On 23 September, the European Union (EU) and the European Bank for Reconstruction and Development (EBRD) provided up to €16 million to support the launch of the Amber Capital EU-Armenia SME Fund. This is a private equity fund seeking to raise a total of €70 million for investment in small and medium-sized enterprises (SME’s) in Armenia, reported arka.am. A cooperation memorandum was signed on 20 September in Yerevan.

Katarina Mathernova, Deputy Director-General for Neighbourhood Policy and Enlargement Negotiations at the European Commission, said at a briefing that the provision by the EU and EBRD for the establishment the fund is evidence of the European Union's consistent policy of support for small and mid-scale businesses in Armenia. ”We are confident that the EU-Armenia SME Equity Fund will support the growth and competitiveness of the Armenian economy, attract foreign direct investment and help further develop innovation based on the talents of Armenians,” she said. Mathernova said that the European Union has already provided a €10-million assistance to Armenia four years ago.

Matteo Patrone, EBRD Managing Director of Eastern Europe & Caucasus, said this project will also help to improve the investment climate and overall economic diversification. He said he meant not only financial resources but also the formation of a platform for putting EBRD ideas for management system improvement and improving the economic eco-system as a whole into practice. In his words, cooperation with Armenia has attracted considerable investments into small and medium businesses - their share in the capital of private companies in agriculture, tourism, logistics and energy has already reached 85%.

“We are very excited to be a part of this initiative, pioneering the concept of institutional private equity in Armenia. The Fund will bring together the best of the two worlds: the highest quality investor base and strategically important corporate clients to create strong and long-lasting partnerships. We aim to become a catalyst for change with the introduction of the best corporate governance standards, technology transfer and the development of capital markets,” said Anush Simonyan, Chief Executive Office of Amber Capital Armenia.

The EU is the biggest provider of financial support and a key reform partner in Armenia. On average, the EU provides €1 million per week to contribute to stronger governance, a stronger economy, stronger connectivity and people-to-people contacts. With annual allocations of €40 million in grants, its current substantial portfolio focuses on supporting the reform agenda of the government, private sector development, education and regional development. In addition, since 2014 more than €1 billion in the form of blended loans and grants has been invested in the energy, agriculture and transport sectors.

The EBRD is the leading institutional investor in Armenia and is active in all sectors of the economy. Since the start of its operations in Armenia in 1992, the EBRD has invested €1.36 billion in 178 projects in the country’s financial, corporate, infrastructure and energy sectors, with 90% of investments in the private sector.

According to the Compendium of Enterprise Statistics in Armenia, published by the Organization for Economic Co-operation and Development (OECD) in 2018, SME’s comprise more than 99% of all enterprises in the business economy, account for 66% of the total business employment and 62% of total turnover and 60% of value added of the business sector. 94% of Armenian enterprises are micro-enterprises, meaning enterprises with less than ten employees. About 87.5% of all enterprises operate in the services sector, accounting for almost 68% of employment and generating 60% of value added. While less than 0.4% of enterprises are in the mining and manufacturing sectors, they provide a disproportionate contribution to employment and value added, respectively 3.6% and 7.7%. There were 59 575 SME’s registered in the country with 52% of the enterprises located in Yerevan.