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Business education and rural Business education and rural entrepreneurship in rural Armeniaentrepreneurship in rural Armenia
Nelly LejterNelly Lejter
AIPRG ConferenceAIPRG Conference
May 18, 2008May 18, 2008
FocusFocus
This presentation focuses on a very This presentation focuses on a very specific, delimited field: business training specific, delimited field: business training received by micro and small entrepreneurs received by micro and small entrepreneurs in Armenia’s rural areasin Armenia’s rural areasWe will discuss the training challenges We will discuss the training challenges and needs, and lessons from the field in and needs, and lessons from the field in Armenia and worldwide to then:Armenia and worldwide to then:Suggest specific ideas to improve the Suggest specific ideas to improve the impact of business training in rural areasimpact of business training in rural areas
Lessons Learned to DateLessons Learned to Date
ParticipantsParticipants
Trainers and Trainers and support staffsupport staff
CurriculaCurricula
Physical Physical resources resources (premises, (premises, computers, etc.)computers, etc.)
Training Training
Business plan Business plan developmentdevelopment
Business plan Business plan presentationpresentation
Business plan Business plan reviewreview
Bank Bank cooperationcooperation
Businesses Businesses fundedfunded
Jobs createdJobs created
New skills New skills developed developed
PROCESS OUTPUTINPUT
Constraints of Program ParticipationConstraints of Program ParticipationWidespread mentality of dependenceWidespread mentality of dependence
√ √ lack of ability to make own decisionslack of ability to make own decisions
There is a widespread mentality of dependency and distrust There is a widespread mentality of dependency and distrust in officials. This finding expalains that most of the villagers in officials. This finding expalains that most of the villagers are dominated by local elites to whom they have to leave are dominated by local elites to whom they have to leave key decision-making.key decision-making.
The impact of aid programs.The impact of aid programs.
It has become increasingly popular among villagers that It has become increasingly popular among villagers that international organizations should “feed their families”. international organizations should “feed their families”. These expectations go a long way in shaping their These expectations go a long way in shaping their behavior and reducing their overall motivation to start own behavior and reducing their overall motivation to start own businesses.businesses.
Distrust in microcredit institutionsDistrust in microcredit institutions
There is a sense of frustration There is a sense of frustration that most of the microcredit that most of the microcredit institutions in order to attract clients provide loans with institutions in order to attract clients provide loans with low percentage and then increase the percentage.low percentage and then increase the percentage.
Weak social capitalWeak social capital
Lack of ability to identify the actual and Lack of ability to identify the actual and potential resources that can be mobilized potential resources that can be mobilized through individual businesses.through individual businesses.
√√ Pessimistic villagers/unhealthy social Pessimistic villagers/unhealthy social networksnetworks
TrainingsTrainings
√√ Time consumingTime consuming
√ √ Difficulties with distanceDifficulties with distance
Major recruiting challengesMajor recruiting challenges
Slow process that can be reasoned by:Slow process that can be reasoned by: Villagers low trust about such programs, Villagers low trust about such programs, Villagers low (or no) awareness of rural Villagers low (or no) awareness of rural
entrepreneurship entrepreneurship Large number of villagers (basically men) regularly Large number of villagers (basically men) regularly
working outside of Armenia mainly in Russia working outside of Armenia mainly in Russia (usually from March to November).(usually from March to November).
• Relatively high rate of drop outs (about Relatively high rate of drop outs (about 32% of the selected applicants) from the 32% of the selected applicants) from the business training.business training.
Major ProblemsMajor Problems
Necessity of providing continuous Necessity of providing continuous consultations for beneficiaries and consultations for beneficiaries and businesses. businesses.
Necessity of organizing trainings for the Necessity of organizing trainings for the offices staff: business plan writing related offices staff: business plan writing related trainings for the training assistants (it can be trainings for the training assistants (it can be organized in the field offices and be taught organized in the field offices and be taught by the local trainers), and rural by the local trainers), and rural entrepreneurship development trainings for entrepreneurship development trainings for the program leaders and program assistants. the program leaders and program assistants.
Potential impactPotential impact
The trainings would surely result in higher The trainings would surely result in higher quality of produced business plans and in quality of produced business plans and in more successful rural development more successful rural development strategies and businesses.strategies and businesses.
