代写美国留学企业问题研究论文FOLLOW UP SUMMARY
THE SME FINANCING ROUND TABLE
ORGANIZED BY USAID/FINANCIAL SECTOR DEEPENING PROJECT
ON JUNE 10TH
July 9, 2009
This publication was produced for review by the United States Agency for International Development.
It was prepared by Financial Sector Deepening Project.
The SME Financing Round Table
Organized by USAID/Financial Sector Deepening Project on June 10th
Submitted by:
Financial Sector Deepening Project
DISCLAIMER
The author’s views expressed in this publication do not necessarily reflect the views of the United States Agency for
International Development or the United States Government.
Report Title i
TABLE OF CONTENTS
EXECUTIVE SUMMARY .............................................................................................................................. II
PREFACE ....................................................................................................................................................1
I. INTRODUCTION ...................................................................................................................................2
II. SME IN ARMENIA.................................................................................................................................2
III. SME ACCESS TO FINANCE.................................................................................................................4
IV. SUMMARY OF CHALLENGES AND RECOMMENDATIONS .............................................................8
A. CHALLENGES AND MAIN ISSUES .......................................................................................................................8
B. RECOMMENDATIONS AND SUGGESTIONS ........................................................................................................10
V. CONCLUSIONS ..................................................................................................................................13
Report Title ii
EXECUTIVE SUMMARY
On June 10th the USAID Financial Sector Deepening Project (FSDP) in cooperation with Unionof Banks of Armenia, SME Development National Center and other interested stakeholdersorganized a round-table discussion entitled “SME Financing in Armenia: Current Situation,Challenges and Opportunities”.
More than 60 well-known SME and financial market experts from different state bodies andvarious local and international organizations participated in the event.Summarizing the main results of the round table on SME financing in Armenia, includingpresentations of all speakers as well as discussed findings and recommendations of allparticipants, this report describes the purpose of the round table event, the general environmentin Armenia for SMEs financing and identifies certain existing challenges trying to proposecertain key recommendations which might facilitate the whole process of overcoming thespecified challenges. Further to the above, we can propose following generalizedrecommendations of the round table.
- It is mentioned necessity of development, adoption and implementation of GovernmentStrategy related to SME assistance and development of concept and correspondingaction plan. Also development/improvement of business climate and infrastructure.
- Highlighted the urgency of public policy and administration improvements in legal,judicial and regulatory systems to reduce the level of bureaucracy, corruption,monopolization in the economy.
- Declared crucial role of easing of the tax administration, accounting and reportingstandards for SME finance development.
- Referred to the necessity of capacity building of financial institutions to overcome thelack of experience in SME financing and develop more appropriate financial tools
(leasing, factoring etc.), particularly lower interests and longer durations, also provideguaranty or venture mechanisms to enable financial institutions to finance start-ups andnewly established businesses.
- Mentioned necessity to attract trough financial/donor organizations long-term financial
resources and resources in Armenian Drams.
Report Title iii
- Emphasized necessity of more state support to SMEs, particularly state guarantees,subsidies and other supportive mechanisms (consultancy, market research, information
sharing, etc.).Stressed urgency of development of appropriate training on SME management, marketing,international trading and finance and providing (or financing) of consulting services for SME’s
Report Title 1
PREFACE
On June 10th the USAID Financial Sector Deepening Project (FSDP) in cooperation with Unionof Banks of Armenia, SME National Development Center, Republican Union of Employers and
other interested stakeholders organized a round-table discussion entitled “SME Financing inArmenia: Current Situation, Challenges and Opportunities” at Erebuni Plaza Business Center.More than 60 well-known SME and financial market experts involved in the financial and realsectors of Armenian economy, experts and representatives from different state bodies and
various local and international organizations dealing with SME financing and developmentissues, participated in the event.
During the first part of the event 8 speakers from different organizations made presentations on
different aspects of SME financing. During the second part of the event participants discussedvarious issues related to SME needs for financial resources, SME access to finance and
particularly to lending resources, current challenges, as well as existing opportunities, includingall SME financing programs implemented by the government of Armenia and international
/organizations.
