YEREVAN. - A new project with $5.2 mln funding has been launched in Armenia to support exporters of canned food and alcohol.

Alexander Kalantaryan, director of the Fund for Rural Economic Development in Armenia (FREDA), which will implement the project, said the aforementioned to Armenian News – NEWS.am.

The company, which is the continuation of the previous one (with $8 mln funding), will again provide support to the companies which deal with agricultural processing and have an export potential. The project will again be funded by the International Fund for Agricultural Development (IFAD), which will provide $5.2 mln.  But FREDA works with other financial companies as well.

“We are trying to invest together. We work very actively with ArmSwissBank. I think we will invest in two companies in the near future. And personally we have invested in three of them,” he stated.

Apart from joint investment, the new project will help to get ready for it. “We have conventionally called this a quasi-corporate investment. We provide loan to the company and prepare it for necessary standards of management, since our companies are not always subjected to audit and assessment of assets, and do not always do accounts according to the modern standards,” Kalantaryan added.

When the companies reach “the required condition,” the loan provided to them turns into equity participation.  The companies, which have already received funding, manufacture mushrooms, cattle fodder, as well as cardboard boxes for wine and canned food.

FREDA stimulates companies to introduce energy conservation in their production, as well as diversify export directions. The previous program partners have not only maintained the traditional markets of Russia and, to a lesser extent, Ukraine, but also managed to make their goods available in the Czech Republic, Germany, U.S., Israel, Lebanon and Latvia.

“The upper threshold of our investments is 240 mln AMD (slightly more than $500,000), that is we work with small and medium enterprises. We actually prepare them to become the clients of international financial organizations, such as EBRD и IFC (which already provide funding on market conditions). We can provide half of that amount as a short-term loan for circulating funds. This can come in very handy during the harvest season, since the agrarian sector companies engage in seasonal but large purchase of raw material for the entire year,” Kalantaryan noted.   

In the framework of the previous project, four out of nine entrepreneurs work successfully, Two more continue working, but without FREDA’s participation (due to inappropriate financial accounting). Another three are engaged in bankruptcy procedure.

“The experience is not catastrophic but partially negative. Therefore, now we will choose our partners more strictly,” Kalantaryan said.