progress report on tranche release · 2015-11-27 · progress report on tranche release ......

Progress Report on Tranche Release

This consultant’s report does not necessarily reflect the views of ADB or the government concerned. [For PPTAs: Also, all of the views expressed herein may not be incorporated into the proposed project’s design.]

Project Number: 45230-001 Loan Number: 2922 November 2015

Armenia: Women’s Entrepreneurship Support Sector Development Program (Second Tranche) . This document is being disclosed to the public in accordance with ADB’s Public Communications Policy 2011.

CURRENCY EQUIVALENTS (as of 3 November 2015)

Currency Unit – dram (AMD)

AMD1.00 = $0.0021 $1.00 = AMD473.100

ABBREVIATIONS

ADA – Armenian Development Agency ADB – Asian Development Bank B&B – bed and breakfast BDS – business development services EEU – Eurasian Economic Union ESMS – environmental and social management system FIL – financial intermediation loan GCCI – Gegharkunik Chamber of Commerce and Industry GDP – gross domestic product GSVCA – Gender Sensitive Value Chain Analysis ICT – information and communication technology MOE – Ministry of Economy MSMEs – micro, small, and medium-sized enterprises OECD – Organization for Economic Co-operation and Development PBL – policy-based loan PFI – participating financial institution PMU GAF – project management unit of the German–Armenian Fund SDR – special drawing right SME DNC – Small and Medium Entrepreneurship Development National Center TA – technical assistance

NOTE

In this report, “$ refers to US dollars.

Vice-President W. Zhang, Operations 1 Director General S. O’Sullivan, Central and West Asia Department (CWRD) Director B. Wilkinson, Public Management, Financial Sector and Trade Division,

CWRD Team leader I. Martinez, Private Sector Development Specialist, CWRD Team members N. Djenchuraev, SeniorEnvironment Specialist, CWRD

M. Etrata, Associate Project Analyst, CWRD G. Gyurjyan, Associate Economics Officer, Armenia Resident Mission,

CWRD C. Lim, Operations Assistant, CWRD

M.I. Martin, Associate Project Officer, CWRD V. Medina, Social Development Specialist (Safeguards), CWRD

L. Schou-Zibell, Technical Advisor (Finance), Sustainable Development and Climate Change Department

P. Thi Thanh Tran, Senior Environment Specialist, CWRD M.C. Yabut, Operations Assistant, CWRD

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS

Page

I. INTRODUCTION 1

II. MACROECONOMIC AND FISCAL DEVELOPMENTS 1

A. Macroeconomic Developments 1 B. Fiscal Developments 2 C. Balance of Payments 2 D. External Debt 2 E. Banking Sector 2 F. Micro, Small, and Medium-Sized Enterprise Development 3 G. Poverty 4

III. PROGRAM IMPLEMENTATION 4

A. Output 1: Improved Institutional Framework Supports Women Entrepreneurs and MSMEs 6

B. Output 2: Improved Capacity of Women Entrepreneurs and MSMEs 10 C. Output 3: Improved Access to Finance by Women Entrepreneurs and MSMEs 12 D. Output 4: Improved Business Environment Supports MSMEs 12 E. Tranche 2 Monitorable Policy Actions 13

IV. THE PRESIDENT’S DECISION 13

APPENDIXES

1. Status of Continued Compliance with First Tranche Policy Actions 14

2. Policy Matrix 18

I. INTRODUCTION

1. In October 2012, the Asian Development Bank (ADB) approved a loan to Armenia for the Women’s Entrepreneurship Support Sector Development Program.1 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 has two components: (i) a policy-based loan (PBL) to help fund budget allocations to strengthen the business environment and the Small and Medium Entrepreneurship Development National Center (SME DNC) and its support for women entrepreneurs and MSMEs; and (ii) a financial intermediation loan (FIL) to enable participating financial institutions (PFIs) to provide local currency loans to MSMEs, of which at least 50% are women MSMEs. 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. The implementation period is from 2013 to 2017. The program became effective on 19 December 2013, when the first tranche of the PBL in the amount of SDR6,517,500 was released. An advance of $8.01 million was provided to the PMU GAF on 4 February 2014 for the FIL. The PBL provides the release of the second tranche amounting to SDR6,517,500 upon compliance of the second tranche policy actions. This report discusses the government’s compliance with the second tranche policy actions agreed upon and contained in the loan agreement.

II. MACROECONOMIC AND FISCAL DEVELOPMENTS

A. Macroeconomic Developments

2. Economic growth in Armenia has recovered, following a 14% contraction in 2009.2 In 2014 growth in Armenia reached 3.5%, up from 3.3% in 2013, driven by agriculture and services. 3 Agriculture expanded by 7.8% in 2014 and services rose by 5.8%. Private consumption expanded by 0.4% in 2014, slightly under the 0.9% expansion in 2013. Higher government spending helped counterbalance subdued private consumption—public consumption increased by 6.4% in 2014—while investment fell by 2.6%, reflecting deficiencies in the investment environment and structural weaknesses (footnote 3). The growth outlook remains uncertain, primarily due to the slowdown in Armenia’s main trading partners (the Russian Federation and the European Union). Growth is expected to slow to 1.6% in 2015 before recovering to 2.3% in 2016 (footnote 3); growth in 2015 is expected to come mostly from agriculture and services. Industry is unlikely to grow as strongly as it has in the past, mostly because of a depressed demand for exports. Average annual inflation decreased to 3% in 2014 from 5.8% in 2013, as a result of favorable global prices, declining domestic demand and increased domestic food production. The 12-month inflation rate (December to December) was 4.6%, within the 2.5%–5.5% target band of the Central Bank of Armenia. The central bank has used interest rates to counter pressure on prices and on the exchange rate, raising interest rates by 375 basis points to 10.5% (in several steps) from December 2014 to February 2015; it subsequently decreased the rate by 25 basis points to 10.25% in August 2015. Inflation is

1 ADB. 2012. Report and Recommendation of the President to the Board of Directors: Proposed Policy-based Loan,

and Technical Assistance Grant to Armenia for the Women’s Entrepreneurship Support Sector Development Program. Manila.

2 International Monetary Fund. 2015. 2014 Article IV Consultation and First Review Under the Extended Arrangement. Washington D.C.

3 ADB. 2015. Asian Development Outlook 2015. Manila.

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forecast to be 4.6% in 2015 before subsiding to 4.1% in 2016 (footnote 3). Inflationary pressures are intensifying because of depreciation of the Russian Federation ruble, which flows through to the Armenian dram. This will likely mean that monetary policy will remain tight in 2015 before returning to a neutral stance over the medium term. The current slowdown in the Russian Federation economy has an adverse impact on remittance inflows into Armenia. 4 Net remittances declined by 35.5% in January-July 2015, driven by a 42.0% decline of net remittances from the Russian Federation.

B. Fiscal Developments

3. Fiscal policy remained in line with the government’s policy of macroeconomic stability and medium-term budgetary objectives, aimed at securing the fiscal deficit and debt at manageable levels. The fiscal deficit at 1.9% of GDP in 2014 was well below the planned 2.3% in the 2014 state budget. The lower than projected budget deficit mainly reflects capital under-spending and lower-than-budgeted matching pension contributions (due to the pension reform changes).

C. Balance of Payments

4. The current account deficit narrowed to 7.3% of GDP in 2014 (from 7.6% in 2013 and an average of 12.6% in 2009–2012), reflecting lower remittance inflows and a still larger trade deficit. The trade deficit narrowed to 17.7% of GDP in 2014 from 18.8% in 2013. Merchandise exports fell by 12.2% in the first quarter of 2015, on subdued demand from Russian Federation and on soft prices for traditional export commodities (such as copper and molybdenum). Merchandise imports fell by 18.0% reflecting moderating domestic demand. The Central Bank of Armenia sold foreign currency during November and December 2014, causing gross international reserves to fall sharply to $1.5 billion at the end of 2014 (equivalent to 3.3 months of imports) from $2.2 billion a year earlier (5.5 months).

D. External Debt

5. The Armenian dram (AMD) depreciation caused the ratio of public debt to GDP to rise from 40.9% in 2013 to 43.6% at the end of 2014. In nominal terms, public and publicly guaranteed external debt increased by 13.7% (37.1% of GDP), and domestic public debt climbed by 11.5% (6.4% of GDP). The Law on State Debt (adopted in 2008) limits total public debt (external and domestic) to 60% of GDP, and restricts the budget deficit to 3% once total public debt reaches 50% of GDP. In March 2015, Armenia issued the second $500 million 10-year Eurobond (at the yield of 7.5%). Some of the Eurobond proceeds were used to buy back $200 million of the previous dollar bond issued in 2013 and $85 million was used to cover the 2015 budget deficit.

E. Banking Sector

6. In 2014, growth rates of main indicators of the banking sector surpassed the nominal GDP growth rate. As a result, main indicators of banking intermediation increased, except for the deposits-to-GDP ratio. Compared to the previous year, ratios such as banking sector

4 The economy of the Russian Federation has been slowing because of structural challenges even before the

Ukrainian conflict: the Russian Federation GDP recorded a 0.6% growth in 2014 as compared to an average annual 7% growth in the mid-2000s. A combination of factors—plunging oil prices, western sanctions, and continuing structural problems—have caused a currency crisis in Russian Federation in December 2014. The Russian Federation GDP is expected to decline by -3.5% in 2015.

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assets-to-GDP, credit-to-GDP and broad money-to-GDP improved by 6.4, 5.7 and 0.9 percentage points to 75.4%, 45.8% and 37.4%, respectively. The deposits-to-GDP ratio dropped by 0.2 percentage points to 35.5%.

F. Micro, Small, and Medium-Sized Enterprise Development

7. Women in Armenia are not reaching their economic potential. Armenia’s ranking in the Global Gender Gap Index decreased from 92 in 2012 to 103 in 2014.5 Women’s educational achievements in Armenia are higher than those of men, yet labor force participation is lower and estimated earned income is lower.6 In addition to public sector jobs, self-employment is a core occupation for women. Most women engage in small subsistence-based business activities in trade and retail services. While women are increasingly engaged in growth sectors, including agro-processing and tourism, their participation in these sectors remains small. Mutually reinforcing social, market, and institutional constraints limit women’s access to economic opportunities and productive resources, and to the development of entrepreneurial attitudes. Small business is a crucial option for women to gain a livelihood. Yet women often lack the business skills, knowledge, confidence, and access to networks to increase their entrepreneurial capacity, and have less access to credit and other financial services than men.

8. MSME financing in Armenia remains inadequate. In 2012, there were about 132,219 registered MSMEs in Armenia, or about 98% of all registered businesses. Of these, about 60.0% or 73,925 were active.7 Women’s MSMEs represented about 42,310 or 32.0% of registered MSMEs (footnote 7).8 The government recognizes MSME development as one of the key development priorities. It has set out its commitment for the development of women entrepreneurs and MSMEs through the Concept for SME Development Policy and Strategy in Armenia, and the Law on State Support to Small and Medium Enterprises, both adopted in 2000.9 Annual programs for state support of MSMEs have been implemented since 2001. A national strategy for small and medium entrepreneurship development, drafted in 2012 but not approved, promotes entrepreneurship among women through the Women Entrepreneurship Strategy—approved in October 2014—in line with the government’s On the Approval of the Gender Policy Concept Paper, the Gender Policy Strategic Action Plan, and the Gender Policy Action Plan for 2012.10 In 2002, the government established the SME DNC to implement the annual SME state support programs. However, while the budget allocated to the Ministry of Economy (MOE) increased 8.5% from 2009 to 2013, the budget allocation to the SME DNC was reduced by nearly 74%, from AMD573 million ($1.35 million) in 2009 to AMD150 million ($0.4 million) in 2012. Following the release of the first tranche of the PBL, a government decision

5 World Economic Forum. Armenia Gender Gap Index 2014. http://reports.weforum.org/global-gender-gap-report-

2014/economies/#economy=ARM 6 Armenia was ranked 103 in the 2014 Gender Gap Index, 94 in 2013, and 92 in 2012. Female enrollment in

secondary education was 91 in 2014 while male enrolment was 76. Female enrollment in tertiary education was ranked 58 in 2014 while male enrollment was ranked 37. Estimated earning income in 2014 was purchasing power parity (PPP) $5,469 for females and PPP $9,250 for males. Source: World Economic Forum. 2014. Global Gender Gap Report. (footnote 5)

7 Small and Medium Entrepreneurship Development National Center

http://www.smednc.am/am/content/smes_in_figure. Statistics. (Accessed June 2015) 8 There is no legal definition for women’s MSMEs.

