Presentation on theme: "Business education and rural entrepreneurship in rural Armenia Nelly Lejter AIPRG Conference May 18, 2008."— Presentation transcript:
Business education and rural entrepreneurship in rural Armenia Nelly Lejter AIPRG Conference May 18, 2008
Focus This presentation focuses on a very specific, delimited field: business training received by micro and small entrepreneurs in Armenias rural areas We will discuss the training challenges and needs, and lessons from the field in Armenia and worldwide to then: Suggest specific ideas to improve the impact of business training in rural areas
Lessons Learned to Date Participants Participants Trainers and support staff Curricula Curricula Physical resources (premises, computers, etc.) Physical resources (premises, computers, etc.) Training Training Business plan development Business plan development Business plan presentation Business plan presentation Business plan review Business plan review Bank cooperation Bank cooperation Businesses funded Businesses funded Jobs created Jobs created New skills developed New skills developed PROCESS OUTPUT INPUT
Constraints of Program Participation Widespread mentality of dependence lack of ability to make own decisions lack of ability to make own decisions There is a widespread mentality of dependency and distrust in officials. This finding expalains that most of the villagers are dominated by local elites to whom they have to leave key decision-making. There is a widespread mentality of dependency and distrust in officials. This finding expalains that most of the villagers are dominated by local elites to whom they have to leave key decision-making. The impact of aid programs. It has become increasingly popular among villagers that international organizations should feed their families. These expectations go a long way in shaping their behavior and reducing their overall motivation to start own businesses. It has become increasingly popular among villagers that international organizations should feed their families. These expectations go a long way in shaping their behavior and reducing their overall motivation to start own businesses. Distrust in microcredit institutions Distrust in microcredit institutions There is a sense of frustration that most of the microcredit institutions in order to attract clients provide loans with low percentage and then increase the percentage. There is a sense of frustration that most of the microcredit institutions in order to attract clients provide loans with low percentage and then increase the percentage.
Weak social capital Lack of ability to identify the actual and potential resources that can be mobilized through individual businesses. Lack of ability to identify the actual and potential resources that can be mobilized through individual businesses. Pessimistic villagers/unhealthy social networks Pessimistic villagers/unhealthy social networksTrainings Time consuming Time consuming Difficulties with distance Difficulties with distance
Major recruiting challenges 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 entrepreneurship Villagers low (or no) awareness of rural entrepreneurship Large number of villagers (basically men) regularly working outside of Armenia mainly in Russia (usually from March to November). Large number of villagers (basically men) regularly working outside of Armenia mainly in Russia (usually from March to November). Relatively high rate of drop outs (about 32% of the selected applicants) from the business training. Relatively high rate of drop outs (about 32% of the selected applicants) from the business training.
Major Problems Necessity of providing continuous consultations for beneficiaries and businesses. Necessity of organizing trainings for the offices staff: business plan writing related trainings for the training assistants (it can be organized in the field offices and be taught by the local trainers), and rural entrepreneurship development trainings for the program leaders and program assistants.
Potential impact The trainings would surely result in higher quality of produced business plans and in more successful rural development strategies and businesses.
Suggestions To organize short (some 4-6 day) trainings on rural entrepreneurship in bigger villages, The villagers will not be required to present a business idea to participate in the trainings, Through the trainings we will be able: to enhance the villagers awareness of rural entrepreneurship, to enhance the villagers awareness of rural entrepreneurship, to prepare more committed prospects for business trainings with better business ideas to prepare more committed prospects for business trainings with better business ideas
Suggestions To reduce the level of the business trainings drop outs, To reduce the level of the business trainings drop outs, To identify more rural business opportunities. To identify more rural business opportunities.
Factors favoring participation Specifics of the program Tangible results; beneficiaries Public accountability /satisfied trainees public accountability is critically important to consolidate mentality change and create values around the programs mission and vision. public accountability is critically important to consolidate mentality change and create values around the programs mission and vision. Individual approach with each villager. Sensitivity trainings: We focus our attention on the social needs of training participants which include affection, sense of belonging, acceptance and friendship. Participatory leadership: better integration between the trainee and prorgam. Trainees performance at trainings depends not only on ability but on motivation as well.
Issues to be analyzed To identify possible constraints of program participation To identify target groups with innovative production techniques. To identify data on the existing rural enterpreneurships and possible business people.
Concerns of rural entrepreneurs worldwide Need for tailored training and educational programs Difficulties in accessing outside resources and support services A sense of isolation Lack of access to capital Underappreciated by communities or the center Regulatory frameworks not conducive to entrepreneurial activities
Rural entrepreneurship centers offer: Education and training Technical assistance and information Entrepreneurial networking Access to capital and infrastructure Leadership and policy development A framework to organize community development councils and strategic alliances with microentrepreneurs, SMEs, government, service providers (NGOs)
Limitations specific to rural areas Rurality limits development ecologically by restricting the ability of the local population to meet its daily needs within the local territory. Distance, remoteness DependencyIsolation
Opportunities of rural areas Increased potential to build upon strong ties (if they exist) These can support actions on common concerns
Rural entrepreneurship Entrepreneurship is a self development strategy with a strong potential for benefitting the local economy. Key questions: –How to make sure self development will benefit growth with equity –How to create markets, socioeconomic conditions, and a business climate conducive to the success of rural enterprise as a development mechanism
Action items Conduct a goods/resources inventory, identify assets and gaps Plan regionally-involve urban and suburban partners Intentionally create a culture that promotes a regional flavor and entrepreneurship environment Create urban-rural linkages Goal: to form a regional entrepreneurial development system that is inclusive and that empowers entrepreneurs in decision making and has an impact on regulations and other issues
Action items: access to capital Develop a finance continuum that supports every stage of business development Create incentives for banks and other financial institutions (credit organizations) to assist in the development of loan funds, business investment mechanisms, and related funds For existing loan funds, diversify financial products to maximum extent possible Create financial innovations roundtables and insurance roundtables Goal: rural entrepreneurs need access to capital, savings, and investment opportunities, and health, retirement, and other insurance related plans that are affordable. These financial resources should be calibrated to the scale of microenterprises as well as small and larger businesses.
Action items: new market opportunities Create funded networks between compatible small businesses and microenterprises for joint promotion, joint ventures, scaling up, and knowledge- sharing Develop local and region-based incentives for small business and microenterprises that use local resources, produce value added products, purchase from local suppliers, and participate in local networks Develop the capacity to provide industry- specific technical assistance to entrepreneurs Develop industry-specific distribution capacity in the community to ensure that entrepreneurs products/services can reach the identified markets Goal: to create, expand and promote new market opportunities for rural enterprises, particularly in respect to value added opportunities, urban/rural linkages, sectoral strategies, industry clusters
Action items: infrastructure Develop broadband, high speed data access to transmit ideas, know-how, knowledge, products and services Create a long term transportation plan for the region that addresses getting goods and people to markets Develop appropriate infrastructure packages that support small business development Goal: to invest in quality, 21 st century infrastructure that includes schools, health care facilities, transportation, utilities, waste disposal, water treatment that is sized to fit very small businesses in rural areas
Rural entrepreneurial communities Regulatory framework InfrastructureSocial capital Access to knowledge and networks Access to credit Access to non financial services
In Armenia as in elsewhere… Development efforts are concentrated in the macro-level, and do not pay enough attention to the micro-level of how economic changes are affecting individuals, families, and communities, particularly in poorer areas Community enterprise development is a professional practice that can complement addressing this problem