Taking into consideration current global economic and financial crisis and its influence on theeconomy of Armenia, as well as the important role of SME in development of the economy,
increase of the employment rate and fighting of current financial economic situation, variousrecommendations and possible solutions have been proposed and discussed by
representatives of different organizations.
Following the end of the round-table, USAID FSDP promised to summarize all presentations,challenges and recommendations and submit the summary of the event to all interested parties,as well as state organizations as a step forward in the establishment of a more favorableenvironment for SME financing in Armenia.
SME Round Table Follow Up Report 2
I. INTRODUCTION
This paper presents and summarizes the presentations, discussions and opinions of speakersand participants of the Round Table discussion and aims to summarize current situation in SMEfinancing in Armenia, existing challenges, problems and opportunities for development.Small and medium enterprises are the foundation for development of any national economy and
Armenia is not an exception. The growth of a healthy, competitive SME sector is maximizedwhen there is a strong enterprise culture in the society at all levels, maximum potential for
growth of existing small businesses, and a highly supportive economic, social and stakeholderenvironment. The development of small business also depends significantly on society’s attitudeto small business and entrepreneurship. In recent years, the Armenian Government has startedto actively encourage SME growth, in order to stimulate economic development.
An essential part of developing a sustainable SME environment is a legal framework thatincludes fully operating institutions to enforce laws. This allows for commercial growth by
reducing unfair competition, providing stability and increasing trade opportunities. The legal
system also ensures that SMEs have improved access to the funding that they need for
investment and success.
II. SME IN ARMENIA
Definitions of a SME can vary from country to country, based in part on size of economy andstage of economic development. According to Armenian law, the definition of SME is multilevel
depending on the sector and is defined by number of employees. Thus, for industrial andproduction sectors, it shouldn’t exceed 100 employees, for transport, trade and services- 30
employees, etc. In 2008, the Department of Statistics recorded 130,000 SMEs registered in
Armenia, which comprise 98% of all legal entities and private entrepreneurs, and produce about
42% of country’s GDP.
In Armenia, as in many other CIS countries, there are a number of challenges in the overall
business operating environment which affect all economic agents and in particular SMEs. The
major points of concern can be highlighted, as follows.
SME Round Table Follow Up Report 3
Political and legal environment – The entire system is flawed, from initial drafting of laws to
actually getting a ruling enforced. Enormous concerns are raised regarding the level of
education and training of judges and court officials, interpretation of the Law, independence of
the judiciary, corruption of justice, low capacity, and inability to enforce fair, binding and timely
rulings. In such a setting, the population and especially MSMEs distrust the courts and prefer to
operate in an informal fashion, avoiding government. There are few incentives for going legal.
Unfair Competition – Because of the high cost of compliance and strong tendency to operate
informally, those SMEs that try to operate legally, if only partly, suffer from unfair competition:
where a competitor is able, by bribery or fraud, to avoid the costs of complying with the laws and
official rules and thus can undercut those who try to comply.
Shadow Economy – Most Armenian SMEs are having some legal operations and some in the
shadows; few, if any, are wholly legal. The environment is not conducive to legalization. The
Armenian economy is generally made up of very large concerns and micro, marginal
enterprises, there is no real medium size enterprise segment. And those who are successful
have political connections and protection.
Access to Finance – SMEs are typically owner-managed and started with funds from friends
and relatives, and this limits their growth potential. Many donor programs have looked at
bridging various gaps to increase SMEs’ access to finance. This includes various SME lending
programs, micro financing, credit organizations etc. However, lenders demand more collateral
for loans and impose onerous bureaucracy and high costs, particularly on new SMEs and
startups.
Human Resources Development – Armenia enjoys a relatively well-educated population, but
the system fails to supply the skills necessary in a modern, market-driven economy. SMEs also
rely on friends and family for their staffing needs, which can further constrain growth. Donor
organizations, such as KfW, BFC, etc. are also working on providing various business skills, but
usually lack coordination in their programs.
Information – SMEs have poor access to information, either because they do not know where
to find it or because there are vested interests against their accessing information. Often, SMEs
are limited in their vision, being concentrated on a single buyer or seller, or looking merely at
SME Round Table Follow Up Report 4
their local market and one product or service. There is lack of industry analysis and other
comparative data publicly available for SME.
