About the Suport to SME Development in Armenia (SMEDA)
The private sector in Armenia faces several challenges such as the lack of cohesion and coordination of different small and medium-sized enterprises (SME) support programmes, inefficient steering mechanisms for the SME development process, a fragmented landscape of stakeholders, and an inefficient public private dialogue as well as an inefficient decision-making process. The donor coordination process in different intervention areas is currently not government-driven.
The involvement of the private sector in SME development strategies is not effective and interests of SMEs are in fact not reflected in decision-making processes. Supporting services are insufficiently available – both in quality and quantity. Underdeveloped capacities within the organised private sector are main obstacles and barriers to the envisaged development.
Innovative ideas are hardly developed and are rarely transferred into business cases. Research and development are limited, in particular in the SME sector with hardly any cooperation of businesses and research entities. The innovative and creative potential of young specialists is not employed.
Access to finance is another major challenge for SMEs. Due to high debts – accrued during the global financial crisis and an associated decline in GDP (estimated 14% in 2009) – many Armenian SMEs have only limited access to further credits and loans. In general, lending policies of most banks and financial institutions do not encourage investments in SMEs.
With this situation for the private sector in Armenia, the EU-co-financed, GIZ-implemented project “Support to SME Development in Armenia” (SMEDA) was initiated in 2016. The project is in line with the EU Single Support Framework 2014-2017 for Armenia. It is furthermore consistent with the strategic framework documents of Armenia (Armenia Development Strategy and SME State Support Strategy) in order to facilitate their implementation.
The objective of the project is to improve the national business and investment climate and support the creation and development of SMEs to enable broad based growth.
The SMEDA-Project is part of the Regional Private Sector Development in South Caucasus Programme, which is operating in the three countries of the South Caucasus, Armenia, Azerbaijan, and Georgia. This umbrella programme faces the challenge of generating broad based inclusive growth to reduce the urban-rural gap and poverty above all in rural regions. In view of the small domestic markets with low purchasing power, the primary aim is to strengthen private sector development.
The “Support to SME Development in Armenia” (SMEDA) Project is focusing on the following result areas:
- Improved policy making process and coordination of supports to SME development for a conducive business development framework,
- Strengthened private sector organisations to implement SME policies,
- Improved process of commercialization of ideas linking research institutions and businesses via cooperation networks,
- Improved design and management of economic clusters (business incubators, techno parks, and Free Economic Zones),
- Diversified access to finance for innovative start-ups and small businesses.
The project is co-funded by the European Union and implemented by the GIZ Programme Private Sector Development South Caucasus (PSD SC) and its country component in Armenia. The PSDSC-Programme is commissioned by the German Federal Ministry for Economic Cooperation and Development (BMZ). The SMEDA-Project is designed for four years from 2016 to 2019.
SMEDA Overall Objective
Create employment opportunities by enhancing private sector development in Armenia.
SMEDA Specific Objective
The specific objective is to improve the national business and investment climate and support the creation and development of SMEs to enable broad based growth.
- Increase the proportion of SME within the overall economy: increase the share of SME from 7% to 15% in overall number of micro, small and medium enterprises in Armenia.
- Increase share of SME in employment from 25% to 30%.
- Increase share of SME in GDP from 27% to 35%.
- Increase of added value created by SMEs.
Partner structure: executing agencies and intermediaries
The project is guided in its implementation by a Technical Project Steering Committee (PSC), which is co-chaired by representatives of the EU Delegation and the Ministry of Economy (MoE).
Target Group and Implementing Partners
The target group is composed of all relevant stakeholders involved in the development of SMEs in Armenia. This includes the political lead partner, the Ministry of Economy in Armenia, and the Small and Medium Entrepreneurship Development National Centre (SMEDNC), related sector associations, the Armenian Chambers of Commerce and designated SME support organisations.
An important project partner is the Armenian Enterprise Incubator Foundation (EIF), which implements parts of the project activities related to managing and monitoring of funds for start-ups and small businesses.
Another important target group is females and males, owners and employees of SMEs.