9 Ministry of Justice. http://www.arlis.am/DocumentView.aspx?docid=64617 (accessed August 2012).

10 Government of Armenia. 2012. SME State Support Strategy 2012–2015. Yerevan (draft); Government of Armenia. 2014. The Women Entrepreneurship Strategy. Yerevan; Government of Armenia. 2010. On the Approval of the Gender Policy Concept Paper. Yerevan; Government of Armenia. 2011. Gender Policy Strategic Action Plan for 2011–2015. Yerevan (items 19 and 21); Government of Armenia. 2012. Gender Policy Action Plan for 2012. Yerevan (items 11 and 12).

http://www.smednc.am/download.php?f=337&fc=SME%20state%20policy%20Eng.pdf

http://www.smednc.am/download.php?f=337&fc=SME%20state%20policy%20Eng.pdf

http://reports.weforum.org/global-gender-gap-report-2014/economies/%23economy=ARM

http://reports.weforum.org/global-gender-gap-report-2014/economies/%23economy=ARM

http://www.smednc.am/am/content/smes_in_figure

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was issued to allocate AMD811.5 million (or $2 million) to support the SME DNC credit guarantee scheme.11

G. Poverty

9. Armenia has a population of 3.0 million, with 32.0% of its people living below the poverty line. With no coastline, scarce natural resources, and a shortage of basic services, Armenia has struggled to build a more prosperous life for its people. The poverty rate fell slightly from 32.4% in 2012 to 32.0% in 2013, although this decline was statistically not significant.12 In 2013, almost every third person—32.0% of the population—was poor. Among them, 13.3% were very poor and 2.7% were extremely poor. Although the poverty rate has decreased continuously since 2011, both the poverty gap (5.9%) and the severity of poverty (1.7%) were higher in 2013 than in 2008 when the poverty gap was 5.1% and severity of poverty was 1.4%. The number of poor in 2013 was about 967,000. Among them, 402,000 were very poor, of which about 82,000 were extremely poor. Of the total poor population, 42% are very poor and 8% are extremely poor.

III. PROGRAM IMPLEMENTATION

10. The impact of the program will be that women benefit from increased economic opportunities. The outcome will be an improved enabling environment for women entrepreneurs. The program has two components: a PBL and an FIL. The PBL has four outputs: (i) improved institutional framework supports women entrepreneurs and MSMEs, (ii) improved capacity of women entrepreneurs and MSMEs, (iii) improved access to finance by women entrepreneurs and MSMEs, and (iv) improved business environment supports MSMEs. The FIL will help achieve output 3.

11. All tranche one policy actions were complied with at the time of approval by ADB’s Board of Directors in 2012. The second tranche release requires that first tranche policy actions remain in compliance, as shown in Table A2 (Appendix 1). Of the 14 policy actions, five require no follow-up action, one is a monitorable policy action that remains in compliance, six policy actions remain in compliance, and two policy actions are substantially complied with.

12. The table below shows the compliance status of the second tranche policy actions. Of the 21 policy actions, 15 policy actions are fully complied with and six policy actions are substantially complied with. The table also includes four monitorable policy actions which are not required for tranche release. Of these, three are complied with and no follow-up is required for one.

Table 1: Status of Compliance with Second Tranche Policy Actions Policy Action Status of Compliance

Output 1: Improved Institutional Framework Supports Women Entrepreneurs and MSMEs

1 The Borrower, through MOE, shall: (a) adopt and implement a National Strategy for Small and Medium

Entrepreneurship Development, which includes the Women Entrepreneurship Promotion component; and

Substantially complied with

(b) implement interagency coordination working group on women’s entrepreneurship promotion.

Complied with

11

Government of Armenia. Decision. 10 October 2013, N 1095-N on Making Amendments and Supplements to the 2013 State Budget of the Republic of Armenia and to the Decision N 1616 of 20 December 2012 of the Government of the Republic of Armenia. https://www.e-gov.am/gov-decrees/item/23431/

12 National Statistical Service of the Republic of Armenia. 2014. Poverty Profile and Labor Market Development in 2008-2013. http://www.armstat.am/file/article/5.poverty_2014e_2.pdf (accessed 12 June 2015).

https://www.e-gov.am/gov-decrees/item/23431/

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Policy Action Status of Compliance

2 The Borrower, through MOE, shall: (a) appoint new independent members to the Board of Trustees of SME DNC of

which at least 50% of such new appointees shall be women; and

Complied with

(b) require the Board of Trustees to undergo accredited training on good corporate governance practices.


3 The Borrower, through MOE, shall: (a) strengthen the risk management committee of SME DNC to enable it

to assist with risk monitoring, control and analysis associated with financial products provided by it and by ensuring that the committee comprises at least 50% women;

Complied with

(b) require SME DNC to adopt internal procedures to assess credit risk related to provision of financial products and train its staff on these procedures; and

Complied with

(c) establish appraisal panels for fund allocations at regional level involving SME DNC and relevant stakeholders.

Complied with

4 The Borrower, through MOE, shall: (a) expand its database to at least 10,000 MSMEs, with sex disaggregated data

and data on their ethnicity; and

Complied with

(b) undertake annual surveys on MSMEs, including women entrepreneurs, and MSMEs and identify the needs, and effectiveness of support services provided (including lessons learned and opportunities to be developed) for women.

Complied with

5 The Borrower, through MOE, shall: (a) identify opportunities for women entrepreneurs in growth sectors; and Complied with (b) implement an action plan, with targets and indicators, for developing women

entrepreneurs in identified sectors. Substantially complied with

Output 2: Improved Capacity of Women Entrepreneurs and MSMEs

6 The Borrower, through MOE, shall support women entrepreneurs by: (a) providing at least 20 start-up training programs; (b) implementing at least 4 awareness campaigns on business development

services resources; (c) improving the website of SME DNC and its online marketplace to meet the

specific needs of women entrepreneurs; and (d) using information communication technology to increase the reach of start-up

campaigns to serve at least 2,400 people annually, of which at least 50% are women.

Complied with Complied with Substantially complied with Substantially complied with

7 The Borrower, through MOE, shall design and pilot a mentorship network for women entrepreneurs, which may include the use of information communication technology to support it.

Complied with

Output 3: Improved Access to Finance by Women Entrepreneurs and MSMEs

8 The Borrower, through MOE, shall: (a) issue at least 300 loan guarantees under the revised loan guarantee scheme

(with an aggregate value of about $1.5 million equivalent) and/or other financial products to enterprises and start-ups of which at least 50% are women entrepreneurs and MSMEs; and

(b) ensure that PFIs fully implement all safeguard related assessment, compliance and monitoring requirements as specified in the Project Loan Agreement.

Complied with Complied with

Output 4: Improved Business Environment Supports MSMEs

9 The Borrower, through MOE, shall support business development, including women entrepreneurs by: (a) adopting an action plan to ensure collaboration between SME DNC and the

Armenian Development Agency to enable efficient and effective support to micro, small, medium and large enterprises, including women entrepreneurs and MSMEs;

Complied with

(b) implementing a virtual one-stop shop to enable entrepreneurs to have efficient access to information, products and services for standing and growing businesses through utilization of information communication technology; and

(c) consolidating existing databases into 1 database on MSMEs, with sex disaggregated data.

Complied with Substantially complied with

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Policy Action Status of Compliance

Monitorable Policy Actions

1 SME DNC to adopt a tailored approach to support women entrepreneurs and MSME start-ups

No follow-up is required

2 MOE to establish the awards program as an annual campaign to promote women’s entrepreneurship

Complied with

3 Accounting Center to adopt a strategy, including financing plan, to ensure ongoing services to MSMEs, including the needs of women

Complied with

4 State Revenue Committee to broaden the base for electronic tax reporting by piloting a platform for paying taxes via points-of-sale terminals and the official website of State Revenue Committee

Complied with

MOE = Ministry of Economy, MSMEs = micro, small, and medium-sized enterprises, PFI = participating financial institution, SME DNC = Small and Medium Entrepreneurship Development National Center. Sources: Asian Development Bank, Small and Medium Entrepreneurship Development National Center, Ministry of Finance, Ministry of Economy

A. Output 1: Improved Institutional Framework Supports Women Entrepreneurs and MSMEs

13. Policy action 1.a.—(substantially complied with) (Appendix 2, tranche 2 policy action 1.1.a.). The National Strategy for Small and Medium Entrepreneurship Development was developed in 2014. However, the approval of the strategy was delayed due to the weakening economic situation, and the need to fine tune this strategy to the new economic reality. A revised version of the strategy, based on the one previously developed and on existing policies on MSME support, which includes a component on promoting women entrepreneurship, was submitted to the government and approved on 1 October 2015. 13 Paragraph 59 of this strategy describes how the strategy activities will be implemented through annual small and medium enterprises support programs during 2016-2018, as well as through government’s annual action plans. The government is currently preparing the 2016 annual action plan, which is expected to be approved at the end of the first quarter of 2016. Current SME support activities are being implemented under the umbrella of the 2015 SME support program, which supports the objectives of the new strategic document. For example, the attention to SMEs interest in the preparation of Regulatory Impact Assessments is aligned with Strategic Objective 1 (Improvement of the institutional, legislative and operational environment for creation and development of SMEs); the current provision of loan guarantees for start-ups and SMEs is aligned with Strategic Objective 2 (Improving access to funding for SME entities); business development support services in the form of capacity development, and informational and business advisory services is aligned with the Strategic Objective 3 (Promotion and development of entrepreneurial capacity); activities related to SME capacity development, local economic development, sectoral support and promotion of exports of local products are aligned with the new Strategic Objective 4 (Increasing the internal and external competitiveness of SMEs); the consultation with business associations during the legislative process is aligned with the new Strategic Objective 5 (Improving public-private sector dialogue); the SME Development Council currently serves as a platform to Strengthen SME Development Support Institutions (Strategic Objective 6); finally, an array of measures as described in this policy matrix (tailored start-up support, loan guarantees, mentoring programs, awareness raising events, etc), are aligned with the Strategic Objective 7 (Promoting women's entrepreneurship, as well as support

13

The Women Entrepreneurship Strategy in Armenia was elaborated by SME DNC, submitted to the MOE and adopted by Ministerial Order on 8 August 2014. The SME DNC has provided a copy of the order, posted the strategy on the SME DNC website, and provided an excerpt from the MOE e-doc communication. This strategy forms the basis of the component on women entrepreneurship within the National Strategy on SME development.

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for start-up businesses).

14. Policy action 1.b.—complied with (Appendix 2, tranche 2 policy action 1.1.b.). The interagency coordination working group on women’s entrepreneurship held its first meeting on 20 March 2014. Attendees included representatives from the Armenian Development Agency (ADA). Three meetings had been held as of December 2014. The SME DNC and ADA approved a joint time-bound action plan on 2 July 2014. Copies of minutes and an approved time-bound action plan support compliance.

15. Policy action 2.a.—complied with (Appendix 2, tranche 2 policy action 1.2.a.). The SME DNC appointed one new member, Diana Gaziyan, to its board of trustees on 17 October 2014. No other appointments have been made to the board of trustees since the release of the first tranche in December 2012. The appointment of D. Gaziyan fulfills the requirement that at least 50% of the newly appointed members of the board of trustees are women. Documentation provided to support compliance includes (i) the SME DNC Charter, which includes a description of the duties of members of the board of trustees; (ii) the list of board members, sex-disaggregated; (iii) a link to the website where board members are listed; and (iv) profiles of the members of the board of trustees.

16. Policy action 2.b.—substantially complied with (Appendix 2, tranche 2 policy action 1.2.b.). A consultant was engaged to provide training to the board of trustees on 7 October 2014 at which time a presentation was delivered on the international experience of establishing corporate management. Board members were referred to the United Nations Conference on Trade and Development’s Guidance on Good Practices in Corporate Governance Disclosure.14 Presentation material, the presenter’s biography, signing sheets, and profiles of the members of the board of trustees have been provided. The consultant and the quality of the training are considered adequate. The consultant is an expert of the Organisation for Economic Co-Operation and Development (OECD) corporate management development working group but is not an accredited trainer.

17. Policy action 3.a.—complied with (Appendix 2, tranche 2 policy action 1.2.c.). According to the board of trustees’ decision dated 2 December 2014, a risk management committee has been established in the SME DNC to enable risk monitoring, control, and analysis associated with its financial products. Four out of five staff appointed to the committee are women, exceeding the required 50% target. Risk management has been strengthened through training on credit risk management, which was delivered by an international consultant engaged through the attached TA provided by ADB.15 Training included (i) the current situation of the SME DNC financial support products, (ii) the risk management system, and (iii) business plans. Agenda and signing sheets support the delivery of training.

18. Policy action 3.b.—complied with (Appendix 2, tranche 2 policy action 1.2.d.). The SME DNC has adopted internal procedures to assess credit risk related to the provision of financial products: (i) a regulation on loan guarantees, and (ii) a regulation on the provision of financial assistance to start-up businesses. Training on credit risk management was delivered by an international consultant engaged through the attached TA provided by ADB. Training included (i) the current situation of SME DNC financial support products; (ii) the risk

14

United Nations Conference on Trade and Development. 2006. Guidance on Good Practices in Corporate Governance Disclosure. New York and Geneva.

15 Attached to ADB. 2012. Report and Recommendation of the President to the Board of Directors: Proposed Policy-based Loan, Loan, and Technical Assistance Grant to Armenia for the Women’s Entrepreneurship Support Sector Development Program. Manila.

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management system; and (iii) business plans. Documentation supports the adoption of regulations on internal procedures for credit risk and satisfies the requirements for compliance. Agenda and signing sheets support the delivery of training.