SuggestionsSuggestions
To organize short (some 4-6 day) trainings To organize short (some 4-6 day) trainings on rural entrepreneurship in bigger villages, on rural entrepreneurship in bigger villages,
The villagers will not be required to present The villagers will not be required to present a business idea to participate in the a business idea to participate in the trainings,trainings,
Through the trainings we will be able:Through the trainings we will be able:to enhance the villagers awareness of rural to enhance the villagers awareness of rural
entrepreneurship,entrepreneurship,
to prepare more committed prospects for business to prepare more committed prospects for business trainings with better business ideastrainings with better business ideas
SuggestionsSuggestions
To reduce the level of the business To reduce the level of the business trainings’ drop outs,trainings’ drop outs,
To identify more rural business To identify more rural business opportunities. opportunities.
Factors favoring participationFactors favoring participation
Specifics of the programSpecifics of the programTangible results; beneficiariesTangible results; beneficiariesPublic accountability /satisfied trainees Public accountability /satisfied trainees
public accountability is critically important to consolidate public accountability is critically important to consolidate mentality change and create values around the mentality change and create values around the program’s mission and vision.program’s mission and vision. Individual approach with each villager. Individual approach with each villager. Sensitivity trainings: Sensitivity trainings: We focus our attention on the social We focus our attention on the social needs of training participants which include affection, needs of training participants which include affection, sense of belonging, acceptance and friendship. sense of belonging, acceptance and friendship. Participatory leadership: Participatory leadership: better integration between the better integration between the trainee and prorgam. trainee and prorgam.
Trainees’ performance at trainings depends not only Trainees’ performance at trainings depends not only on ability but on motivation as well.on ability but on motivation as well.
Issues to be analyzed Issues to be analyzed
To identify possible constraints of program To identify possible constraints of program participation participation
To identify target groupsTo identify target groups with innovative with innovative production techniques.production techniques.
To identify data on the existing rural To identify data on the existing rural enterpreneurships and possible business enterpreneurships and possible business people.people.
Concerns of rural entrepreneurs Concerns of rural entrepreneurs worldwideworldwide
Need for tailored training and educational Need for tailored training and educational programsprogramsDifficulties in accessing outside resources Difficulties in accessing outside resources and support servicesand support servicesA sense of isolationA sense of isolationLack of access to capitalLack of access to capitalUnderappreciated by communities or the Underappreciated by communities or the centercenterRegulatory frameworks not conducive to Regulatory frameworks not conducive to entrepreneurial activitiesentrepreneurial activities
Rural entrepreneurship centers offer:Rural entrepreneurship centers offer:
Education and trainingEducation and trainingTechnical assistance and informationTechnical assistance and informationEntrepreneurial networkingEntrepreneurial networkingAccess to capital and infrastructureAccess to capital and infrastructureLeadership and policy developmentLeadership and policy developmentA framework to organize community A framework to organize community development councils and strategic alliances development councils and strategic alliances with microentrepreneurs, SMEs, government, with microentrepreneurs, SMEs, government, service providers (NGOs)service providers (NGOs)
Limitations specific to rural areasLimitations specific to rural areas
Rurality limits development ecologically by Rurality limits development ecologically by restricting the ability of the local population restricting the ability of the local population to meet its daily needs within the local to meet its daily needs within the local territory.territory.
Distance, remotenessDistance, remoteness
DependencyDependency
IsolationIsolation
Opportunities of rural areasOpportunities of rural areas
Increased potential to build upon strong Increased potential to build upon strong ties (if they exist)ties (if they exist)
These can support actions on common These can support actions on common concernsconcerns
Rural entrepreneurshipRural entrepreneurship
Entrepreneurship is a “self development” Entrepreneurship is a “self development” strategy with a strong potential for strategy with a strong potential for benefitting the local economy.benefitting the local economy.
