in It is a non-profit association of businessmen holding the leading positions in the Armenian economy. UMB(E)A has the declared objectives to actively participate in improving economic legislation, protect interests of local manufacturers, develop international business cooperation, and support establishment of links between companies in Armenia and abroad. UMB(E)A cooperates with all major state bodies: the Administration of the President of the RA, the National Assembly and its committees, and the Government of RA. As a proof of that, the UMB(E)A president is entitled to participate in the GoA sessions. He is also a member of the Business Support Council headed by the Prime Minisiter, as well as of various ministries councils and state institutions. UMB(E)A cooperates with a number of Armenian state and non-governmental organizations. UMB(E)A positions itself as a constructive opponent in the issues related to economic policy and legislation strategies. UMB(E)A takes active participation in the works of trade and economic committees established between Armenia and a number of other countries. The activities of UMB(E)A are directed toward formation of conducive business environment,, protection of the interests of business community, support to economic reforms, forming positive image for attracting foreign investments, and support integration of Armenian business in the world economy. As a part of export promotion activities, the Union organizes and participates in trade shows and B2B forums (especially held within the framework of official visits of Armenian and partner countries' authorities), provision of product samples and other events. Since 2009 UMB(E)A is a member of the Union of Black Sea and Caspian Confederation and Armenian Trade Network. It has the connections with similar unions in many countries, chambers of commerce, and other business support associations. As a business support organization uniting largest businesses and standing close to the government, it is influential among other organizations, and may serve a good partner. One of its employees, Ms. Susanna Khalatyan, the Head of Business Support Department, at the same time heads the Yerevan Union of Women Entrepreneurs. This Union was established in 2013 and looks to be one of numerous businesswomen unions, currently counting for 12 members, only of one of them in the production sector.

13 Chamber of Trade and Industry CCI, a non-profit and non-commercial organization, was founded in 2002 to represent the interests of small, medium, and large enterprises from all business areas including industry, local and foreign trade, agriculture, and financial system. The Chamber unites 10 marz chambers and Yerevan chamber with overall number of members reaching 3,000. Its activities are geared toward integration of Armenian businesses into global economy through creating favorable conditions for enterprise development and assisting business organizations in the establishment of mutually beneficial foreign relations. Thus, the export promotion is directly related to the mandate of the organization. The Chamber has founded CCI Arbitration Court, AAP Info and AAP Media, Education and Training Center, The main directions of the Chamber activities include: Create favorable conditions for free competition Encouraging SME development and protection of their rights Assist in cooperation between business organizations and serve as a bridge between business organizations and government bodies Participate In tax and investment policy improvement dialogue Organize business forums, exhibitions and fairs Promote the development of competitive products and increase export potential of the companies Support the export of products and services of Chamber members, strengthen cooperation with foreign partners Contribute to the development of business promotion infrastructure Assist to businesses in HR capacity development, through trainings and qualification system upgrades. Among important service that the Chamber provides is issuing of certificates of origin. The Chamber implements EU funded East-Invest Initiative, a regional investment and trade facilitation project for the economic development of the Eastern Neighborhood region, launched in the framework of the European Eastern Partnership (ENP) initiative. It targets Business support organizations and SMEs from the 6 ENP countries (Armenia, Azerbaijan, Belarus, Georgia, Republic of Moldova, Ukraine), who have potential for developing mutual cooperation and investment relations with the European Union. Its main objectives are: To promote and facilitate investment and economic cooperation at large between the EU and Eastern Partnership countries, and also between the 6 target countries. To create the East Alliance, mobilizing business organizations from both sides to engage in a sustainable partnership and dialogue both within the private sector and towards the public authorities. To develop concrete activities that will generate immediate results for SMEs in the region. East Invest is managed by EUROCHAMBRES and implemented by the East Alliance. After completing the first phase in April 2014, the second phase has recently been started.