19. Policy action 3.c.—complied with (Appendix 2, tranche 2 policy action 1.2.e.). The SME DNC has established an appraisal panel and a working group for selecting participants for start-up business support and appraisal of business projects submitted for financing. The working group involves representatives from local organizations in the regions. The board of trustees has, through the decision dated 2 December 2014, reserved the right to approve the appointment of members of the appraisal panel to the executive director of the SME DNC. According to a decree issued on 10 January 2014, at least six committee members must be present in the selection process for beginner businesspeople entrepreneurship support program participants. The decree also allows for the inclusion of representatives from relevant regions, including SME DNC regional branches, local banks, credit organizations, business associations, and social organizations.

20. Policy action 4.a.—complied with (Appendix 2, tranche 2 policy action 1.4.a.). The SME DNC database had 10,039 entrepreneurs, including MSMEs, in October 2014. The database is being expanded continuously and an information management system is being developed. Not all data will be published on the SME DNC website www.smednc.am as some are confidential. The database includes (i) the name of the enterprise, (ii) organizational legal type, (iii) name of the director, (iv) gender of entrepreneur, (v) sector of activity, (vi) description of activity, (vii) city or village, and (viii) address. Information on ethnicity is not included. A change in to a project was approved 30 May 2014 to take into consideration a re-categorization of the financial intermediation (FI) loan from FI treated as C for involuntary resettlement and FI for environment and indigenous peoples, to FI C for involuntary resettlement and indigenous peoples and FI for environment. Because of the change in categorization, no information is available on ethnicity as it is no longer categorized FI for indigenous peoples.

21. Policy action 4.b.—complied with (Appendix 2, tranche 2 policy action 1.4.b.). The SME DNC has undertaken two annual surveys on women entrepreneurs and MSMEs to identify the needs and effectiveness of support services provided. The 2013 annual survey, Needs Assessment for Business Development Services Among Women Entrepreneurs, conducted during July–August 2013, was presented and discussed at a workshop in Yerevan on 17 October 2013 where key stakeholders including ADB participated. The 2013 and 2014 TA reports on Assessment of Needs for Business Services Among Women Entrepreneurs of Armenia were presented to ADB and are published on the SME DNC website. Surveys include (i) the main obstacles to doing business, (ii) provision of business development services (BDS), (iii) most important BDS services, (iv) business dynamics in the past year and prospects for the next 12 months, (v) the need for financing, (vi) findings from focus discussions, and (vii) conclusions and recommendations. The surveys helped identify the needs and effectiveness of support services (including lessons learned and opportunities to be developed) for women.

22. Policy action 5.a.—complied with (Appendix 2, tranche 2 policy action 1.5.a.). Reports on participatory appraisal of competitive advantages have been developed to identify opportunities for women entrepreneurs in growth sectors.16 The results are being integrated into

16

Participatory Appraisal of Competitive Advantage (PACA) is a method that allows an action-oriented appraisal of a local economy. PACA combines concepts such as competitive advantage, systemic competitiveness, rapid appraisal, and visualization-based facilitation techniques into an innovative approach.

http://www.smednc.am/

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value chain development. Five reports have been submitted to ADB, of which four included a section on women. Special sections are included on the involvement of women in the value chain.

23. Policy action 5.b.—substantially complied with (Appendix 2, tranche 2 policy action 1.5.b). Gender Sensitive Value Chain Analysis (GSVCA) was introduced in Armenia in support of the program. Training of trainers was delivered by an international consultant under the attached TA to transfer the methodology to SME DNC staff. ADB implemented GSVCA exercises in Tumanyan district of Lori region. GSVCA exercises were also implemented with support from German development cooperation through Deutsche Gesellschaft für Internationale Zusammenarbeit in Dilijan community of Tavush region and Stepanavan community of Lori region. GSVCA maps and analyzes the value chain and identifies initiatives that can boost the development of the sector and in particular women MSMEs. As a result of the GSVCA analysis, an action plan was developed for follow-up and support to women’s enterprises in the value chain. Four of the seven activities in the action plan have been implemented, one is partially implemented and two will be implemented by late 2015 to early 2016. As tourism is a growing business, SME DNC has provided support under the action plan to bed and breakfast (B&B) owners.

24. Item 1 of the action plan (an information and communication technology (ICT) literacy training for B&B owners in Tavush region) was implemented as scheduled during October–November 2014. The training was conducted in Ljevan, the regional center of Tavush region. Ten women entrepreneurs (B&B owners from Tavush region) participated in a 4-day training program. The first two days were for basic ICT skills and the remaining two days for more advanced skills. The training was a combination of lectures and practical exercises. All participants assessed the training as very useful for their personal development and for use in their businesses. A consultant’s report on financial literacy training, as well signing sheets from training, supports compliance.

25. Items 2 and 3 of the action plan (ICT training for B&B owners in Vayots Dzor and Lori) is expected to be completed late 2015 to early 2016. The delivery of planned activities has been delayed due to the availability of trainers and participants during the summer months. The remaining activities are expected to be completed through the support of TA administered by ADB (footnote 15).

26. Item 4 (the organization of a networking event) is in the process of being implemented. Seventeen participants from two regions participated in the event, just short of the target of at least 25 B&Bs from three regions. The networking events were organized by the SME DNC in connection with the study tour (item 5) and the B&B training programs (item 6) in Tavush and Lori on 13 and 24 July 2015 respectively. In Tavush there were ten participants of which 100% were women and in Lori there were seven participants of which 86% were women. The objective of the networking event was to share experiences and lessons learned in managing B&Bs, including how to manage tourists travelling in groups. The networking event was coordinated by the SME DNC Director of Tavush Branch, Viliam Ohanyan and facilitated by expert A. F. de Mujinck.

27. Item 5 (a local study tour) for B&B’s from different regions was implemented in July 2015. A study tour was organized by the SME DNC in connection with the B&B training program in Tavush and the networking event (see para above). The study tour visited ten B&Bs managed by the participants in the B&B standards training from Tavush. The objective was to learn from

10

each other. The seventeen participants from Tavush (ten B&B participants) and Lori (seven B&B participants) exceed the targeted fifteen B&B participants from different regions.

28. Item 6 (training on B&B standards) was implemented in February 2015 and in July 2015. The February training program (15 to 25 February 2015) was held in, and was attended by 14 B&B entrepreneurs from, Lori region, of which 93% were women. The July ten day training program (13 to 23 July 2015) was held in, and was attended by ten B & B entrepreneurs from, Tavush region of which 100% were women. During the B&B training, the participants were trained in (i) hospitality, (ii) marketing and sales, and (iii) social media and promotional materials. Recommendations were provided to the borrowers on how to improve B&B rooms, food, and other services. The twenty-four participants from Tavush (ten B&B participants) and Lori (fourteen B&B participants) exceed the targeted fifteen B&B participants. At the end of the February training a short promo movie was prepared showing the B&Bs in Lori region. (https://www.youtube.com/watch?v=NJqzkF-3Myc&feature=youtu.be).

29. Item 7 (provision of financial support to B&Bs that have participated in the SME DNC’s start-up campaigns) was implemented by August 2015. From January to August 2015, fifteen start-up B&B owners have received financial support for a total of approximately AMD66 million. The overall target of ten for the entire year has been exceeded. SME DNC confirmed that B&Bs who have received financial support have participated in the SME DNC’s start-up campaigns.

B. Output 2: Improved Capacity of Women Entrepreneurs and MSMEs

30. Policy action 6.a.—complied with (Appendix 2, tranche 2 policy action 2.1.a.). From January 2013 to February 2014, the SME DNC conducted fifty-one start-up training sessions. The policy action requires twenty start-up training sessions. Documentary evidence was provided for thirty-nine start-up training sessions (25 in 2013 and 14 in 2014), with more than 600 start-ups participating, including women entrepreneurs and MSMEs. Reports and signing sheets support the delivery of start-up training sessions.

31. Policy action 6.b.—complied with (Appendix 2, tranche 2 policy action 2.1.b.). The SME DNC has conducted four awareness campaigns for 92 participants, all of whom were women in the communities of Goris, Vayk, Vanadzor, and Gyumri. Two awareness campaigns were conducted in 2013 and two in 2014. The objective of the awareness campaigns was to increase women entrepreneurs’ awareness of the services offered by BDS providers as well as support projects by nongovernment organizations and international organizations. A reference note and signing sheets support the delivery of awareness campaigns.

32. Policy action 6.c.—substantially complied with (Appendix 2, tranche 2 policy action 2.1.c.). The SME DNC has implemented new measures to promote its activities among entrepreneurs, both male and female. Despite no reference in its website and online market place to targeting specific needs of women entrepreneurs, the new version of the SME DNC website, launched in January 2014, includes a sub-tab on women’s entrepreneurship. This explains how the SME DNC supports women’s entrepreneurship, including the provision of courses, information campaigns, and financial support. The site contains links to documents such as the Women’s Entrepreneurship Strategy, which describes approaches and actions to promote the creation of new enterprises by women, their formation and development; the 2013 and 2014 annual Needs Assessment for Business Development Services Among Women Entrepreneur surveys; information on upcoming training; and information on the Best Woman Entrepreneur awards. Through increased use of ICT, the SME DNC has increased availability of business related information, its reach, and promotion of its activities among entrepreneurs. Social networks—Facebook, Twitter, YouTube, LinkedIn—as well as the SME DNC website, are

http://translate.googleusercontent.com/translate_c?depth=1&hl=en&prev=search&rurl=translate.google.com.ph&sl=hy&u=http://smednc.am/files/uploads/2015/05/271-6d2c64a3d35f298c7eb3826fa8a47740.pdf&usg=ALkJrhhRkEGM6sMX1wqhGo4xk4Eoh6m5Ug

11

used. The website provides links to these social networks, which are available to both men and women. It also includes links to other organizations, including those focusing on women, such as the Women Entrepreneurs Network in Armenia and the Armenian Young Women’s Association. These websites provide networking and cooperation forums for women. They also include marketing of events, such as the International Conference on Women Entrepreneurship, held from 7 to 12 June 2015 in Yerevan.

33. Policy action 6.d.—substantially complied with (Appendix 2, tranche 2 policy action 2.1.d.). Among the ICT used to increase the reach of start-up campaigns is the new version of the SME DNC website. The website had 90,000 visitors as of December 2014, with an average of 13,000 views per month (50% estimated to be women, though no sex disaggregated data is collected). This is confirmed through web analytics reports. Information on upcoming start-up training is also widely disseminated through traditional channels such as SME DNC branches, local authorities, media, and announcements in forums and gatherings. The SME DNC uses a range of means for information dissemination (e.g., computers, internet media, local media, group meetings, and information provided by regional SME DNC branches) to increase the reach of start-up campaigns, with emphasis on targeting women. Social networks (Facebook, Twitter, LinkedIn, and YouTube) are used for information dissemination, including start-up campaigns. The SME DNC Facebook page has 1,810 page likes. During October 2013–October 2014, posts and updates of the Facebook page reached 21,514 users. The SME DNC announces events and activities, including start-up training for women, via the SME DNC Facebook page and website. For example, the Facebook page includes information on the Start-Up Entrepreneur Business Support Program, which reached 158 people via Facebook; the start-up program in Yeghegnadzor City, which reached 935 people via Facebook; and the program in Yerevan City, which reached 769 people via Facebook. Some 15 of the 30 start-up entrepreneurs who participated in the Start-Up Entrepreneur Business Support Program were women. Information on start-up support under the entrepreneur business support program reached at least 2,020 persons via Facebook, of which 1,171 or 58% were women. The SME DNC opened a Twitter account in May 2012. Information tweeted includes links to Facebook, where SME DNC activities are announced. The SME DNC had tweeted 1,819 messages by June 2015, and uploaded 75 videos including information for women entrepreneurs by December 2014. As of December 2014, the videos had 8,824 lifetime views. Over 2012–2014, more than 100 articles, TV and radio shows, and press conferences were organized, published, and aired. Some 150 press releases were released during the same period. In addition, the SME DNC conducted four start-up campaigns in 2013 with a total of 20 participants (all women) and two start-up campaigns in 2014 with a total of 70 participants (all women).

34. Policy action 7.a.—complied with (Appendix 2, tranche 2 policy action 2.2.a.). An international expert designed and implemented a pilot mentorship network for women entrepreneurs. The pilot phase of the mentorship project is complete. A mentorship network event was held from 25 to 27 June 2014, with 20 women entrepreneurs participating. The 2014 needs assessment (see policy action 4.b.) identified a lack of use of ICT among entrepreneurs, especially women entrepreneurs. Based on these findings, it was considered to be too early to use ICT for the provision of BDS. Instead, a pilot project on digital literacy training for women entrepreneurs was launched from October to November 2014 (see policy action 6.d.). A report has been submitted to ADB and posted on its website.17

17

ADB. 2014. Digital Literacy for Women Entrepreneurs in Armenia. Technical Assistance Consultant Report. Yerevan (TA 8200-ARM).