Key questions: Key questions: – How to make sure self development will benefit How to make sure self development will benefit
growth with equitygrowth with equity– How to create markets, socioeconomic How to create markets, socioeconomic
conditions, and a business climate conducive to conditions, and a business climate conducive to the success of rural enterprise as a the success of rural enterprise as a development mechanism development mechanism
Action Action itemsitems
Conduct a goods/resources Conduct a goods/resources inventory, identify assets inventory, identify assets and gapsand gaps
Plan regionally-involve urban Plan regionally-involve urban and suburban partnersand suburban partners
Intentionally create a culture Intentionally create a culture that promotes a regional that promotes a regional flavor and entrepreneurship flavor and entrepreneurship environmentenvironment
Create urban-rural linkagesCreate urban-rural linkages
Goal: to form a Goal: to form a regional regional entrepreneurial entrepreneurial development system development system that is inclusive and that is inclusive and that empowers that empowers entrepreneurs in entrepreneurs in decision making and decision making and has an impact on has an impact on regulations and regulations and other issuesother issues
Action items: Action items: access to access to capitalcapital
Develop a finance continuum that Develop a finance continuum that supports every stage of business supports every stage of business developmentdevelopment
Create incentives for banks and Create incentives for banks and other financial institutions (credit other financial institutions (credit organizations) to assist in the organizations) to assist in the development of loan funds, development of loan funds, business investment business investment mechanisms, and related fundsmechanisms, and related funds
For existing loan funds, diversify For existing loan funds, diversify financial products to maximum financial products to maximum extent possibleextent possible
Create financial innovations Create financial innovations roundtables and insurance roundtables and insurance roundtablesroundtables
Goal: rural Goal: rural entrepreneurs need entrepreneurs need access to capital, access to capital, savings, and investment savings, and investment opportunities, and opportunities, and health, retirement, and health, retirement, and other insurance related other insurance related plans that are affordable. plans that are affordable. These financial These financial resources should be resources should be calibrated to the scale of calibrated to the scale of microenterprises as well microenterprises as well as small and larger as small and larger businesses. businesses.
Action items: Action items: new market new market opportunitiesopportunities
Create funded networks between Create funded networks between compatible small businesses and compatible small businesses and microenterprises for joint promotion, microenterprises for joint promotion, joint ventures, scaling up, and joint ventures, scaling up, and knowledge-sharingknowledge-sharing
Develop local and region-based Develop local and region-based incentives for small business and incentives for small business and microenterprises that use local microenterprises that use local resources, produce value added resources, produce value added products, purchase from local suppliers, products, purchase from local suppliers, and participate in local networksand participate in local networks
Develop the capacity to provide Develop the capacity to provide industry-specific technical assistance to industry-specific technical assistance to entrepreneursentrepreneurs
Develop industry-specific distribution Develop industry-specific distribution capacity in the community to ensure that capacity in the community to ensure that entrepreneurs’ products/services can entrepreneurs’ products/services can reach the identified markets reach the identified markets
Goal: to create, expand Goal: to create, expand and promote new market and promote new market opportunities for rural opportunities for rural enterprises, particularly enterprises, particularly in respect to value in respect to value added opportunities, added opportunities, urban/rural linkages, urban/rural linkages, sectoral strategies, sectoral strategies, industry clustersindustry clusters
Action items: Action items: infrastructureinfrastructure
Develop broadband, high speed Develop broadband, high speed data access to transmit ideas, data access to transmit ideas, know-how, knowledge, products know-how, knowledge, products and servicesand services
Create a long term transportation Create a long term transportation plan for the region that addresses plan for the region that addresses getting goods and people to getting goods and people to marketsmarkets
Develop appropriate Develop appropriate infrastructure packages that infrastructure packages that support small business support small business developmentdevelopment
Goal: to invest in quality, Goal: to invest in quality, 2121stst century century infrastructure that infrastructure that includes schools, health includes schools, health care facilities, care facilities, transportation, utilities, transportation, utilities, waste disposal, water waste disposal, water treatment that is sized to treatment that is sized to fit very small businesses fit very small businesses in rural areasin rural areas
In Armenia as in elsewhere…In Armenia as in elsewhere…
Development efforts are concentrated in the Development efforts are concentrated in the macro-level, and do not pay enough attention to macro-level, and do not pay enough attention to the micro-level of how economic changes are the micro-level of how economic changes are affecting individuals, families, and communities, affecting individuals, families, and communities, particularly in poorer areasparticularly in poorer areas
Community enterprise development Community enterprise development is a is a professional practice that can complement professional practice that can complement addressing this problemaddressing this problem