14 Implementing Partners GIZ GIZ has the long presence in Armenia. Currently, GIZ is one of the major implementing partners of eu Program in Armenia. Until 2013, export promotion was part of the GIZ private sector development program in Armenia, but this program is now ended. Currently, program is focused at support to hospitality industry and wine making. The GIZ program is implemented through delivery of trainings and expertise in various aspects of the value chain development including export promotion activities (mostly for wine making). Within this framework, for example, GIZ works towards creation of the umbrella brand Wines of Armenia (most likely in cooperation with ADA), quality management, improvement of VET education in the winemaking etc. For example, they launch a joint project with ICARE Agribusiness Education Center at Armenian Agricultural Academy and revise curricula for training wine makers in accordance with modern requirements. Recently GIZ started the new pilot program to develop a public-private partnership (PPP) model with German companies willing to import Armenian products. The idea of such partnership is that the German importers get a reliable supplier in Armenia, while GIZ supports establishment of the market linkages and trains the Armenian companies to meet the European market requirements and standards. Regarding the women intensive-sectors, GIZ works with hospitality sector (mostly B&B hotels) where majority are women-owned or women-managed businesses. In their work, GIZ applies various instruments of export promotion such as: Development of umbrella brand that may present Armenian products abroad (Wines of Armenia) Study visits to the important international trade shows (for example, ProWein, one of the largest professional trade shows in Europe Consultancy on various elements of export promotion (for example, presentation of products, negotiation talks and many more) Where possible they cooperate with associations and industry unions. GIZ currently does not have gender specific programs, however, in 2015 such a program is likely to be launched. As a first step, GIZ supported in the nomination of the best women entrepreneurs in April Center of International Industrial Cooperation The Center of International Industrial Cooperation was established in Currently, its main activity is the support to the textile sector as one of the sectors of the Export-Led Industrial Policy. While the sector definition is quite broad and may include for example, tanning and leather production, shoe making, carpet making, production of yarn, in Armenia it focuses on the textile and apparel production

15 (mostly sewing factories and design studios). The highly developed textile industry in Armenia now lives hard time and the workforce is about 3,000 people as compared to more than 100,000 in the Soviet time. Out of the 82 registered enterprises, only are regularly operated. There are plenty of the sufficiently equipped sewing factories, but most of them work on the subcontracts. Few years ago, some of the factories were subcontracted by Monkler, Valentino and other world-known brands. However, the subcontracts are not regular. Currently, import of the textile goods exceeds exports more than 20 times. Many companies, especially larger sewing factories are involved in subcontracting activities. The vast majority of the 3,000-person work force are highly qualified women, but the enterprises are 95% owned and managed by men. In the design studios, the percentage of the women enterprise may be considered 50-60%. The textile support project implemented by CIIC has the following objectives: Increase competitiveness of the local companies through provision of technical advice and international expertise. The work includes for example, technical assistance in getting required certification for the international markets in Russia and other countries. Upgrade production facilities Improve design side of the local sewing factories involved in subcontracting activities and helping them develop a national brand and image. Assist in creating market linkages for Armenian companies. 7. Main Findings of the Study The interviews and desk research identified the number of obstacles for the women entrepreneurs export increase. The factors limiting women export have their roots in general obstacles for women in business. First of all, women entrepreneurs are concentrated in the services and trade whereas only 16 percent 1 are in production. The vast majority of the enterprises or 84% are very small, with not more than 5 employees 2. Their volumes of production in most cases are not sufficient to meet the demand of overseas buyers. Even in the production sectors, women are traditionally engaged in the businesses with low added value and low exporting potential even though the dynamics slowly improves especially in Yerevan. Many of the startup businesses do not have financial means for growth but this regards equally to men and women led enterprises. In the absence of the gender statistics, it was impossible to get reliable figures on the number of exporting women entrepreneurs. Most of the interviewees could provide only estimates rather than exact figures. According to these estimates, percentage of exporting women entrepreneurs does not exceed 10 percent. 1 Data from 2013 Assessment of needs for business development services among women entrepreneurs of Armenia 2 Ibid

16 Armenian export is concentrated in the sectors with traditionally low women participation such as brandy and wine making, production of ore, pig iron and other mineral products, jewelry, IT products and alike. Out of the sectors receiving the state support within the Export-Led Industrial Policy, majority of them namely mining, metallurgy, stone processing, precision engineering, brandy making and wine making are almost 100% men-owned and managed. In the food processing there are more examples of the women businesses, but majority of export-oriented food processing subsectors refer to canning industry such as pulp juice production and others. Again, these larger enterprises are owned and managed by men. Such sectors as pharmaceuticals/biotechnology, or textile show more women participation, but mostly as women-employing enterprises (pharmaceutical sector and textile). In the textile sector, this situation may be partly explained by the fact that in 1990s when many larger state factories were privatized, women did not participate in the privatization process. Thus all the factories are traditionally owned by men. In the fashion design part, where many of the businesses owners or managers are women, they used to concentrate only on the design and production processes, and did not accumulate enough entrepreneurial, management and marketing skills etc. Overall, low percentage of women entrepreneurs in the general business ecosystem is logically mirrored in the export structure. Most of the state support for export promotion currently goes to the Export-Led sectors. SME DNC does not have enough funds for that within their state funding budget. The only instrument they have at hand is Enterprise Europe Network, which does not demonstrate high effectiveness so far. Many interviewees mentioned that problems the women entrepreneurs are facing refer more to the cultural and societal barriers rather than unequal rights or specific gender-conditioned obstacles. Women have more conservative approach to business, are risk aversive, and not always want to expand and grow their business. The lack of networking capital further handicaps women efforts, especially in the regions of Armenia. Sometimes, women start their businesses deliberately, in the sake of their families. According to observations of RUEA President, women are more straightforward and feel uncomfortable in situations with requiring kickbacks and bribes. Lack of the self-confidence was widely acknowledged by majority of the interviewees. Majority of the Armenian businessmen do not have enough management and financial skills especially in the area of strategic management. With the worsening economic situation, many of them balance at the survival edge. Currently, most of the export stimulating and generally business support programs do not have gender component. GIZ and EBRD mentioned that in the next couple of years they will likely have programs targeting women within their private sector development programs.

