Around 50 percent of women-owned businesses in Armenia use personal or household savings as their main source of funding for starting a business, compared to almost 70 percent of their male counterparts.

This is the conclusion of the report on women in business, conducted by a member of the World Bank Group IFC as part of a program implemented in partnership with the UK’s Good Governance Fund. The study aimed to identify barriers that women-owned firms face, while also providing recommendations on how to address them.

The report says that women’s lagging participation in employment and entrepreneurship represents a misallocation of Armenia’s human resource potential, resulting in an estimated loss of economic output that is equivalent to 14 percent of GDP (gross domestic product).

It also reads that women entrepreneurs take more loans and tend to use funds from commercial banks (22 percent compared to 12 percent of men entrepreneurs).

“However, collateral—required for bank loans—is a greater challenge for women because of inheritance practices favoring men. Also, with land ownership granted to males the default head of household, the land privatization of the 1990s has put women entrepreneurs at a disadvantage,” the IFC report states.

The study has also concluded that improved access to finance, adequate business training, and timely support could help women seize more opportunities and become equal participants in the Armenian economy.

The majority of surveyed women (almost 73 percent) mentioned that there was a lack of an educated workforce in their field. Nearly all women entrepreneurs acknowledged gaps in business knowledge and skillsets needed to properly conduct entrepreneurial activities.

 “This project aims to help the Armenian Government in its work to improve the environment for business and encourage investment to stimulate economic growth, with a special focus on fostering female entrepreneurship. We are hopeful that this study will improve awareness of constraints for women-owned businesses and will contribute to women’s economic empowerment in Armenia,” said British Chargé d'Affaires in Armenia Victor Clark.

IFC’s Acting Regional Manager for the South Caucasus Jesper Kjaer has noted that the IFC study reveals the gaps and deterrents that prevent women entrepreneurs in Armenia from unlocking their full potential.

“The aim is to help the public and private sectors, along with international development partners, design and implement more evidence-based policies and programs. We have already coached a cohort of trainers, who can help address some of the common challenges to support women entrepreneurs, thereby helping drive inclusive economic growth in Armenia,” he added.

The study reveals that given the lack of childcare support and school shutdowns during the COVID-19 pandemic, women entrepreneurs face additional challenges compared to men.

Therefore, the report says, women-owned businesses need additional support to retain staff, change operating business models, and have improved access to bank loans and state support programs.