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Business education and Business education and rural entrepreneurship in rural entrepreneurship in rural Armenia rural Armenia Nelly Lejter Nelly Lejter AIPRG Conference AIPRG Conference May 18, 2008 May 18, 2008
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Business education and rural entrepreneurship in rural Armenia Nelly Lejter AIPRG Conference May 18, 2008.

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Page 1: Business education and rural entrepreneurship in rural Armenia Nelly Lejter AIPRG Conference May 18, 2008.

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

Page 2: Business education and rural entrepreneurship in rural Armenia Nelly Lejter AIPRG Conference May 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

Page 3: Business education and rural entrepreneurship in rural Armenia Nelly Lejter AIPRG Conference May 18, 2008.

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

Page 4: Business education and rural entrepreneurship in rural Armenia Nelly Lejter AIPRG Conference May 18, 2008.

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.

Page 5: Business education and rural entrepreneurship in rural Armenia Nelly Lejter AIPRG Conference May 18, 2008.

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

Page 6: Business education and rural entrepreneurship in rural Armenia Nelly Lejter AIPRG Conference May 18, 2008.

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.

Page 7: Business education and rural entrepreneurship in rural Armenia Nelly Lejter AIPRG Conference May 18, 2008.

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.

Page 8: Business education and rural entrepreneurship in rural Armenia Nelly Lejter AIPRG Conference May 18, 2008.

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.

Page 9: Business education and rural entrepreneurship in rural Armenia Nelly Lejter AIPRG Conference May 18, 2008.

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

Page 10: Business education and rural entrepreneurship in rural Armenia Nelly Lejter AIPRG Conference May 18, 2008.

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.

Page 11: Business education and rural entrepreneurship in rural Armenia Nelly Lejter AIPRG Conference May 18, 2008.

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.

Page 12: Business education and rural entrepreneurship in rural Armenia Nelly Lejter AIPRG Conference May 18, 2008.

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.

Page 13: Business education and rural entrepreneurship in rural Armenia Nelly Lejter AIPRG Conference May 18, 2008.

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

Page 14: Business education and rural entrepreneurship in rural Armenia Nelly Lejter AIPRG Conference May 18, 2008.

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)

Page 15: Business education and rural entrepreneurship in rural Armenia Nelly Lejter AIPRG Conference May 18, 2008.

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

Page 16: Business education and rural entrepreneurship in rural Armenia Nelly Lejter AIPRG Conference May 18, 2008.

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

Page 17: Business education and rural entrepreneurship in rural Armenia Nelly Lejter AIPRG Conference May 18, 2008.

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

Page 18: Business education and rural entrepreneurship in rural Armenia Nelly Lejter AIPRG Conference May 18, 2008.

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

Page 19: Business education and rural entrepreneurship in rural Armenia Nelly Lejter AIPRG Conference May 18, 2008.

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.

Page 20: Business education and rural entrepreneurship in rural Armenia Nelly Lejter AIPRG Conference May 18, 2008.

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

Page 21: Business education and rural entrepreneurship in rural Armenia Nelly Lejter AIPRG Conference May 18, 2008.

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

Page 22: Business education and rural entrepreneurship in rural Armenia Nelly Lejter AIPRG Conference May 18, 2008.
Page 23: Business education and rural entrepreneurship in rural Armenia Nelly Lejter AIPRG Conference May 18, 2008.

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