Social entrepreneurship is still at an early stage of development in Armenia. Companies operating

in the social economy sector in Armenia are not recognized by any status, and there are no

comprehensive studies covering this topic. The majority of the several dozen existing social

enterprises in the country seem to have been set up using grants from donor organizations. The

sector currently consists of a majority of individuals who have a strong background in social issues

and non-profit operations, but very little knowledge and experience of business and

entrepreneurship. As yet, there is little engagement by the Government with social enterprises.

Donor engagement is high with the EU Delegation in Armenia having supported projects since

2014 and the UNDP launching an impact accelerator in 2017. The commercial private sector has

not shown much awareness of or interest in social economy for the time being. A positive

phenomenon in Armenia’s social entrepreneurship experience so far is that there is an existing

network that brings together many social enterprises in the country – the Association of Social

Enterprises of Armenia.

There are currently no laws on social entrepreneurship Armenia, and accordingly no separate

legal form for social enterprises in Armenia, as well as no tax privileges for the enterprises that

have social impact. Usually, social enterprises in Armenia are being registered as limited liability

companies, foundations, non-government organizations, cooperatives etc. In 2017 a working

group led by EBRD BSO started the development of a concept paper with a definition of social

enterprise, and it states that Government stands to gain by providing a united and clearly outlined

definition of social entrepreneurship, as well as that the Government should consider engaging

with social enterprises through privileges in the public procurement process while also being

involved in the monitoring of new and existing social enterprise in order to ensure that they are

having a social impact. Besides that, it is worth to mention that the concept paper suggests few

points to support the definition of social enterprise.

In 2017 a new law entered into force which provided an opportunity for NGOs to directly engage

in entrepreneurial activity. This boosted various NGOs to start providing paid services.

Though there are no separate tax privileges for social enterprises in Armenia, but there are several

conditions in the taxation system, which can be favorable for social enterprises as well. There are

various economic sectors which are exempt from various taxes. Such sectors include agriculture,

IT, jewelry etc. A number of fields of activities for self-employment, which are also exempt from

taxes, such as production of shoes, clothes, teaching dancing and singing, extracurricular

education activities, B&Bs, etc. According to the Law “On tax exemptions for entrepreneurship in

border village communities” 47 border villages are exempt from all taxes. Taxpayers engaged in

agricultural production are exempt from taxes on that income until 31 December 2024.

Challanges

Social entrepreneurs in Armenia face several challenges in their efforts to create positive social

change. Some of the key challenges include:

Limited Funding: One of the major challenges faced by social entrepreneurs in Armenia is the

limited availability of funding. Many social entrepreneurs struggle to secure adequate financial

resources to launch and sustain their initiatives. The lack of access to capital and investment

opportunities makes it difficult to scale their ventures and implement innovative solutions.

Regulatory Environment: The regulatory environment in Armenia can be complex and

burdensome for social entrepreneurs.

Lack of Awareness and Support: Social entrepreneurship is still a relatively new concept in

Armenia, and there is a lack of awareness and understanding among the general public,

government officials, and traditional business sectors. This lack of awareness can make it difficult

for social entrepreneurs to gain recognition, build partnerships, and access resources and

networks that can support their ventures.

Limited Networking Opportunities: The social entrepreneurship ecosystem in Armenia is still

developing, and there is a limited network of support organizations, incubators, and accelerators

specifically tailored to the needs of social entrepreneurs. The absence of a strong support system

can hinder collaboration, knowledge sharing, and the exchange of best practices among social

entrepreneurs.

Brain Drain: Armenia has experienced a significant brain drain in recent years, with many highly

skilled individuals leaving the country in search of better opportunities abroad. This brain drain

affects the availability of talent and expertise that social entrepreneurs need to build and grow

their ventures.

Infrastructure and Technology Gaps: In some regions of Armenia, particularly rural areas, there

are infrastructure and technology gaps that can pose challenges for social entrepreneurs. Limited

access to reliable internet connectivity, inadequate transportation networks, and lack of basic

services can hinder the implementation and scalability of social initiatives.

Cultural and Attitudinal Barriers: Cultural norms and attitudes toward entrepreneurship, risk-

taking, and social change can present challenges for social entrepreneurs in Armenia. Some

traditional mindsets may prioritize stability and conformity over innovation and social impact,

making it harder for social entrepreneurs to gain acceptance and support.

VET Institutions’ Situation Analysis Focusing on the Engineering Sector: Current Situation of VET Institutions in Armenia

Armenia has been focusing on the development of vocational education and training as part of

its efforts to enhance the country’s human capital and meet the demands of the labor market.

VET institutions play a crucial role in providing skills and knowledge to students, enabling them

to enter the workforce or pursue further education.

The VET system in Armenia comprises both state and private institutions. The state institutions

are primarily managed by the Ministry of Education, Science, Culture, and Sports. There are also

several non-governmental organizations and private entities that offer vocational training

programs.

VET programs in Armenia cover various fields, including agriculture, engineering, healthcare,

tourism, information technology, construction, and more. These programs aim to provide

students with practical skills and hands-on training relevant to their chosen professions.

To improve the quality of VET in the country, Armenia has been implementing reforms and

working towards aligning its VET system with international standards. Efforts have been made to

update curricula, enhance teacher training, establish partnerships with businesses and

industries, and promote apprenticeship programs.

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