12

C. Output 3: Improved Access to Finance by Women Entrepreneurs and MSMEs

35. Policy action 8.a.—complied with (Appendix 2, tranche 2 policy action 3.1.a.). A list of 300 loan guarantees indicates that 151, or 50.3%, were issued to women entrepreneurs. As of 3 December 2014, seven of the loan guarantees were at the final stage of processing. The total amount of loan guarantees amounted to AMD1.125,5 million ($2.6 million), of which AMD579.1 million ($1.3 million) was to women entrepreneurs.

36. Policy action 8.b.—complied with (Appendix 2, tranche 2 policy action 3.1.b.). ADB safeguard specialists undertook a review of PFIs’ environmental and social management systems (ESMSs) during the following missions: 14–18 October 2013, 1–5 April 2014, 22–28 July 2014, and 10–23 November 2014. Reporting on compliance with ADB’s Safeguard Policy Statement (2009) in sub-loan processing and implementation is done in association with ESMS reporting. The first five sub-loans of the PFIs have been reviewed and endorsed by ADB ESMS safeguard specialists. The SME DNC is not responsible for conducting reviews of PFIs’ ESMSs. The PMU GAF prepared and submitted an annual safeguard monitoring report for 2014. The report was disclosed on the ADB website on 20 January 2015.18 An ADB assessment of PFIs’ ESMSs resulted in eligibility for ACBA Credit Agricole to finance B-category loans; the remaining PFIs have committed to finance only C-category loans until their ESMSs are acceptable to ADB. Four training sessions have been conducted: two in 2014 and two in 2015. One more training session is planned for October 2015. No significant improvement of safeguard capacity has been noted, mainly because of the lack of continuation of designated staff responsible for safeguard issues and lack of nominated staff for training. To date, no B-category applications have been proposed, so application of ESMS requirements has not been relevant.

D. Output 4: Improved Business Environment Supports MSMEs

37. Policy action 9.a.—complied with (Appendix 2, tranche 2 policy action 4.6.a.). A joint action plan between the SME DNC and ADA was developed based on the Women Entrepreneurship Development Strategy. A memorandum of understanding was signed between the SME DNC and ADA in 2012. A letter dated 21 November 2014 from the minister of economy to the chief minister of the government staff, states that the National Competitiveness Foundation of Armenia and the Industrial Development Foundation will be merged into a new entity named the Development Foundation of Armenia. ADA has to be liquidated. The government approved the decision for the merger, and for liquidation of ADA, on 18 December 2014. The new Development Foundation of Armenia had its first board of trustees meeting on 31 March 2015. For the realization of the merger, funding is envisaged from the International Bank for Reconstruction and Development (World Bank) under the Trade Promotion and Quality Infrastructure Loan Project, ratified by Parliament in December 2014. The merger of agencies involved in improving and promoting the business environment was suggested by the ADB program team at the time of processing, but the government was not ready for such a merger at that time. The merger of the two agencies and the liquidation of ADA are welcome steps. The MOE has provided ADB with a letter confirming that the Development Foundation of Armenia will assume ADA’s mandate for the program, and will carry out ADA’s responsibilities under the joint action plan between the SME DNC and ADA. The action plan meets the requirements for compliance.

18

Republic of Armenia. 2014. Women’s Entrepreneurship Support Sector Development Program: Annual Safeguard Monitoring Report. Manila: ADB. http://www.adb.org/projects/documents/womens-entrepreneurship-support-sector-development-program-2014-emr.

http://www.adb.org/projects/documents/womens-entrepreneurship-support-sector-development-program-2014-emr

http://www.adb.org/projects/documents/womens-entrepreneurship-support-sector-development-program-2014-emr

13

38. Policy action 9.b.—complied with (Appendix 2, tranche 2 policy action 4.5.a.). A new website www.sksnak.am has been launched to provide easy access to information relevant to business start-ups. The website, managed by the SME DNC, serves as a one-stop shop for Armenian start-up enterprises—providing links to agencies that support MSMEs and women MSMEs. An action plan for an awareness campaign has been prepared, which includes a public relations campaign.

39. Policy action 9.c.—substantially complied with (Appendix 2, tranche 2 policy action 4.5.b.). Existing databases are being consolidated, including a sex-disaggregated database. The SME DNC has developed a database, which included at least 10,039 entrepreneurs as of October 2014. The database is being expanded continuously and an information management system is being developed. Not all data will be published on the SME DNC website, as some are confidential. The database includes the (i) name of enterprise, (ii) organizational legal type, (iii) name of director, (iv) gender of entrepreneur, (v) sector of activity, (vi) description of activity, (vii) city or village, and (viii) address. Information on ethnicity is not included. The database does not include large enterprises, as the shareholding of large enterprises is mainly corporate so it is not possible to identify sex (see policy action 4.a or 1.4.a.).

E. Tranche 2 Monitorable Policy Actions

40. Monitorable policy action 1—no follow-up required (Appendix 2, tranche 2 policy action 1.3.a.).

41. Monitorable policy action 2—complied with, although it is not a tranche release action (Appendix 2, tranche 2 policy action 2.2.a.). The Best Women Entrepreneur Awards Program has been successfully completed for 2012, 2013, and 2014. In 2012, five awards were given to 14 women entrepreneurs; in 2013, 10 awards were given to 23 women entrepreneurs; and in 2014, 14 awards were given to 34 women entrepreneurs.

42. Monitorable policy action 3—complied with, although it is not a tranche release action (Appendix 2, tranche 2 policy action 4.2.a.). The Strategy of the Accounting Center was adopted in 2012 and is being implemented since 2013.

43. Monitorable policy action 4—complied with, although it is not a tranche release action (Appendix 2, tranche 2 policy action 4.4.a.). The number of taxpayers that submit reports electronically has increased from 4,886 in 2011 to 9,986 in 2012 and 51,546 in 2013.

IV. THE PRESIDENT’S DECISION

44. In view of the progress made in the implementation of the Women's Entrepreneurship Support Sector Development Program, as evidenced by the full compliance with fifteen policy actions and substantial compliance with six policy actions, the President is satisfied with the overall implementation of the Women's Entrepreneurship Support Sector Development Program, and that the necessary conditions for the release of the second tranche of the Women's Entrepreneurship Support Sector Development Program have now been fulfilled. In accordance with the established procedure, the President will authorize the release of the second tranche in the amount of SDR6,517,500. The authorization shall be effective not less than 10 working days after the circulation of this progress report to ADB's Board of Directors.

14 Appendix 1

STATUS OF CONTINUED COMPLIANCE WITH FIRST TRANCHE POLICY ACTIONS

Table A2: Status of Continued Compliance with First Tranche Policy Actions

Policy Action Status of

Compliance

Output 1: Improved Institutional Framework Supports Women Entrepreneurs and MSMEs

1 The Borrower, through MOE, shall establish an internal strategic planning committee for making recommendations (in consultation with stakeholders) on the development of priority sectors and strategic aims.

Complied with

2 The Borrower, through MOE, shall establish an audit committee for SME DNC for monitoring financial and economic activities and ensuring that there is an adequate system of internal control and risk management.

Complied with

3 The Borrower, through MOE, shall adopt an improved approach for supporting “start-up” businesses, which includes the provision of 100% loan guarantees (under the revised loan guarantee scheme) and a training approach based on “competency-based economies through formation of enterprises.”

No follow-up required

4 The Borrower, through MOE, shall assess the role of women entrepreneurs in growth sectors by:

No follow-up required No follow-up required

a. implementing a “participatory appraisal of competitive advantage” exercise in 3 communities; and

b. defining target groups by sector and region based on the result of the “participatory appraisal of competitive advantage” exercise.

Output 2: Improved Capacity of Women Entrepreneurs and MSMEs

5 The Borrower, through MOE, shall strengthen the provision of training and business development services by SME DNC by:

a. developing partnerships with private sector providers of training and business development services for women entrepreneurs and MSMEs; and

Complied with

b. conducting at least 8 “start-up” campaigns for at least 100 people, of which at least 40% are women.


6 The Borrower, through MOE, shall promote women’s entrepreneurship by launching a pilot annual awards program for MSMEs, including women entrepreneurs.


Output 3: Improved Access to Finance by Women Entrepreneurs and MSMEs

7 The Borrower, through MOE, shall: No follow-up required No follow-up required

a. adopt a revised loan guarantee scheme; and b. for the period between February 2012 and August 2012, issue at least 80 loan

guarantees under the revised loan guarantee scheme (with an aggregate value of about $600,000 equivalent) to MSMEs of which at least 30% are women entrepreneurs and MSMEs


8 The Borrower, through the Ministry of Justice, shall reduce the cost of registering businesses (including MSMEs) by eliminating the registration fee of AMD17,000

Complied with

9 The Borrower, through MOE, shall enable the Accounting Center of the Borrower to support the preparation of taxation reports and conduct counseling on taxation for at least 450 MSMEs, of which at least 30% are women, for the period between January 2012 and August 2012.


10 The Borrower, through MOF, shall simplify the “patent fee” system to enable businesses to pay patent fees on flexible terms, including on a monthly basis, provided that the aggregate payment period does not exceed twelve months.

Complied with

11 The Borrower, through MOF, shall eliminate requirements for maintaining special tax books (i.e., book of registration of revenues and book of shipment of inventory holdings).

Complied with

12 The Borrower, through MOE, shall initiate the establishment of a virtual “one-stop shop” for efficient and up-to-date access to information, products and services for starting and growing businesses (micro, small, medium and large).

Complied with

13 The Borrower, through MOE, shall broaden cooperation between SME DNC and the Armenian Development Agency in the promotion of micro, small, medium and large enterprises (including women entrepreneurs and MSMEs) by establishing a working group.


Appendix 1 15

Ap

pe

ndix

2 15

Policy Action

Status of Compliance

Monitorable Policy Action

1 SME DNC to have registered start-up entrepreneurs by sector and region, sex disaggregated

Complied with, although it was not a tranche release action

MOE = Ministry of Economy; MSME = micro, small, and medium-sized enterprise; PFI = participating financial institution; SME DNC = Small and Medium Entrepreneurship Development National Center.

1. Policy action 1—complied with (Appendix 2, tranche 1 policy action 1.1.). On 5 August 2014, the development and strategic planning board had a meeting and discussed (i) issues related to the new tools for financial support, (ii) the new support projects in the framework of the small and medium-sized enterprise (SME) state support program of 2015, and (iii) issues related to implementation of the SMEs’ awareness-raising activities regarding amendments to several laws. 2. Policy action 2—complied with (Appendix 2, tranche 1 policy action 1.2.). The order of the executive director of 15 September 2014 includes (i) implementation of measures to monitor the capital of the credit guarantees provided by the SME DNC; (ii) preparation of a note on the amounts deposited in the framework of credit guarantees provided by the SME DNC by partner banks, as well as financial assets, fees paid by banks for the guarantee provision, and income received from the bank interest applied to the SME DNC bank account balance at the Armenian Development Bank; and (iii) alignment of the SME DNC internal disciplinary rules with the with the provisions of relevant laws and other legal acts. 3. Policy action 3—no follow-up required. 4. Policy action 4—no follow-up required. 5. Policy action 5.a.—complied with (Appendix 2, tranche 1 policy action 2.1.a.). The SME DNC has built a strong relationship with Gegharkunik Chamber of Commerce and Industry (GCCI) and EV Consulting. Since 2013, the SME DNC has been the implementing the Partnerships for Rural Prosperity Program, funded by the United States Agency for International Development; the GCCI and EV Consulting are partner organizations for this program. The SME DNC has collaborated with Business Pareta in implementing local economic development initiatives and in developing the new SME DNC website. The SME DNC signed a memorandum of understanding with the GCCI and Business Pareta as part of compliance with tranche 1 policy actions.

6. Policy action 5.b.—substantially complied with (Appendix 2, tranche 1 policy action 2.1.b). The SME DNC conducted 25 start-up campaigns in 2013 with a total of 490 participants (32% women) and 26 start-up campaigns in 2014 with a total of 457 participants (37% women). The total number of participants exceeds the 100 target. The 32% women participants in 2013 and 37% women participants in 2014 are considered to be substantially in compliance with the target of 40%. 7. Policy action 6—no follow-up required. The Best Women Entrepreneur Awards Program for 2013 and 2014 were successfully completed. 8. Policy action 7—no follow-up required.