17 Small firms are less able to address weaknesses related in the investment climate. Women businesses, due to disproportionally large share in the micro business segment, are therefore specifically affected by the limitations of a country s investment climate. Lack of management skills further contributes to this situation. Therefore, improvement of the general business climate will contribute to the more conducive environment for the women entrepreneurship development. Recommendations These recommendations summarize the suggestions expressed by the participants of the survey. As many interviewees have mentioned, export is among the most advanced steps of the enterprise development cycle, therefore, prior to the export support and promotion activities, enterprises should reach certain level of development and capacity building activities should be implemented on a consistent basis. Efforts should be made to enterprises growth to ensure sufficient volumes and quality, and domestic markets should be first explored. Only after getting experience in the local markets, it would be possible to think about markets abroad. Again, at the export promotion stage, trainings and consultancy should be provided, as very often the businesses participating in the trade shows, are not ready for that and cannot even properly present their products and then follow up the contacts made at the trade shows. Overall, without prior work done, export promotion measures such as participation in the trade shows, may be waste of money. To change the situation, the systemic approach is needed. This should include macro- meso- and firm levels. Among the macro measures, one can mention state support to the industry, improved access to finance, subsidies for exports, tax vacations for startup enterprises, simplified procedures for consolidated shipment (to ensure sufficient volumes of product), allowances for imports of the raw materials (for example, in the textile industry 90% of the raw materials are imported which significantly adds to the cost of the ready product and makes them non-competitive in the export markets). According to the President of RUEA, women businesses may benefit from regulatory support. For example, in the Regulating Guillotine project, more attention should be paid to the womenpredominant sectors to stimulate women entrepreneurship. Women businesses usually have tiny volumes of production, and therefore consolidated shipment abroad might be a solution. Simplified procedures for consolidated shipment might encourage exports and cut the transaction costs. Cooperation between the companies to fulfill the large subcontracts should be encouraged, as often single producer their capacities are not enough (this is the case, for example in textile sector). Among the other export stimulating measures, the President of RUEA mentioned importance of factoring services for exporters, though many entrepreneurs are not aware, do not trust, or do not want to pay the service fees to the banks and other institutions providing factoring services. Making the factoring more affordable for the exporters might stimulate further stimulate foreign trade.

18 Among the other measures that may be suggested to stimulate women businesses would be envisaging quotas for women-owned or managed businesses for state procurement, the same way as for SMEs. On the firm and industry-level, increase of the educational level (work on the curricula in the relevant universities, assistance to the design schools etc.), provision of trainings on financial, management and marketing skills, Trainings especially for the startup businesses were considered important by most of the interviewees. In the trainings for the startup businesses, coaching and mentoring component is to be strengthened. These coaching activities may refer more to building self-confidence of women entrepreneurs, rather than managerial issues of doing business. Network building skills may also be helpful for women entrepreneurs, especially in the regions. Finally, general improvement of the business climate in the country, as international experience shows, usually serves a driver for women entrepreneurship development. In this regards, To increase women entrepreneurship, the complex approach is needed. This should combine support to the businesses with the promotion of the women role in the society in general,

19 Annex 1: Questionnaire Date: Organization: Status: Contact point: Suggested length of interview: min 1. How export promotion is linked to the mandate of the organization? 2. Main directions of the program 3. Major instruments of export promotion 4. Targets (per year, # of events, successful deals etc.) 5. Results in the last 3 years 6. Criteria for beneficiary selection 7. Breakdown of the beneficiary businesses by sector, size, gender, countries of export 8. Percentage of women enterprises (women-owned or managed mostly) 9. Main barriers and obstacles for women export increase 10. How to increase export of women businesses? How feasible is it in the upcoming 3 years?