Planned Activities of SMEDA-Project
- Support to policy making by assisting the Armenian government to implement the SME strategy and to introduce a review mechanism for the SME development strategy and its action plans
- Support to policy implementation by strengthening the institutional capacities of the Ministry of Economy and the SMEDNC in terms of coordinating the implementation of the SME strategy and related action plans as well as developing an information portal to support business performance on foreign trade transactions
- Support to Public-Private Dialogue (PPD) by strengthening the capacities of the Ministry of Economy to manage the PPD process as well as to assess and recommend on dispute settlement mechanisms and platforms
- Provide technical assistance to private sector organisations to improve and expand services and to increase their network with European businesses
- Strengthening the capacities of private sector organisations to participate in PPD platforms and to utilize the opportunities of technology transfer as well as to promote entrepreneurial skills, clusters and value chain development
- Support to linking research institutions and the private sector to foster innovation
- Support to state bodies and the private sector to access EU innovation support resources and platforms such as the new EU Framework Programme for Research and Innovation (Horizon 2020)
- Strengthening capacities of the Ministry of Economy to design, implement and promote clusters
- Support to improving cluster management, linking clusters to European networks as well as developing and promoting new areas for business incubation
- Supporting the provision of grants to support technology start-ups and SMEs promoting new services/products
- Support to EIF and SMEDNC to design and implement business acceleration and coaching programmes for entrepreneurs and grant recipients
Context and current situation in the field of assignment
The newly commissioned SMEDA-Project embraces 5 result areas and a team headed by a team leader and composed of 3 project experts, a communication expert, and a financial and administrative manager as well as support staff.
The Government of the Republic of Armenia (GoA) identified in the Strategy of Export-Led Industrial Policy of Armenia 11 sectors that have significant export potential. Despite the rich heritage as well as the up-to-date Armenian production, the Cultural and Creative Industry (CCI) is slightly underexposed within the strategy. The economic potential and opportunities especially of Armenian SMEs are not in the focus at this moment. Regardless, they can play an important role for economic development and the innovation ecosystems of countries as described by GIZ: “... because creativity is boundless.- The potential of cultural and creative industries”. Nevertheless, the pro-innovative structure of the dynamic cultural and creative industries has the potential to set trends and shape the future. Views tend to diverge however when it comes to determining precisely what can be termed as CCI. UNESCO defines CCIs as those branches of the economy that produce or sell goods or services that embody or convey cultural expressions. In its definition, GIZ concurs with Germany’s Conference of Economics Ministers which breaks the industry down into eleven sub-markets: music industry, publishing industry, art industry, film industry, broadcasting industry, performing arts, design industry, architecture, media, advertising industry and games and software industry. The latest research report by the German Government on CCIs re-structures this sector of the economy in line with the classification used for economic activity, resulting in the inclusion of several artisanal craft industries, which had hitherto been deemed traditional trades. This embraces craftspeople such as bookbinders, jewelers, musical instrument makers with retail outlets, art traders, graphic designers, photographers, stage designers, craft enterprises for stage work and wood sculptors. The monitoring report has taken these economic sectors into account in the relevant sub-markets in line with their respective cultural and creative focus.
The sub-markets essentially consist of micro- and small-scale enterprises. In contrast to many other branches of industry, the assets of businesses are rarely finished products. More often they involve less tangible innovations. Given that the work process is mostly determined by transient trends and prototype-like activities, providing support for the creative economy is a real challenge. ‘Fun industry’, ‘playground’, ‘bohemians with no idea how the business world works’ – people who work in the creative economy are often confronted with these clichés. But above all else, the CCI are pioneers of tomorrow’s working world. Highly inter-linked, with internet-based forms of communication and cooperation as well as a keenly honed ability to innovate, this market is rapidly becoming a cross-sectoral branch. It is itself developing at a breakneck pace, and is contributing to value chains in many other sectors in the process. Moreover, classic sub-markets like film and music industry, art and book trades and market for performing arts, which are less cross-sectoral in nature, are developing innovations or adapting innovations of others to suit their specific market. Today, 3D films, MP3 audio file formats and e-books are all firmly established on the market. (…) At global level an upward trend can be seen. At USD 592 billion, trade in creative goods and services now accounts for almost 3.7 per cent of global trade, which is twice what it was ten years ago. (…) At the same time, in comparison with other sectors of the economy, the creative economy requires more outside support as it is one of the few sectors not to have any established industry associations. Moreover many of those who work in the creative sector know very little about how the business world works and therefore about how to turn their ideas into a profitable venture. As a result, besides the need to ensure an enabling environment and state promotion measures, this sector has a disproportionately high demand for advisory services. (…) Cultural and creative industries have a secret formula for success: their above-average innovativeness. (…) The creative economy’s innovative spirit is mainly based on two factors: creative professionals not only have new ideas for products but are at the same time extremely creative regarding process development, organisation and marketing. As a result, new ideas for product contents synergise with a flood of ideas concerning new forms of distribution or marketing, customer interaction or new methods of working. What is more, they do not work on their own but cooperate with other actors along the entire value chain. That means that cultural and creative companies work hand in hand with universities, companies in neighbouring sectors and customers in order to nurture ideas and drive forward current trends. They constantly engage with their follow actors via state-of-the-art technology and test their ideas’ marketability. This means that the creative economy is extremely dynamic and criss-crossed by informal and international relations. By involving customers and users, it is pioneering industrial change. This allows us to propound a simple rule of thumb: without networking, there is no innovation and without innovation chances of accessing the market are more difficult. Through networking, the likelihood of being more innovative and thus economically successful is increasing.