16 Appendix 1

9. Policy action 8—complied with (Appendix 2, tranche 1 policy action 4.1.). The Law on Amendments and Additions to the Law on State Duty was approved by Parliament on 19 March 2012, NO-131 remains effective. The elimination a registration fee of AMD17,000 is regulated by Article 1, Point 1 of the Law on Amendments and Additions to the Law On State Duty. 10. Policy action 9—no follow-up required. 11. Policy action 10—complied with (Appendix 2, tranche 1 policy action 4.3.). In addition to the Law on Making Amendments and Additions to the Law on Patent Fees, approved on 1 June 2012 (AL-166-N), another Law on Making Amendments and Additions to the Law on Patent Fees was approved on 19 December 2012 (AL-243-N), in which Article 4 defines that physical persons can submit application declarations about being patent fee payers for any period of a given year (any month selected during the calendar year or the sum of successive months, but limited to the remainder of the calendar year). 12. Policy action 11—complied with (Appendix 2, tranche 1 policy action 4.4.). Initiatives are ongoing and are aimed at simplifying taxation procedures as well as developing an effective tax policy for SMEs, including tax incentives for entrepreneurial activity carried out by family members introduced on 1 October 2014. Family owned businesses are for example free of all state taxes (e.g. profit tax, income tax, VAT), as well as the obligation of providing a report about the volume and prices of services and goods provided, and personal income tax for each employee is paid at the fixed rate of 5000 AMD., Taxpayers can also pay taxes electronically. Relevant draft laws have been submitted to the National Assembly for discussion. Electronic tax accounts are mandatory from 2015, and other accounting documents will be provided electronically from 2016, removing the need for keeping separate registration books. 13. Policy action 12—complied with. Refer to tranche 2 action (Loan Agreement, Attachment 3 to Schedule 3, para. 9[b].) A new website www.sksnak.am has been launched to provide easy access to information relevant to business start-ups. The website, managed by the SME DNC, serves as a one-stop shop for Armenian start-up enterprises—providing links to agencies that support MSMEs and women MSMEs. An action plan for an awareness campaign has been prepared, which includes a public relations campaign. 14. Policy action 13—complied with. Refer to tranche 2 action (Loan Agreement, Attachment 3 to Schedule 3, para. 9[a].) A joint action plan between the SME DNC and ADA was developed based on the Women Entrepreneurship Development Strategy. A memorandum of understanding was signed between the SME DNC and ADA in 2012. The government approved the merger of the National Competitiveness Foundation of Armenia and the Industrial Development Foundation into a new entity, the Development Foundation of Armenia and the liquidation of ADA on 18 December 2014 (decision N. 1523-N). ADA has to be liquidated. The new Development Foundation of Armenia had its first board of trustees meeting on 31 March 2015. For the realization of the merger, funding is envisaged from the International Bank for Reconstruction and Development (World Bank) under the Trade Promotion and Quality Infrastructure Loan Project. The project was ratified by Parliament in December 2014. The merger of agencies involved in improving and promoting the business environment was suggested by the ADB program team at the time of processing, but the government was not ready for such a merger at that time. The merger of the two agencies and the liquidation of ADA are welcome steps. The role of the SME DNC regarding the proposed new agency was not mentioned in the letter from the MOE to the chief minister. The MOE has provided ADB with a letter confirming that the Development Foundation of Armenia will assume ADA’s mandate for

Appendix 1 17

Ap

pe

ndix

2 17

the program, and will carry out ADA’s responsibilities under the joint action plan between the SME DNC and ADA. The action plan meets the requirements for compliance. 15. Monitorable policy action 1—complied with, although it was not a tranche release action. The SME DNC conducted 25 start-up campaigns in 2013 with a total of 490 participants (32% women) and 26 start-up campaigns in 2014 with a total of 457 participants (37% women). Some 176 businesses were registered in 2013, of which 33% were women’s enterprises, and 177 businesses were registered in 2014, of which 34% were women’s enterprises. Activities included services, production, and trade.

18 Appendix 2

POLICY MATRIX

Program Outputs and Activities

Tranche 1 Actions (September 2012)

Agency Responsible/ Documentary

Evidence

Status of Ongoing Compliance

(October 2015)

Tranche 2 Actions (October 2015)

Agency Responsible or

a Documentary Evidence

Status of Compliance with Tranche 2 Actions

(October 2015)

Output 1. Improved Institutional Framework Supports Women Entrepreneurs and MSMEs

1.1. SME DNC to have established an internal strategic planning committee, which makes recommendations in relation to the development of priority sectors and strategic aims in consultation with stakeholders (Loan Agreement, Attachment 2 to Schedule 3, para. 1)

SME DNC minutes from committee meeting

Documentary evidence: Minutes from internal strategic planning committee dated 15 September 2014

Policy action 1 is complied with. On

5 August 2014, a meeting of the development and strategic planning board held a discussion on (i) issues related to the new tools for the financial support; (ii) the new support projects in the framework of the SME state support program of 2015; and (iii) issues related to implementation of the SME entities’ awareness-raising activities regarding amendments to several laws.

MOE to (a) adopt and

implement national strategy for small and medium entrepreneurship development, including women’s entrepreneurship promotion

(Loan Agreement, Attachment 3 to Schedule 3, para. 1[a])

Adopted gender-mainstreamed national strategy for small and medium entrepreneurship development

Documentary evidence: Excerpt from MOE e-doc communication Women Entrepreneurship Development Strategy Letter from SME DNC to MOE on submission of the strategy Copy of link to website to the strategy: http://www.smednc.am/en/publications.html

Policy Action 1.a. is (substantially complied with)

The National Strategy for Small and Medium Entrepreneurship Development was developed in 2014. However, the approval of the strategy was delayed due to the weakening economic situation in 2014, and the need to fine tune this strategy to the new economic reality. A revised version of the strategy was approved on 1 October 2015. Paragraph 59 of this strategy describes how the strategy activities will be implemented through annual small and medium enterprises support programs during 2016-2018, as well as through government’s annual action plans. The government is currently preparing the 2016 annual action plan, which is expected to be approved at the end of the first quarter of 2016. Current SME support activities are being implemented under the umbrella of the 2015 SME support program, and

http://www.smednc.am/en/publications.html

http://www.smednc.am/en/publications.html

Appendix 2 19




Evidence


(October 2015)





(October 2015)

remain aligned with the objectives of the new strategic document.

(b) implement interagency coordination working group on women’s entrepreneurship promotion

b

(Loan Agreement, Attachment 3 to Schedule 3, para. 1[b])

Minutes from meetings of the working group and interagency action plan Documentary evidence: Minutes from meetings SME DNC–ADA Action Plan

Policy action 1.b. is complied with. The

interagency coordination working group on women’s entrepreneurship held its first meeting on 20 March 2014, which was attended by representatives from ADA. A total of three meetings have been held. A joint time-bound action plan between SME DNC and ADA was approved by SME DNC and ADA on 2 July 2014. SME DNC has provided copies of the minutes and approved time-bound action plan.

1.2. SME DNC to have strengthened governance by establishing an audit committee, which monitors financial and economic activities and ensures that there is an adequate system of internal control and risk management (Loan Agreement, Attachment 2 to Schedule 3, para. 2)

SME DNC (a) Executive director

decision (b) Internal Audit

Committee regulation

Documentary evidence: Order N9 of the executive director dated 15 September 2014

Policy action 2 is complied with. The

order of the executive director of 15 September 2014 includes (i) implementation of measures to monitor the capital of the credit guarantees provided by SME DNC; (ii) preparation of a note on the amounts deposited for credit guarantees provided by SME DNC by partner banks, as well as financial assets, fees paid by banks for the

SME DNC Board of Trustees to strengthen governance by (a) appointing new

independent Board of Trustees, of which at least 50% shall be women

c


SME DNC board of trustees

List of members of board of trustees, sex-disaggregated

Documentary evidence:

Board of trustees decree Updated list of board of trustees Board of trustees web link Charter of the Board of

Policy action 2.a. is complied with. SME DNC

has, since the first tranche release, appointed one new member to the board of trustees. On 17 October 2014, Diana Gaziyan was appointed as a member of the board of trustees. This fulfills the requirement that at least 50% of the newly appointed members of the board of trustees are woman. No other appointments have been made to the board of trustees. Documentation provided includes (i) the SME DNC Charter, which

20 Appendix 2




Evidence


(October 2015)





(October 2015)

guarantee provision, and income received from the bank interest applied to the SME DNC bank account balance at the Armenian Development Bank; and (iii) alignment of SME DNC’s internal disciplinary rules with the provisions of relevant laws and other legal acts.

Trustees Profiles of the members of the board of trustees

includes the duties of members of the board of trustees; (ii) a list of board members, sex-disaggregated; (iii) the link to the website where board members are listed; and (iv) members of board of trustees profiles.

(b) requiring Board of Trustees to undergo training by accredited trainer on good corporate governance practices


Agenda for board training List of participants in board training, including profiles of the members of the board of trustees Documentary evidence: Signing sheet of the board of trustees training Profiles of the members of the board of trustees Presentation material Biography of trainer, Konstantin Saroyan OECD Corporate Governance

Policy action 2.b. is substantially complied with. A consultant was

engaged to provide training to the board of trustees on 7 October 2014. A presentation was delivered on the International Experience of Establishing Corporate Management. Board members were referred to the United Nations Conference on Trade and Development’s Guidance on Good Practices in Corporate Governance and Disclosure.

d Presentation

material, the presenter’s biography, signing sheets, and profiles of members of the board of trustees have been provided. The consultant is an expert of the OECD corporate management development working group. The quality of the training is considered adequate.

(c) strengthening risk management

Minutes from meeting on the establishment of

Policy action 3.a. is complied with. According

Appendix 2 21




Evidence


(October 2015)





(October 2015)

committee (of which at least 50% shall be women) for risk monitoring, risk control, and risk analysis associated with financial products provided


risk management committee, sex-disaggregated Documentary evidence:

Board of Trustees Decision on (i) establishment of risk management committee; and (ii) establishment of an evaluation group for (a) selection of participants for start-up business support, and (b) business project submitted for financing List of members of the risk management committee, sex-disaggregated Training agenda on risk management Signing sheet for the training on risk management Director’s order on members of the financial assistance project qualification committee

to the Board of Trustees Decision of 2 December 2014, a risk management committee of SME DNC has been established to enable risk monitoring, control, and analysis associated with financial products provided. Four of five staff on the risk management committee are women, exceeding the 50% target. Risk management has been strengthened through training on credit risk management, which was delivered by an international consultant engaged through the attached TA provided by ADB.

e Training covered

(i) the current situation of SME DNC financial support products, (ii) risk management system, and (iii) business plans. Agenda and signing sheets support the delivery of training.

22 Appendix 2




Evidence


(October 2015)





(October 2015)

(d) adopting internal procedures to assess credit risk related to provision of financial products, which incorporate good practices, and train staff on these procedures


Staff training program on credit risk Documentary evidence:

Regulation for loan guarantee for SMEs Regulation for loan guarantee for start-ups Training agenda on risk management Signing sheet for the training on risk management

Policy action 3.b. is complied with. SME DNC

has adopted internal procedures to assess the credit risk related to the provision of financial products: (i) regulation on loan guarantees, and (ii) regulation on the provision of financial assistance to start-up businesses. Training on credit risk management was delivered by an international consultant engaged through the attached TA provided by ADB. Training covered (i) the current situation of SME DNC financial support products, (ii) the risk management system, and (iii) business plans. Four of five staff on the risk management committee are women, exceeding the 50% target. The internal procedures adopted satisfy the requirements for compliance.

(e) establishing appraisal panels for fund allocations at regional level involving SME DNC and relevant stakeholders

(Loan Agreement, Attachment 3 to Schedule 3, para. 3[c])

Minutes from meeting on the establishment of appraisal panel Documentary evidence: Director’s order on establishment of the appraisal panels

Policy action 3.c. is complied with. SME DNC

has established appraisal panels and working groups for selecting participants for start-up business support and evaluation of business projects submitted for financing. The working group involves

Appendix 2 23




Evidence


(October 2015)





(October 2015)

representatives from local organizations in the regions. The board of trustees has, through the decision of 2 December 2014, reserved the right to approve the appointment of members of the appraisal panel to the executive director of SME DNC. According to a decree issued on 10 January 2014, at least six committee members should be present in the selection process of beginner businesspeople entrepreneurship support program participants. The decree also allows for the inclusion of representatives from relevant regions, including SME DNC regional branches, local banks, credit organizations, business associations, and social organizations. Thus, the appraisal panels have been established at a regional level.

1.3. SME DNC Board of Trustees to have ratified improved approach to support start-ups (including 100% loan guarantee and CEFE training approach)

f

(Loan Agreement, Attachment 2 to

SME DNC (a) Board minutes

ratifying work plan that contains an integrated approach to start-ups

(b) Work plan

Policy action 3, no follow-up required.

SME DNC to (a) adopt a tailored

approach to support women entrepreneurs and MSME start-ups

(Monitorable action)

SME DNC (a) Board minutes

confirming start-up support tailored to women entrepreneurs and MSMEs


No follow-up required as it is not a tranche release action.

The SME annual development plan adopted by MOE in 2013 includes support to women entrepreneurs (section 8 of the report). MOE adopted the Women

24 Appendix 2




Evidence


(October 2015)





(October 2015)

Schedule 3, para. 3) SME DNC minutes of 2 July 2014 Action Plan SME development annual plan SME annual plan excerpt – women’s entrepreneurship section

Entrepreneurship Strategy by minister’s order on 8 August 2014. A joint time-bound action plan between SME DNC and ADA was approved by SME DNC and ADA on 2 July 2014.

