Enterprise Armenia Foundation is an organization funded by taxpayers that claims to stimulate business development and attract investment in Armenia. Annually, it spends around 550 million drams on salaries and administrative costs.
Going back 15-20 years, the organization focused on supporting small businesses through seminars, courses, and consultations. However, these initiatives’ outcomes and general perceptions were not particularly positive, even though the allocated funds were fully utilized.
Enterprise Armenia distinguishes itself from other funds by being relatively transparent. Other organizations like ANIF, ARFI, E+S, and Amber Capital have ranged in their dealings from evasive at best to outright aggressive at worst. In contrast one of Enterprise Armenia’s managers was willing to discuss their operations openly. He explained that the organization guides investors through the complex landscape of Armenian business operations, assisting them in navigating challenges..The fund’s website states: “Whether you seek to invest in a growing economy with limitless potential or aspire to elevate your existing business to new heights, you have arrived at the perfect destination. Our agency offers a range of services designed to support investors in every step of the investment process. From identifying potential investment opportunities to facilitating communication with government agencies, we are dedicated to helping you succeed in Armenia..”
More specifically, for example, when customs officers stop a truckload of the investor’s goods and start making demands, the investor can contact Enterprise Armenia, which in turn will deal with the issue. These instances are clearly not rare.
This type of assistance, which the organization terms “concierging,” also includes company registration, liaising with government agencies, and preparing presentations. It sounds nice, but that’s about it.
Discussion, much less polemics, is not part of the plans – just listening. Now let’s consider the question from another angle. What sort of investment appeal does Armenia really have if it requires a specialized fund with dozens of employees just to tackle basic tasks?
Is the purpose of the organization to merely justify its own existence? Why are the activities of the fund not aimed at eradicating harmful phenomena? Why are there no legislative initiatives to prohibit corrupt practices like the unjustified stopping of trucks? Why hasn’t Enterprise Armenia made any effort to translate crucial civil, tax, and administrative codes and other necessary laws into English and publish them for public access?
Interestingly enough, when asked why incidents of assisting trucks aren’t on their website as success stories, the answer was that it is not publicized so as “not to harm the investment climate,” which seems rather ironic.
Enterprise Armenia’s activities are not limited to helping investors. They also extend their services to small entrepreneurs with bad credit histories or without collateral. They act as a guarantor to the banks for their loans. If the entrepreneur fails to repay the loan, the bank deducts the amount from the fund’s bank account. However, this has proven to be risky as, according to the reports, out of 1.8 billion drams of issued guarantees, more than 1 billion drams have not been repaid. In any other bank, a non-return rate exceeding 20% would lead to serious consequences, but here, despite a 55% non-return rate, everything is fine. What were the staff doing? The fund claims to be pursuing legal action to recover the money, but the prospects are dim.
So far, the financial picture shows a loss of 550 million drams annually on salaries and administrative expenses and more than 1 billion drams of non-repayable loans. Compared to the ANIF fund, these figures seem minor, but they are significant nonetheless, making their presence known. However the fund was more active compared to ANIF and its subsidiaries, their activities were equal to zero. In the end, all these funds continue to be funded by taxpayers.
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Levon Khalatyan
