Half of SMEs in Armenia have no access to financial resources –USAID

YEREVAN, January 22. / ARKA /. About half of small and medium-sized companies in Armenia have no access to financial resources, according to Anthony Sinclair, a USAID advisor for "Finance for Economic Development» program.

He was speaking today at the presentation of the findings of a study conducted to find out what should be done to improve the availability of funds to  small and medium-sized businesses operating beyond the capital city Yerevan.

The study offers more than 100 measures, the implementation of which will contribute to improving the availability of funds.

According to Anthony Sinclair, SMEs’ access to finance in Armenia is in poor condition when compared to other countries and about 50% of them do not have access to finance, while  in rural areas this figure rises to 60-70%. He said four of five such companies are beyond the funding on their own, or because of other circumstances.

He said industry, agriculture, construction and IT sectors account for 30% of Armenia's economy, which means that other industries depend on them to varying degrees, and therefore everything should be done to improve the availability of financial resources to above-mentioned industries.

He said one of the proposed measures is  the need to improve lending proposals, many of which do not suit SMEs-  only 6% of  proposals offer loans with a repayable period of time exceeding 12 months. According to him,  clear-cut  steps are needed to strengthen the Armenian national currency in order to avoid the impact of currency fluctuations on credit obligations.

"Banks and universal credit organizations need to diversify their activities, because their financial resources  do not often reach those who need them," said Sinclair.

According to the Union of Employers of Armenia, there were about 70,000 SMEs in Armenia in late 2014, including 58,000 micro and small enterprises. SMEs account for  43% of Armenia’s GDP.

The 4-year Finance for Economic Development (FED) Program, designed to expand and further develop financial intermediation in Armenia, was launched in 2013 summer. The program will work to increase the availability of relevant affordable and effective financial services to micro, small, and medium-sized enterprises throughout Armenia including rural areas. 

Activities will also focus on improving the regulatory and institutional framework for a more effective and stable financial sector, and strengthening the financial sector foundations for Armenia’s ongoing pension reform.-0-