In the past, creative professionals have repeatedly found new ways of engaging with each other and with other actors, frequently cooperating on specific projects. ‘Co-working places’, for instance, allow actors from various disciplines within the CCI to work together in shared space at flexible work stations, thus combining effectiveness and creativity. By sharing the same infrastructure, they reduce their costs. Informal professional networks – known as ‘communities of practice’ – focus on developing joint competence and benefiting from physical contacts. Online networks offer the chance of working on the same idea at a distance. The results of this kind of cooperation are referred to as ‘open innovation’.
But creative professionals are not always able to transform their ideas into reality – be it for financial reasons or lack of business experience. Indeed, the creative economy openly admits that it is still in need of appropriate programmes capable of embracing this sector’s multitude of cutting-edge business ideas.
The aim of SMEDA’s result area 3 is to develop and promote new areas for business incubation and support. Therefore, SMEDA wishes to assess the potential and demand for support activities in the CCI with a focus on selected business related sub-sectors.
Objective and tasks
The SMEDA-Project seeks to contract a national company/expert to conduct four roundtables and short studies for different sub-industries within the CCI. The aim is to assess potential interventions and support offers for those industries. As a result of these roundtables, the CCI sector shall be better understood and defined – as a basis for further activities supporting selected sub-sectors within the CCI.
The assignment will focus as a first step on the following four subsectors and consists of two different parts:
- Software and Games
PART I: Short Inventory Reports (one for each subsector all together 4) on the existing associations, web platforms, festivals, fairs, training courses, institutes, infrastructures and support offers in the mentioned subsectors in Armenia. This report (6-10 pages) shall give a comprehensive overview and inventory on the opportunities and promotional structures available for active actors in those creative industry fields. The necessary data shall be collected via desktop research and if necessary expert interviews.
PART II: Organization of one roundtable for each subsector (four roundtables all together) with the goal to assess the demand and potential support measures in the field. The expectation is that minimum 15 representatives from the different fields of the mentioned subsectors (companies, education institutions, associations, others) participate in each roundtable. A high participation of businesses/businessmen (creative agencies, entrepreneurs, self-employed designers etc.) is envisaged.
The contractor shall develop an agenda and concept for the assessment of the demand in the industry, organize set-up and implementation of the roundtables and above all ensure the participation by invitation over his own channels (as social media, newsletters and other industry relevant channels). The Roundtables will be joined by at least one international expert contracted by GIZ responsible for the development of a supporting approach for CCI in Armenia.
During the period 29 Jan – 03 Feb 2017 an international expert will be in Yerevan, conducting a feasibility study on potential CCI support approaches and interventions. The contractor shall support the international expert with information gathering and organize four to eight meetings with key representatives of the subsectors and four to eight site visits for the international expert.
The assignment starts on January 12th 2017 and lasts until February 28th 2017.
Conditions and payment terms
The Contractor’s offer must include:
- The Financial offer requires the Contractor to submit for consideration a summary of costs with respect to the above sections
- The Technical offer requires the Contractor to submit details pertaining to the Contractor’s organization; the Contractor’s experience in the field of creative industries; the Contractor’s embeddedness in the different subsectors of Creative Industry, the Contractor’s experience in organization of roundtables (workshops), a media plan which present the plan to reach the relevant actors in this field
- Interim payment;
- Final payment upon fulfilment of the contract.
Coordination and communication
The Contractor reports to the Team Leader of the SMEDA-Project, Ms. Eva Maria Näher, and closely collaborates with the responsible Project Experts, Mr. Peer Priewich and Mr. Davit Kartashyan, as well as with the administrative support team in Armenia.
The Contractor must fulfil the following requirements:
- Strong proven expertise in the area of assignment
- Proficiency in English and Armenian languages (written and spoken)
Excellent understanding of how to approach and communicate with people from the creative community.
- Description of Action
- Log Frame for SMEDA-Project