Besides public sector jobs, the micro, small, and medium enterprise (MSME) sector is deemed crucial in ensuring women’s economic participation in Armenia. Notwithstanding this, women MSMEs comprised only 32% of the registered MSMEs in 2012. This low ratio was attributable to women’s lack of business skills, knowledge, confidence, and access to networks and credit. On a broader plane, while women were on par with men in terms of education, their economic participation and earnings were lower. In 2012, women’s unemployment rate was 35%, against 22% for men; their estimated average income was $1,724, compared with $2,557 for men.
To enhance the economic opportunities for women entrepreneurs and the MSMEs that, in 2010, accounted for 98.5% of all registered enterprises in Armenia and contributed 43% of gross domestic product and 42.5% of employment, the Asian Development Bank (ADB) approved a $40 million loan for the Women’s Entrepreneurship Support Sector Development Program in October 2012. The loan had 2 components with equal amounts: a 2-tranche policy-based loan (PBL) that financed improvements in the enabling environment and the Small and Medium Entrepreneurship Development National Center (SME DNC), the state agency tasked with implementing support programs for small and medium enterprises; and a financial intermediation loan (FIL) that enabled participating financial institutions (PFIs) to provide loans to MSMEs, of which at least 50% should be to women MSMEs.
The program’s envisaged impact was women benefiting from increased economic opportunities in Armenia. Its expected outcome was an improved enabling environment for women entrepreneurs, delivered through 4 outputs. 3 of these outputs − improved institutional framework, improved capacity, and improved business environment for women entrepreneurs and MSMEs − were to be supported by the PBL. The 4th output, improved access to finance by women entrepreneurs and MSMEs, was to be financed by the FIL.
The PBL and FIL complemented each other well and in combination achieved the program’s intended outcome. Through the PBL, key reforms to strengthen SME DNC’s corporate governance and coordinating functions were undertaken; programs to support startup businesses, develop MSMEs in the provinces, establish a women entrepreneurs’ mentorship network, and recognize outstanding women entrepreneurs and MSMEs were implemented; business readiness was improved through training and the provision of business development services; and starting and doing business was made cheaper and easier through the elimination of the business registration fee; the simplification of the patent fee payment procedures and tax reporting requirements; the provision of tax counseling services; and the installation of point-of-sale and online tax payment systems.
The FIL component provided the liquidity needed to deliver financing to women entrepreneurs in this improved enabling environment. The PFIs utilized ADB loan proceeds to make 2,780 new MSME loans by end-2017, more than the 2,600 minimum-target. 73% of these new loans were disbursed to women entrepreneurs, surpassing the target 50%.
Successful attainment of the program’s intended outcome was reflected in the World Economic Forum’s 2017 Global Gender Gap Report, which shows the number of firms with women ownership in Armenia to have grown from 32% to 34% between 2013 and 2017 and the number of firms with female managers to have increased from 14% to 24% during the same period. While not solely or primarily attributable to women’s greater participation in the MSME sector, women’s unemployment rate decreased to 17.8% by end-2016 and the gender gap in labor force participation declined to 18% in 2016 from 20% in 2011.
Self-evaluation by ADB’s Central and West Asia Department rated the program successful. The Ministry of Finance was the executing agency. The Ministry of Economy, through the SME DNC, was the PBL’s implementing agency. The Central Bank of Armenia, through the project management unit of the German–Armenian Fund, and the PFIs were the implementing agencies for the FIL.
