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Private Sector

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computer with group meetingUSAID is working to develop the potential of the private sector to compete in domestic and international markets by assisting it to become more market oriented and influential in public policy making.  USAID, in coordination with other donors, will work to enhance access to credit for all businesses, increase trade and trade-related employment, and to improve essential public services.  The USG will continue to provide industry-specific training with U.S. businesses on market-economic principles, business development, quality standards and fair business practices to support the goal of enabling market-based private sector competitiveness and economic stability.

Major accomplishments to date include:

  • Required elements of a viable financial system have been established, including the creation of a strong financial regulator (in the form of the Central Bank of Armenia), electronic market systems for currency and securities, the required clearance and settlement systems and central depository, new information nodes such as the credit bureau, stock exchange disclosure filings and a growing financial media, and private sector participants in each of the financial system’s sub sectors.
  • Support to micro, small and medium enterprises has been a focus of USAID/Armenia's programs.   Over 7,700 micro-entrepreneurs have received USAID-funded loans totaling nearly $7.6 million dollars.  Over 500 small- and medium- enterprises (SMEs) received an additional $3.1 million in loans. 
  • Under the current Competitive Armenian Private Sector (CAPS) project, USAID provided assistance to 34 private companies in IT, tourism, and pharmaceuticals sectors to improve management, marketing and governance practices.  In 2008, USAID assistance contributed to the creation of 2,697 new jobs as well as a 26% increase in sales in the tourism sector and 15% in Information Technologies (IT) sector.
  • U.S. Government assistance has contributed to tax and fiscal reform including reduced staffing (20% reduction), computerization of the State Tax Service offices and improved taxpayer information.  A principal accomplishment was an increase in the Tax/GDP ratio and organizational restructuring.

CURRENT ACTIVITIES

Financial Sector Deepening Project (FSDP) (09/2006-09/2009, $12.2m): addresses three major components of the financial system: a) increasing intermediation (bank lending, availability of mortgages, provision of insurance, existence of private pensions), b) improving the financial system’s regulation; and c) strengthening the system’s infrastructure (e.g. credit bureaus). The Project works closely with the Central Bank and the private sector. [Implemented by Emerging Markets Group, Ltd.]

Development Credit Authority (DCA) to First Mortgage (09/2008-06/2009, $274K): The bond guarantee to First Mortgage, Armenia’s first private residential mortgage finance company, allows issuance of $5 million in bonds with a maturity of up to 10 years to raise private funding for housing finance targeted at low and middle income segments of the population.  [Implemented by First Mortgage Company Universal Credit Organization]

Private Sector
A Ministry of Culture staff holds a symbolic stork, crafted by Armash village schoolchildren for the opening ceremony of the Armenian Bird Trail, co-funded by the USAID/CAPS project to promote ecotourism in Armenia.

Competitive Armenian Private Sector (CAPS) (09/2005-02/2011, $14.1m): works with the information technology, tourism and pharmaceutical sectors to increase sales, exports and employment, and build the capacity of business associations to advocate effectively for needed policy changes. [Implemented by Nathan Associates]

Business Advisory Services (BAS) Program (04/2007-04/2010, $1.6m):  The goal of this small project is to increase the number and viability of SMEs in Armenia’s rural and poor areas through the introduction of modern management practices relevant to a market economy.  The BAS Program accomplishes this by providing technical assistance, training and firm-level consultancy to small enterprises, typically in the less developed regions of Armenia. [Implemented by EBRD BAS]

Establishment of Advanced Educational and Technology Resources in Armenia (09/2007-12/2009, $1.5m): This public-private alliance will help create more qualified graduates for the Information technology industry, provide access to advanced technologies for Armenian universities and business community, create new high-tech jobs, and increase foreign direct investments for the IT industry.  Specifically the program will (a) create new technology training laboratories at 3 major Armenian universities to provide access to training on a wide array of technologies; and (b) establish a Solution Development, Integration and Testing Center that will provide means for IT companies, institutions, and individuals to deliver proof-of-concept computer applications. [Implemented by Enterprise Incubator Foundation]

FUTURE DIRECTIONS

USAID activities in the area of Economic Growth are directed towards improving national competitiveness and unleashing the potential of the private sector and increasing research and development to foster innovation. More specifically, our new programs will work in:

Fiscal Policy: USAID’s new project will support the reform at the State Revenue Committee to improve tax processes and make them more business friendly.  Special attention will be given to audit, VAT refund and taxpayers services.

Trade and Investment: USAID is planning a new program that will aim to increase exports and remove constraints to investment and trade by providing technical assistance, training, and capacity building to the Government of Armenia and the private sector.

Financial sector: USAID has conducted an assessment of the financial sector to guide the design of a new program.   Increasing access to financing to SMEs as well as ensuring that the financial system is transparent, stable, sound, and safe, are planned objectives of the new program.

Communications: A new element has been added to an existing project to accelerate regulatory reform of the telecommunications sector.