Launched in October 2011, the Enterprise Development and Market Competitiveness project of the United States Agency for International Development (USAID/EDMC) started a full spectrum of activities this spring. In a jointly organized event: "Competition Issues, Analysis and Solutions" conference on June 14, the EDMC Project provided to the State Commission for the Protection of Economic Competition (SCPEC) an overview of competition issues in the key export and growth-oriented value chains (sectors) supported by the project, as well as proposed solutions how to overcome these and enhance competition overall. For the next 4 years, through July 2016, the project will provide comprehensive support to Armenian small and medium-sized enterprises (SMEs) operating in the following sectors: high technologies, pharmaceuticals/biotechnologies, food processing (fruits and vegetables), and hospitality.

Mr. Babinov, what do you think about the position of Armenian companies and clusters operating in the sectors that USAID/EDMC supports?

Unfortunately there are not a lot of developed clusters in the sectors that USAID/EDMC supports. During the initial months of the project, we evaluated the growth potential in each sector and have to acknowledge that there is a development potential. High-tech, pharmaceuticals, food processing and hospitality sectors were chosen specifically because of their potential for increased exports, employment and the creation of new jobs.

The goal of the project is to support SME development to ensure sustainable economic growth in Armenia, improve the business enabling environment and develop competitive sectors, including supporting SMEs to expand existing and enter new markets and to establish cross-sector ties. It is for the latter purpose, that we supported DigiTec Business Forum 2012 "Smart Country - Digital Solutions for an Innovative Economy" (June 15-16).

USAID/EDMC also supports SMEs to improve productivity through development of managerial skills, make use of innovative solutions, including high-tech products and services. The program is aimed at improving the business enabling environment and easing e the regulatory burden: supervision, taxation, licensing. Legal reform recommendations are jointly discussed with the private sector representatives and associations, drafted and submitted to the relevant Government institution for review and consideration.

Through our Legal Reform component, USAID/EDMC also contributes to the Regulatory Guillotine program. USAID provides part of the financing, while our specialists offer technical assistance.

How effective was the previous USAID/CAPS program?

USAID/CAPS project has been a very effective project, especially in the field of tourism. A lot of times our project relies on the previous work of CAPS project in order to deliver further development assistance. The main difference between the programs is that USAID/CAPS offered a lot of consulting, while USAID/EDMC is designed to offer a wider range of business services.

What prevents our companies from increasing their value and what can help them in the matter? What specific steps will be taken towards this end?

Competitiveness is one of the key issues for Armenian SMEs. There are sectors where one company uses various means – ties with government agencies, barriers for new companies - to prevent healthy competition and remain dominant in the field. If we fail to ensure real improvement in this sphere, we will have to go down to a lower level, that is, work with specific companies on specific issues, but this will not be as effective.

It is with that purpose that we held the June 14 conference, jointly with the American Chamber of Commerce and the State Commission on Protection of Economic Competition of Armenia, attended by the US Ambassador to Armenia John Heffern, more than 80 private sector representatives and Armenian government colleagues. We invited an international export to support our partners in devising policy recommendations that will ease the process of resolving anti-competition cases through court. We hope that this will help the State Commission on Protection of Economic Competition of Armenia to find real solutions to real problems.

Does this mean that improving the system of competition protection and the fight against monopolies in Armenia is one of the goals of USAID/EDMC?

The project targets improvements in Armenia’s business enabling environment and the monopolies are probably the most essential obstacle to its establishment. And if we take no measures in this direction, the rest of our work will not be as effective.

For the first time a donor program supporting the private sector of Armenia, particularly USAID/EDMC, also supports higher education institutions in terms of market oriented workforce development. What kind of support is provided for the stable development of higher educational institutions, including laboratory capacities and academia skills?

Our Workforce Development component works to bring together labor market demand and supply in Armenia. It is not a secret that a company’s greatest asset is its competitive human resources, however, in many countries the demand for skilled labor force does not comply with an adequate supply. In Armenia this gap is perhaps wider. For instance, in the IT sphere the annual demand for professional specialists in the market may allow the creation of 600-1000 new workplaces, while in most cases the young specialists and graduates lack the necessary knowledge and skills that the private sector is looking for.

In order to fill this gap, we first of all study the existing curricula and the need for new programs in higher education institutions (universities, colleges, vocational education institutions), as well as opportunities to adjust them to private sector needs. The project supports universities and colleges to develop and offer new courses that respond to specific market needs. Right now our project supports the American University of Armenia to offer three new extension courses and train their staff to offer more.

We also invite short-term experts to support VET institutions and colleges to revise existing curricula. The component team works together with university career centers and private employment agencies so that they can better match business sector demands. Unfortunately, we cannot provide material support. Our work is to act a mediator in initiating and enhancing an effective dialogue between the private sector and educational institutions.

Is USAID/EDMC going to “enter” the sphere of education management, as it takes the universities and the Ministry of Education and Science of Armenia much time to elaborate and approve plans for developing courses and programs?

That is an issue, however, USAID/EDMC does not target education management as an end-goal. The educational institutions that our project partners with usually have a management system that rapidly responds to these needs. Leadership commitment and openness to change is of course a prerequisite to a successful partnership and the universities that are proactive about adjusting their programs to market needs are the first to cooperate with us.

Do you receive any partnership offers?

We do – the May 17^th career fair at the European Regional Educational Academy in Yerevan is an example of that. The fair was a success in terms of bringing the Academy’s students and hiring companies together in one place. EREA career center and management was open for cooperation and improving their dialogue with the private sector.

In addition, the USAID/EDMC Workforce Development team collaborates with regional universities of Armenia, such as in Gyumri where we will work to support the development of a mobile technology curriculum.

What do you think of the fact that in Armenia people often enter the university only to receive a diploma?

I come from Bulgaria, which also used to be a communist country. This psychology perhaps dates back to those periods and it will take many generations to avert this line of thinking. The fact that many universities are accustomed to state funding is not helping either.

Alexander Babinov: USAID/EDMC supports sectors with the highest growth potential

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