1.4.SME DNC to have registered start-up entrepreneurs by sector and region, sex-disaggregated (Monitorable action)

SME DNC report on active start-up entrepreneurs registered with SME DNC Documentary evidence: SME DNC letter with reference to (i) number start-up campaigns, (ii) number of participants sex-disaggregated, (iii) number registered businesses sex-disaggregated, and (iv) areas of business activities

Monitorable policy action 1 is complied with. SME DNC

conducted 25 start-up campaigns in 2013, with 490 participants (32% women) and 26 start-up campaigns in 2014 with 457 participants (37% women). Some 176 businesses were registered in 2013, of which 33% were women’s enterprises. In 2014, 177 businesses were registered, of which 34% were women’s enterprises. Activities include services, production, and trade.

SME DNC to (a) develop database to

at least 10,000 entrepreneurs and MSMEs, with sex-disaggregated data


SME DNC online market place www.marketplace.smednc.am Reference should be to www.smednc.am instead of www.market place.smednd.am as the marketplace is not being further developed. Documentary evidence: SME DNC database

Policy action 4.a. is complied with. As of

October 2014, the database included at least 10,039 entrepreneurs, including MSMEs. It is being expanded continuously and an information management system is being developed. Not all data will be published on the website (www.smednc.am) as some are confidential. The database includes (i) name of enterprise, (ii) organizational legal type, (iii) name of director, (iv) gender, (v) sector of activity, (vi) description of activity, (vii) city or village, and (viii) address. Information on ethnicity is not included. The project has been re-categorized from FI C for involuntary resettlement and FI for environment and

http://www.marketplace.smednc.am/

http://www.marketplace.smednc.am/



Appendix 2 25




Evidence


(October 2015)





(October 2015)

indigenous peoples, to FI C for involuntary resettlement and indigenous peoples and FI for environment.

(b) undertake annual surveys on women entrepreneurs and MSMEs to identify needs and effectiveness of support services provided, including lessons learned and opportunities to be developed for women


Publications on MSMEs and women entrepreneurs on SME DNC website Reference should be to www.smednc.am instead of www.market place.smednd.am as the marketplace is not being further developed Documentary evidence: Report on Needs Assessment Survey 2013 Report on Needs Assessment Survey 2014 Survey 2014 database (12 files: questionnaire, instruction for interviewers, survey form, 10 lists with interviewees)

Screen shot of 2013’s survey publication on SME DNC website: http://smednc.am/en/publications.html


has undertaken two annual surveys on women entrepreneurs and MSMEs to identify the needs and effectiveness of support services provided. The 2013 annual Needs Assessment for Business Development Services Among Women Entrepreneurs was presented and discussed with key stakeholders at a workshop in Yerevan on October 2013. The 2013 and 2014 surveys are published on the SME DNC website. The surveys include (i) main obstacles to doing business, (ii) provision of BDS services, (iii) most important BDS services, (iv) business dynamics in the previous year and prospects for the next 12 months, (v) need for financing, and (vi) findings from focus discussions, and (vii) conclusions and recommendations. The surveys helped identify the needs and effectiveness of support services (including


http://smednc.am/en/publications.html


26 Appendix 2




Evidence


(October 2015)





(October 2015)

lessons learned and opportunities to be developed) for women.

1.5 SME DNC to have assessed the role of women entrepreneurs in growth sectors by (a) implementing a

PACA exercise in 3 communities

(b) pursuant to result of PACA, define target groups (by sector and region)

(Loan Agreement, Attachment 2 to Schedule 3, para. 4[a] & [b])

SME DNC PACA reports


SME DNC to (a) identify suitable

opportunities for women owned businesses in growth sectors


SME DNC report on suitable opportunities for women Documentary evidence:

PACA brochures, including a section on women’s participation PACA booklet, Annexes 1–3

Policy action 5.a. is complied with. PACA

reports have been developed to identify opportunities for women entrepreneurs in growth sectors. The results are being integrated into value chain development. Five PACA reports have been prepared and submitted to ADB, of which four included a section on women’s involvement in the value chain.

(b) implement action plan, with targets and indicators, for developing women entrepreneurs in identified sectors.


Summarized results on PACA exercises GSVC Final report for Dilijan, Stepanavan and Tumanyan districts GSVC Follow Up Activity Plan 2014 2015 GSVC Reference letter from SME DNC ICT literacy training List of Attendance for basic and advanced training for Ijevan, Sevan districts ICT Literacy Final report Lori and Tavush signing sheets for networking events

Policy action 5.b. is substantially complied with.

Gender Sensitive Value Chain Analysis (GSVCA) was introduced in Armenia with support of the Women’s Entrepreneurship Support Sector Development Program. Training of SME DNC trainers was delivered by an international consultant under the piggy-backed TA. ADB implemented GSVCA exercises in Tumanyan district of Lori region. GSVCA exercises were

Appendix 2 27




Evidence


(October 2015)





(October 2015)

Report B&B on Lori training Report B&B on Tavush training Signing sheets for B&B Standards Training in Lori and Tavush, Networking Event and Study Tour SME DNC Reference Letter on Financing of B&Bs Screenshot of B&B youtube promo Certificate of participation in start-up training.

also implemented with support from German development cooperation through Deutsche Gesellschaft für Internationale Zusammenarbeit in Dilijan community of Tavush region and Stepanavan community of Lori region. GSVCA maps and analyzes the value chain and identifies initiatives that can boost the development of the sector and in particular women MSMEs. As a result of the GSVCA analysis, an action plan was developed for follow-up and support to women’s enterprises in the value chain. Six of the seven activities in the action plan are scheduled to take place in the second half of 2015. Item 1 of the action plan (an information and communication technology (ICT) literacy training for bed and breakfast (B&B) owners) was implemented in October–November 2014 in the Tavush region. A consultant’s report on financial literacy training, as well signing sheets from training, supports

28 Appendix 2




Evidence


(October 2015)





(October 2015)

compliance. Items 2 and 3 of the action plan—ICT training for B&B owners in Vayots Dzor and Lori—is expected to be completed late 2015 to early 2016. The delivery of planned activities has been delayed due to the unavailability of trainers and participants during the summer months. The remaining activities are expected to be completed through the support of TA administered by ADB (footnote 14). Item 4 (the organization of a networking event) has been implemented in July-August 2015. Seventeen participants from two regions participated in the event, just short of the target of at least 25 B&Bs from three regions. The networking events were organized by the SME DNC in connection with the study tour (item 5) and the B&B training programs (item 6) in Tavush and Lori on 13 and 24 July 2015 respectively. In Tavush there were ten participants of 100% were women and in Lori there were seven participants of which 86% were women. The objective

Appendix 2 29




Evidence


(October 2015)





(October 2015)

of the networking event was to share experiences and lessons learned in managing B&Bs, including how to manage turists travelling in groups. The networking event was coordinated by the SME DNC Director of Tavush Branch and facilitated by a consultant. Item 5 (a local study tour) was implemented in July 2015. A study tour was organized by the SME DNC in connection with the B&B training program in Tavush and the networking event (see para above). The study tour visited ten B&Bs managed by the participants from Tavush. The seventeen participants from Tavush (ten B&B participants) and Lori (seven B&B participants) exceed the targeted fifteen B&B participants. Item 6 (training on B&B standards) was implemented in February 2015 and in July 2015. The February training program (15 to 25 February 2015) was held in Lori region and was attended by 14 participants, of which 93% were women. The July ten day training program (13 to

30 Appendix 2




Evidence


(October 2015)





(October 2015)

23 July 2015) was held in Tavush region and was attended by ten participants, of which 100% were women. During the B&B training, the participants were trained in (i) hospitality, (ii) marketing and sales, and (iii) social media and promotional materials. Recommendations were provided to the borrowers on how to improve B&B rooms, food, and other services. The twenty-four participants from Tavush (ten B&B participants) and Lori (fourteen B&B participants) exceed the targeted fifteen B&B participants. At the end of the February training a short promo movie was prepared showing the B&Bs in Lori region. (https://www.youtube.com/watch?v=NJqzkF-3Myc&feature=youtube). Item 7 (provision of financial support to B&Bs that have participated in the SME DNC’s start-up campaigns) has been ongoing until August 2015 and is expected to continue. From January to August 2015, fifteen start-up B&B owners have received financial support for a total of

Appendix 2 31




Evidence


(October 2015)





(October 2015)

AMD66 million. The overall target of ten for the entire year has been exceeded. B&Bs that have participated in the SME DNC’s start-up campaigns and who have received financial support has been confirmed by SME DNC.

Output 2. Improved Capacity of Women Entrepreneurs and MSMEs

2.1. SME DNC to have strengthened its provision of nonfinancial services (training and Business Development Services [BDS]) by (a) developing

partnerships with private sector providers of training and business development services for women entrepreneurs and MSMEs

(b) conducting 8 start-up campaigns

i

serving more than 100 people of which at least 40% are women


SME DNC (a) MOU signed

between SME DNC and at least 2 partner BDS providers

(b) Schedule of BDS training

Documentary evidence: Letter from SME DNC on establishment of SME DNC with private BDS providers Letter from SME DNC with reference to key indicators of start-up campaigns

Policy action 5.a is substantially complied with. SME DNC has

built a strong relationship with GCCI and EV Consulting. Since 2013, SME DNC has been the implementing institution of the Partnerships for Rural Prosperity Program, funded by the United States Agency for International Development; GCCI and EV Consulting are the partner organizations for the program. SME DNC has collaborated with Business Pareta in implementing local economic development initiatives and in developing the new SME DNC website. SME DNC signed an MOU with GCCI and Business Pareta as part of compliance with tranche 1 policy actions.

SME DNC to support women entrepreneurs and MSMEs by (a) providing at least

20 start-up training programs


SME DNC (a) Usage statistics of

SME DNC website and online marketplace

Documentary evidence: Annual report on evaluation of training outcomes 22 reports on all start-up training conducted in 2013 14 reports on all start-up training conducted in 2014 List of participants in 39 start-up training implemented in 2013–2014 See 2.1.d. for usage statistics

Policy action 6.a. is complied with. From

January 2013 to February 2014, SME DNC conducted 39 start-up training sessions, with more than 600 start-ups participating in the training. Reports and signing sheets support the delivery of start-up training. It is confirmed that women participated in all the training.

32 Appendix 2




Evidence


(October 2015)





(October 2015)

Policy action 5.b. is substantially complied with. SME DNC

conducted 25 start-up campaigns in 2013 with a total of 490 participants (32% were women) and 26 start-up campaigns in 2014 with a total of 457 participants (37% were women). The total number of participants exceeds the 100 target. The 32% women participants in 2013 and 37% women participants in 2014 are considered to be substantially in compliance with the target of 40%.

(b) implementing at least four awareness campaigns about BDS resources


(b) Report on the reach of awareness campaigns

Documentary evidence: SME DNC Reference on Women Awareness Campaigns Signing sheets of four awareness campaigns


has conducted four awareness campaigns with a total of 92 participants, all of whom were women, in the communities of Goris, Vayk, Vanadzor, and Gyumri. Two were conducted in 2013 and two in 2014. The objective of the awareness campaigns was to increase women entrepreneurs’ awareness of BDS offered by providers as well as on different support projects by nongovernment organizations and

Appendix 2 33




Evidence


(October 2015)





(October 2015)

international organizations. All participants were women entrepreneurs.

(c) improving its website and online market place to meet the specific needs of women entrepreneurs



SME DNC Reference Note on Media and IT Tools for Communication of SME DNC of Armenia

Policy action 6.c. is substantially complied with.

The documentary evidence for policy actions 2.1.a–2.1.d as indicated in the report and recommendation of the President refers to (a) usage statistics of SME DNC, website, and online marketplace; (b) report on the reach of awareness campaigns; (c) annual report on evaluation of training outcomes; and (d) sex-disaggregated participation data. SME DNC has increased its reach through increased availability of business related information, and promoted its activities among entrepreneurs, both male and female. A new version of the SME DNC website was launched in January 2014. After the launch, the total number of visitors increased, with more than 90,000 views registered on the website and an average of 13,000 views per month. As of December 2014, of the 90,000 visits to the

34 Appendix 2




Evidence


(October 2015)





(October 2015)

website, which includes information on start-up campaigns, about 45,000 or 50% were women. SME DNC has clarified that it provides information on its website that is relevant for all types of businesses, including those that are owned, managed, or majority employer of women. The SME DNC website includes a sub-tab for women’s entrepreneurship http://smednc.am/am/content/women_support/, which explains how SME DNC supports women’s entrepreneurship, including through courses, information campaigns, and financial support. It contains a link to the Women Entrepreneurship Development Strategy, which describes approaches and actions to promote the creation of new enterprises by women (see policy action 1.a). It includes links to the 2013 and 2014 annual Needs Assessment for Business Development Services Among Women Entrepreneurs survey (see policy action 4.b); links to

http://smednc.am/am/content/women_support/

http://smednc.am/am/content/women_support/



Appendix 2 35




Evidence


(October 2015)





(October 2015)

information on how to access funding to start a business (see policy action 8.a); information on upcoming training; and information on the Best Woman Entrepreneur awards (see monitorable policy action 2.2). The SME DNC website also includes a sub-tab for news, which includes a number of publications that refer to women entrepreneurs: (i) Women Entrepreneurship Development Strategy, and (ii) 2013 and 2014 annual Needs Assessment for Business Development Services Among Women Entrepreneurs survey (http://smednc.am/en/publications.html). See policy action 4.b (1.4.b) SME DNC is using ICT to increase access to information and for promotion of its activities among entrepreneurs. Social networks—Facebook, Twitter, YouTube, LinkedIn—as well as the SME DNC website, are used. The website provides links to these networks, which are available to both men and women (see policy action



36 Appendix 2




Evidence


(October 2015)





(October 2015)

6.d). All events, including announcements on start-up training for women, are publicized via the Facebook page and the SME DNC website. For example, the SME DNC Facebook page, includes information on: i. the Start-Up

Entrepreneur Business Support Program, which reached 158 people via Facebook;

ii. the start-Up Entrepreneur Business Support Program in Yeghegnadzor City, which reached 935 people via Facebook;

iii. The Start-Up Entrepreneur Business Support Program in Yerevan City, which reached 769 people via Facebook;

15 of the 30 start-up entrepreneurs who participated in the Start-Up Entrepreneur Business Support Program were women. Information on start-up support for these programs reached at least 2,020 people through Facebook, of which about

Appendix 2 37




Evidence


(October 2015)





(October 2015)

1,171 or 58% were women. The SME DNC website includes links to www.businesswoman.am, and the Armenian Young Women’s Association website www.aywa.am. These websites provide networking and cooperation forums for women. They include publicity events such as the International Conference on Women Entrepreneurship from 7 to 12 June 2015 in Yerevan (see policy action 2.1.c). The SME DNC website provides opportunities to find business partners in Europe and beyond through the Enterprise Europe Network, which has an online form for finding business partners: http://smednc.am/hy/programs/buss_int/176. The recommendation section of the TA report Assessment of needs for business development services among women entrepreneurs of Armenia

k

recommends creating a partner-searching platform and network similar to the Enterprise Europe Network for women entrepreneurs, to facilitate the search for

http://www.aywa.am/

http://smednc.am/hy/programs/buss_int/176

http://smednc.am/hy/programs/buss_int/176

38 Appendix 2




Evidence


(October 2015)





(October 2015)

business partners, networking services, and information support. SME DNC is developing a new web tool for this network. The SME DNC website includes a sub-tab on information, which includes business information as well as links to a number of organizations relevant to entrepreneurs, including women. http://smednc.am/am/content/information_support/ includes a link to www.businesswomen.am, and www.sksnak.am website http://sksnak.am/#links, which includes a link to a one-stop shop for Armenian start-up enterprises—providing links to agencies that support MSMEs and women MSMEs. (see policy action 9.c.) The website www.sksnak.am is managed by SME DNC. It serves as a one-stop shop for Armenian start-up enterprises, providing links to relevant agencies that support MSMEs, including women MSMEs. See policy action 9.b (4.5.a).

http://smednc.am/am/content/information_support/

http://smednc.am/am/content/information_support/

http://www.businesswomen.am/

http://www.sksnak.am/

http://sksnak.am/#links

http://www.sksnak.am/

Appendix 2 39




Evidence


(October 2015)





(October 2015)

(d) using information and communication technologies (ICTs)

l

to increase the reach of start-up campaigns to serve at least 2,400 people annually, of which at least 50% are women

(Loan Agreement, Attachment 3 to Schedule 3, para. 6[d])

(c) Sex-disaggregated participation data


SME DNC Reference Note on Media and IT Tools for Communication of SME DNC of Armenia Documentation on Digital Literacy for Women Entrepreneurs in Armenia

Policy action 6.d. is substantially complied with. The documentary

evidence for policy actions 2.1.a–2.1.d, as indicated in the report and recommendation of the President, refers to (a) usage statistics of SME DNC, website, and online marketplace; (b) report on the reach of awareness campaigns; (c) annual report on evaluation of training outcomes; and (d) sex-disaggregated participation data. SME DNC uses ICT to increase the reach of start-up campaigns. ICT includes any communication device or application—radio, television, cellular phones, computer and network hardware and software, satellite systems, as well as the various services and applications SME DNC has clarified that it provides information relevant for all businesses, including those that are owned, managed, or majority employer of women, on websites such as www.smednc.am. SME DNC conducted four

40 Appendix 2




Evidence


(October 2015)





(October 2015)

start-up campaigns in 2013 with a total of 20 participants (all women) and two start-up campaigns in 2014 with a total of 70 participants (all women). See policy action 6.b. or 2.1.b. Of the 92 participants in start-up campaigns, all were women. The attached TA supported a pilot project on digital literacy training for women entrepreneurs during October–November 2014. This was to make ICT tools more effective for reaching women entrepreneurs and to help them access information, including start-up campaigns. A draft report has been submitted, including a list of participants, of which all 40 were women (see policy action 5.b. on ICT literacy training). Among the ICT used to increase the reach of start-up campaigns is the new version of the SME DNC website, launched in January 2014. After launch, the number of visitors increased, with more than 90,000 views registered on the website

Appendix 2 41




Evidence


(October 2015)





(October 2015)

and an average of 13,000 views per month (as of December 2014). This is confirmed through web analytics reports. SME DNC intensively used all means of information dissemination (computers, internet media, local media, group meetings, information provided by regional SME DNC branches, etc.) to increase the reach of start-up campaigns, with emphasis on targeting women. Of the 13,000 SME DNC users per month, about 50% are women. Information on upcoming start-up training is also widely disseminated through SME DNC branches, local authorities, media, and announcements in forums and gatherings. Of the 90,000 views on the SME DNC website, which includes information on start-up campaigns, about 45,000 or 50% were women. Social networks used for information dissemination, including for start-up campaigns, include Facebook, Twitter, LinkedIn, and YouTube. https://www.facebook.com/

https://www.facebook.com/SME%20DNC.of.Armenia?fref=ts

42 Appendix 2




Evidence


(October 2015)





(October 2015)

SME DNC.of.Armenia?fref=ts https://www.facebook.com/groups/kotaykdnc/?fref=ts https://twitter.com/@SMEDNC_AM http://www.linkedin.com/company/small-and-medium-entrepreneurship-development-national-center-of-armenia?trk=company_name http://www.youtube.com/user/SMEDNCArmenia The SME DNC Facebook page has 1,810 page likes. According to statistics, 58% of page fans are women and 42% are men. This means that approximately 1,050 women receive the information on start-up campaigns. Of the 1,810 likes on Facebook, which includes information on start-up campaigns, about 1,050 or 58% were women. All events, including start-up training for women, are announced via the Facebook page and the SME DNC website. See policy action 6.c. During October 2013–October 2014, posts and



https://www.facebook.com/groups/kotaykdnc/?fref=ts

https://www.facebook.com/groups/kotaykdnc/?fref=ts

https://twitter.com/@SMEDNC_AM

https://twitter.com/@SMEDNC_AM

http://www.linkedin.com/company/small-and-medium-entrepreneurship-development-national-center-of-armenia?trk=company_name







http://www.youtube.com/user/SMEDNCArmenia

http://www.youtube.com/user/SMEDNCArmenia

Appendix 2 43




Evidence


(October 2015)





(October 2015)

updates of the facebook page reached 21,514 users Twitter SME DNC opened a Twitter account in May 2012. Information tweeted includes links to Facebook, where SMC DNC activities are announced. As of June 2015, 1,819 tweets were on the page. https://twitter.com/SMEDN C_AM YouTube SME DNC had uploaded 75 videos since launching the channel (as of December 2014). These include information campaigns and information for women entrepreneurs. As of December 2014, the YouTube channel had 8,824 Lifetime views. https://www.youtube.com/user/SMEDNCArmenia During 2012–2014, over 100 articles, TV and radio shows, and press conferences were organized, published, and aired; and 150 press releases were released.

2.2. MOE to have promoted women entrepreneurship by launching a pilot

MOE (a) List of award

results for 11 women

Policy action 6, no follow up required.

2013 and 2014 Best Women Entrepreneur

MOE to establish the awards program as an annual campaign to promote

MOE (a) Evaluation report of

the awards program (b) List of awardees

Monitorable action 2 is complied with (although it is not a tranche release action). The Best Women

https://twitter.com/SMEDNC_AM

https://twitter.com/SMEDNC_AM

https://www.youtube.com/user/SMEDNCArmenia

https://www.youtube.com/user/SMEDNCArmenia

44 Appendix 2




Evidence


(October 2015)





(October 2015)

annual awards program for women entrepreneurs and MSMEs (Loan Agreement, Attachment 2 to Schedule 3, para. 6)

entrepreneurs (b) Minutes of the

Competition Committee

Awards Program were successfully completed.

woman entrepreneurship


Documentary evidence: Minutes from evaluation meeting of 2014 award List of awardees, 2012–2014

Entrepreneur Awards Program was successfully completed in 2012, 2013, and 2014. Five awards were given to 14 women entrepreneurs in 2012, 10 awards were given to 23 women entrepreneurs in 2013, and 14 awards were given to 34 women entrepreneurs in 2014.

SME DNC to (a) design and pilot a

mentorship network for women entrepreneurs (and feasibility of using ICTs to support it)

(Loan Agreement, Attachment 3 to Schedule 3, para. 7)

SME DNC (a) Evaluation report of

mentorship network design and pilot project.

(b) Evaluation report on the use of ICTs for women in business leadership program and mentorship network.

Documentary evidence: SME DNC Reference Note on Pilot Project on Mentorship Concept of mentorship program developed by international expert Mentorship Training from 25–27 June in Aghveran Training module (and Annexes 1–4)

Policy action 7.a is complied with. A pilot

mentoring program for women entrepreneurs was designed and introduced with the support of the piggy backed TA. The pilot phase was completed in December 2014. A mentorship network event was held from 25 to 27 June 2015 with a total of 20 women entrepreneurs participating. The 2014 needs assessment (see 4.b tranche release action) identified lack of use of ICT among entrepreneurs, especially women entrepreneurs. Based on these findings, it was considered to be too early to use ICT for the provision of BDS. Instead, a pilot project on digital literacy training for women entrepreneurs was

Appendix 2 45




Evidence


(October 2015)





(October 2015)

Mentoring program Signing sheet of launch of pilot phase of the program at the end of June 2014

launched in October–November 2014 (see 6.d tranche release action) and repeated in 2015. An evaluation report has been submitted to ADB and posted on the ADB website.

Output 3. Improved Access to Finance by Women Entrepreneurs and MSMEs

3.1. SME DNC to have (a) adopted revised

loan guarantee scheme

(b) issued at least 80 loan guarantees under new scheme (approximate aggregate value of $0.6 million) to existing and new MSMEs (for the period February – August 2012) of which at least 30% are women entrepreneurs and MSMEs


SME DNC (a) Ratified loan

guarantee regulations

(b) Loan guarantee letter to the banks and list of approvals, sex-disaggregated

Policy action 7 (a) No follow-up

required No follow-up required

SME DNC to (a) issue at least

300 (approximate aggregate value of $1.5 million) loan guarantees and or other financial products to active MSMEs and start-ups of which at least 50% are women entrepreneurs and MSMEs


SME DNC (a) Documentation on

training sessions held, number of male and female participants

Documentary evidence: Reference Note from SME DNC on fulfilling the commitment of provision of 300 loan guarantees List of loan guarantees provided to entrepreneurs in 2013-2014, sex-disaggregated

Policy action 8.a. is complied with. A list of

300 loan guarantees that have been issued indicate that at least 151, or 50.3%, were to women entrepreneurs. The total loan guarantees amounted to AMD1.125,5 million ($2.6 million), of which at least AMD579.1 million ($1.3 million) was to women entrepreneurs.

(b) ensure application of ADB’s Safeguards Policy Statement (2009) compliance in the sub-loan processing and implementation.

(b) Biannual report of the PFIs’ implementation of their ESMSs

Policy action 8.b. is complied with. A review of

PFIs’ ESMSs has been undertaken by ADB ESMS specialists during the following missions: 14–18 October 2013,

46 Appendix 2




Evidence


(October 2015)





(October 2015)


Documentary evidence: ADB staff back-to-office reports from October 2013, April 2014, and July 2014 include reviews of ESMSs and PMU GAF Annual Safeguards Monitoring Report

1–5 April 2014, 22–28 July 2014, and 10–23 November 2014. Application of ADB’s Safeguards Policy Statement (2009) compliance in the sub-loan processing and implementation is conducted in connection with ESMS reporting. The first five subloans of the PFIs were reviewed and endorsed by ADB ESMS specialists. SME DNC is not responsible for conducting a review of PFI ESMSs. The PMU GAF prepares and submits an annual safeguards monitoring report.


4.1 MOJ to have reduced the cost of registering businesses (including MSMEs) by eliminating a registration fee of (AMD17,000) (Loan Agreement, Attachment 2 to Schedule 3, para. 8)

MOJ (a) amendments to

the Law On State Duty, approved by Parliament on 27 December 1997, NO-186, amended through Law On Amendments and Additions to Law On State Duty, approved by Parliament on 19 March 2012 NO- 131.

Policy action 8 is complied with. The

Law on Amendments and Additions to the Law on State Duty, approved by Parliament on 19 March 2012 NO-131 remains effective. The elimination a registration fee of AMD17,000 is regulated by Article 1, Point 1 of the Law on Amendments and Additions to the Law on State Duty.

Appendix 2 47




Evidence


(October 2015)





(October 2015)

Documentary evidence: Email from MOE confirms the Law On Amendments and Additions to the Law On State Duty, approved by Parliament on 19 March 2012 (NO- 131) is effective and henceforth the issue of the cost of registering businesses (including MSMEs) by eliminating a registration fee of AMD17,000 is regulated by Article 1, Point 1 of the Law on On Amendments and Additions to the Law On State Duty. The registration fee is eliminated and is not charged in practice.

4.2 Accounting Center to have provided services of preparing taxation reports, conducting counseling on taxation to at least 470 MSMEs (at least 30% are women) (January–August 2012) (Loan Agreement, Attachment 2 to Schedule 3, para. 9)

Accounting Center (a) List of

beneficiaries


Accounting Center to (a) adopt strategy,

including financing plan, to ensure ongoing services to MSMEs, including the needs of women entrepreneurs and MSMEs (Monitorable action)

Accounting Center (a) Copy of adopted

strategy Documentary evidence: Strategy of accounting center

Monitorable action 3 is complied with (although it is not a tranche release action). The Strategy of

the Accounting Center was adopted in 2012 and is being implemented since 2013.

48 Appendix 2




Evidence


(October 2015)





(October 2015)

4.3 MOF to have simplified the patent fee

m system to enable

businesses to pay patent fees on flexible terms including monthly or sequential months (but not more than 12 months) (Loan Agreement, Attachment 2 to Schedule 3, para. 10)

MOF (a) RA Law on Patent

Payments as of 22.12.2010, amended through the Law on Amendments and Additions to the Law on Patent Payments, approved by Parliament on 22 June 2012 (NO-166-N)


Letter from MOF

Policy action 10 is complied with.

In addition to the Law on Making Amendments and Additions to the Law on Patent Fees, approved on 12 June 2012 (AL-166-N), another law on Making Amendments and Additions to the Law on Patent Fees was approved on 19 December 2012 (AL-243-N), where Article 4 defines that physical persons can submit application declarations about being patent fee payers for any period of a given year (any month selected during the calendar year or the sum of successive months, limited to the remainder of the year).

4.4 MOF to have simplified tax reporting by eliminating requirements for maintaining special tax books (book of registration of revenues and book of shipment of inventory holdings) (Loan Agreement, Attachment 2 to Schedule 3, para. 11)

MOF (a) Government

decree NO 183-N voided the Book of Shipment of Inventory Holdings in the Territory of the Republic of Armenia

(b) Government Decree NO-191-N voided the Book of Registration of

Policy action 11 is complied with.

Initiatives are ongoing, aimed at simplification of taxation procedures and accountability as well as the development of an tax policy for small and medium entrepreneurs: (i) For contributing to the development of small and medium entrepreneurship, new tax incentives for

SRC to (a) broaden the base for

electronic tax reporting by piloting a platform for paying taxes via points-of-sale terminals and the official website of SRC


SRC Number of MSMEs that file taxes online increases at least 10% per year from 6,100 in 2011

Documentary evidence: Email from MOF

Monitorable policy action 4 is complied with (although it is not a tranche release action).

The number of taxpayers that submit reports electronically has increased from 4,886 in 2011 to 9,986 in 2012 and 51,546 in 2013.

Appendix 2 49




Evidence


(October 2015)





(October 2015)

Revenues in the Territory of the Republic of Armenia on 23 February 2012

Documentary evidence: Letter from MOF

entrepreneurial activity being carried out by family members was introduced on 1 October 2014. Family owned businesses are for example free of all state taxes (e.g. profit tax, income tax, VAT), as well as the obligation of providing a report about the volume and prices of services and goods provided, and personal income tax for each employee is paid at the fixed rate of 5000 AMD., (ii) Taxpayers may pay taxes electronically. Drafts of relevant laws are being discussed by the National Assembly, by which, in addition to other regulations, a comprehensive move to electronic filing is envisaged from 2016 (electronic filing will be mandatory from 2015 and for other accounting documents from 2016), so separate registration books will no longer be required.

4.6 Government/MOE to have broadened the cooperation between the SME DNC and ADA in promoting micro, small, medium-

SME DNC and ADA (a) MOU to establish a working group with representatives from SME DNC and ADA to support MSME

Policy action 13, refer to T2 action (Loan Agreement, Attachment 3 to Schedule 3, para. 9[a])

Government/MOE to (a) adopt an action plan

to ensure collaboration between SME DNC and ADA and enable

Government/MOE Adopted action plan Documentary evidence: Joint action plan of SME

Policy action 9.a. is complied with. A joint

action plan between SME DNC and ADA was developed based on the Women Entrepreneurship

50 Appendix 2




Evidence


(October 2015)





(October 2015)

sized and large enterprises—including women entrepreneurs and MSMEs—through the establishment of a working group (Loan Agreement, Attachment 2 to Schedule 3, para. 13)

development efficient and effective support to micro, small, medium–sized and large enterprises, including women entrepreneurs and MSMEs


DNC and ADA SME DNC Reference Note on Media and IT Tools for Communication of SME DNC of Armenia Letter from minister of economy to the chief minister of the government staff Government decision dated 18 November 2014 On Reorganization of the Industrial Development Foundation and National Competiveness Foundation of Armenia in the Form of Merging and Establishment of Development Foundation for Armenia, on liquidation of Armenian Development Agency. Letter from the MOE dated 26 June 2015 confirming that the Development Foundation of Armenia will assume the mandate of ADA for the given program and will carry out the responsibilities of ADA under the joint action plan between SME DNC

Development Strategy. An MOU was signed between SME DNC and ADA in 2012. The government approved the merger of the National Competitiveness Foundation of Armenia and the Industrial Development Foundation into a new entity, the Development Foundation of Armenia, and the liquidation of ADA on 18 December 2014 (decision N. 1523-N). The first board of trustees meeting was held 31 March 2015. For the realization of the merger, funding is envisaged by the International Bank for Reconstruction and Development (World Bank) within the Trade Promotion and Quality Infrastructure Loan Project. The project was approved by the World Bank and ratified by Parliament in December 2014. The suggested merger of agencies involved in improving and promoting the business environment was suggested by the project team at the time of processing. Letter from the MOE dated 26 June 2015 confirms that

Appendix 2 51




Evidence


(October 2015)





(October 2015)

and ADA.

the Development Foundation of Armenia will assume the mandate of ADA and will carry out the responsibilities of ADA under the joint action plan between SME DNC and ADA.

4.5 Government/MOE to have initiated the establishment of a virtual one-stop shop to include efficient and up-to-date access to information, products and services for starting and growing businesses (micro, small, medium-sized and large) (Loan Agreement, Attachment 2 to Schedule 3, para. 12)

SME DNC and ADA (a) MOU on the establishment of a virtual one-stop-shop for micro, small and medium-sized enterprises

Policy action 12, (a) refer to T2 action. (Loan Agreement, Attachment 3 to Schedule 3, para. 9[b])

4.5 Government/MOE to support business development, including women entrepreneurs and MSMEs by (a) implementing a

virtual one-stop shop to enable businesses efficient access to information, products, and services for starting and growing businesses through effective utilization of ICT


Government/MOE (a) Virtual one-stop

shop available online

(b) Virtual one-stop shop awareness raising strategy and action plan

Documentary evidence: SME DNC Reference Note on Media and IT Tools for Communication of SME DNC of Armenia

Policy action 9.b. is complied with. A new

website www.sksnak.am has been launched to provide easy access to information relevant to (i) start-ups, and (ii) existing businesses that want to grow their business. The website provides links to agencies that support MSMEs. It serves as a one-stop shop for Armenian start-up enterprises and is managed by SME DNC. It includes a link to online business registration managed by the State Registry of Legal Entities, Ministry of Justice. The business registry has been supported by ADB under TA for Institutional Modernization to Improve the Business Environment.

n An action

plan for an awareness campaign has been prepared, which includes an ad campaign and a public relations campaign.

52 Appendix 2




Evidence


(October 2015)





(October 2015)

The one-stop shop meets the requirements for compliance.

(b) consolidating existing databases into one database on micro, small, medium-sized and large enterprises in Armenia, sex-disaggregated


(c) Web analytics report on usage statistics of virtual one-stop shop

Documentary evidence: SME DNC Reference Note on Media and IT Tools for Communication of SME DNC of Armenia

Policy action 9.c. is substantially complied with. Databases are being

consolidated. SME DNC has confirmed that consolidation of the database is midway through its development stage. The data included in the database are sex-disaggregated. They include micro, small, and medium-sized enterprises. They do not include large enterprises, as the shareholding of large enterprises is mainly corporate so it is not possible to identify sex of entrepreneurs. The database, as of October 2014, included at least 10,039 entrepreneurs. Each regional branch periodically updates its database and sends it to the central office for consolidation. The database is being expanded continuously. An information management system is being developed, for which SME DNC has engaged an IT company. The existing database is

Appendix 2 53




Evidence


(October 2015)





(October 2015)

being transferred from Microsoft Excel format to the new database. It will be accessed through a local network (such as intranet). The database includes (i) name of enterprise (ii) organizational legal

type (iii) name of director (iv) gender of

entrepreneur (v) sector of activity (vi) description of activity (vii) city or village (viii) address (ix) size of enterprise

(micro, small, and medium-sized)

Information on ethnicity is not included. Not all data are published on the SME DNC website as some are confidential. As the virtual one-stop shop is a newly established website www.sksnak.am, usage statistics are not yet available. It is not technically possible to identify the sex of website visitors (see policy action 4.a/1.4.a). Since 2011, the government has defined MSMEs in harmony with European Union regulations. MSMEs are

54 Appendix 2




Evidence


(October 2015)





(October 2015)

defined by the number of employees and at least one of the financial following criteria: number of employees, annual turnover, or annual balance sheet total.

ADA = Armenian Development Agency; ADB = Asian Development Bank; B&B = bed and breakfast; BDS = business development service; ESMS = environmental and social management system; GCCI = Gegharkunik Chamber of Commerce and Industry; GSVCA = Gender Sensitive Value Chain Analysis; ICT = information and communication technology; IT = information technology; MOE = Ministry of Economy; MOF = Ministry of Finance; MOJ = Ministry of Justice; MOU = memorandum of understanding; MSMEs = micro, small, and medium-sized enterprises; OECD = Organization for Economic Co-operation and Development; PACA = Participatory Appraisal of Competitive Advantage; PFI = participating financial institution; SMEs = small and medium-sized enterprises; SME DNC = Small and Medium Entrepreneurship Development National Center; SRC = State Revenue Committee; TA = technical assistance. Notes: a MOE is the implementing agency for the program and it acts through SME DNC as appropriate. b Government agencies have been coordinated into an interagency group, which includes the Small and Medium Enterprise Development Center, Armenian

Development Agency, and SME Council. c Independent board includes business associations, chamber of commerce, and participants from the private sector. d United Nations Conference on Trade and Development. 2006. Guidance on Good Practices in Corporate Governance Disclosure. New York and Geneva. e Attached to ADB. 2012. Report and Recommendation of the President to the Board of Directors: Proposed Policy-based Loan, Loan, and Technical Assistance

Grant to Armenia for the Women’s Entrepreneurship Support Sector Development Program. Manila. (TA 8200-ARM). f Competency Based Economies through Formation of Enterprises. CEFE International is a non-profit private sector organization, which coordinates members of

the network to provide competent CEFE services: concept development; training of trainers; course adaptation, preparation, and realization; manual preparation; project implementation; monitoring and evaluation.

g ADB. 2014. Minor Change to a Project: Loan 2923-ARM: Women’s Entrepreneurship Support Sector Development Program. Manila.

h See note a. i Using Competency-based Economies through Formation of Enterprises (CEFE). j ADB. 2012. Report and Recommendation of the President to the Board of Directors: Proposed Policy-based Loan, Loan, and Technical Assistance Grant to

Armenia for the Women’s Entrepreneurship Support Sector Development Program. Manila. k ADB. 2014. Assessment of needs for business development services among women entrepreneurs of Armenia. Consultant’s report. Yerevan (TA 8200-ARM). l ICT refers to the diverse technological tools and resources used to communicate, and to create, disseminate, store, and manage information. These

technologies include computers, the internet, broadcasting technologies (radio and television), and telephony. m The patent payment fee is a compulsory and without-indemnity fee paid to the state budget that comes to replace the income tax and the value-added tax for

individuals and private entrepreneurs carrying out activities envisaged by the Law on Amendments and Additions to the Law on Patent Payments, approved by the Parliament on 22 June 2012 (NO-166-N).

n ADB. 2009. Technical Assistance to Armenia for Institutional Modernization to Improve the Business Environment. Manila (TA 7417-ARM). o Law on State Support to Small and Medium Enterprise (from 5 December 2000, and amended in 2010). Before 2011, the definition was based on the number

of employees and was sector-dependent. Sources: Asian Development Bank, Small and Medium Entrepreneurship Development National Center, Ministry of Finance, Ministry of Economy

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