Government Communications – There is no avenue for SMEs to voice their joint concerns or
promote their joint interests. While there are various associations and SME supporting
organizations, their activities are mostly fragmented and not coordinated. Government is
generally deaf to business, except where personal connections exist. Government devises
policy and laws in isolation, rarely consulting the community therefore failing to build
understanding or support.
Rural Specifics – All the above factors worsen as distance from the center increases. In the
regions, problems are also recorded with rural space security, rural infrastructure, and rural
production information. With a combined population of 768,000, rural territory represents nearly
25 percent of the entire population of Armenia. Analysis of 38 accumulated actual municipal
expenditures for 2008 showed that these communities spent nearly 7.5 billion AMD for goods
and services, capital investments, and capital repairs. Much of this is provided by local venders
serving the municipality and most of these are small businesses. Required working capital and
equipment financing can be financed through commercial banks. However, many of these
SMEs have lack of access to financial means to improve and expand their services.
Infrastructure – Infrastructure is also a common problem and represents a significant burden to
the supply chain. The highly urbanized and concentrated networks make those in the rural
areas truly isolated. With poor roads, limited irrigation and often no power, these areas are
disenfranchised and unlikely to develop.
III. SME ACCESS TO FINANCE
SMEs, whether start-ups or existing entities, need either capital or access to working capital to
be able to grow. Capital can be in the form of internally generated funds (such as profits or
retained earnings in the company) or external funds such as a capital contribution of some type.
Working capital can come from a number of sources, including loans, credit extended by
suppliers, sale of assets, or internally generated profits.
SME Round Table Follow Up Report 5
Access to financial services, is defined as an absence of price and non-price barriers in the use
of financial services. Improving access means improving the degree to which financial services
are available to all at a fair price.1
In Armenia, numerous business
representatives express as their primary
concern that loans for working capital and new
investment are difficult to get and that rates
are too high. SMEs’ primary source of funds
usually comes from family or individual capital.
This heavy reliance on personal sources of
funding is in great part due to a perceived or
actual inability to obtain affordable financing
from banks, microfinance and credit
institutions, leasing companies, and other
institutions that provide loans or credit.
The community of financial institutions,
however, claims that there are numerous
lending programs in the market place to fund
inventory, capital expenditures, and even
start-up businesses. The major obstacles from
the some lenders perspective are the lack of
credit history, poor skills and know-how in
SME funding and necessity to educate the
public that financing is available.
Various international donor institutions, such
as EBRD, World Bank, IFC, KfW, are currently
collaborating with the local banks in Armenia
to provide SME lending. There has also been
increased competitive pressure, for example from one of the original micro-credit banks –
1 Malhotra, Mohini, et al. 2006. “Expanding Access to Finance: Good Practices and Policies for Micro, Small,
and Medium Enterprises,” Washington, D.C. : World Bank.
Snapshot of SME Access in Europe
According to the SME Access to Finance
Survey conducted in 2005 by Eurobarometer:
- SMEs are most interested in lower
interest rates, less demanding
guarantee requirements and simpler
procedures for granting loans.
- Leasing or renting and overdrafts are
the types of financing most frequently
used by SMEs to finance their activities.
Over 50% of the SMEs surveyed have
already made use of leasing or renting
and overdrafts.
- Banks are the financial institutions that
SMEs have used most in order to
obtain financing. Nearly 80% of the
SMEs surveyed have used a bank for
financing. Leasing or renting companies
were used by around 25% of SMEs.
- A substantial minority of SMEs feel that
the offers from the banks are not suited
to their needs. 42% of the SMEs
surveyed hold this view, but 50%
disagree with it.
- The view that banks do not want to take
risks in lending to companies is
widespread among SMEs, with 71% of
SMEs surveyed holding this view.
- SMEs are most likely to turn to banks
when in need of information on
financing. 45% of those surveyed firstly
turn to banks when they look for
information or advice on financing.
SME Round Table Follow Up Report 6
ProCredit. Thus, there is now some competition for SME loans, and at the same time some of
the lenders have proven to the banks that these loans are profitable, and can spread the overall
lending risk for a bank into a broader base.
On the demand side, specific borrowers’ problems include: