SME growth key to economic stability in emerging Arab democracies

By Anthony Williams

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Job creation via the development of successful small and medium-sized enterprises (SMEs) will be a crucial element in the transition to economic stability in burgeoning democracies in the Middle East and North Africa, Sir Suma Chakrabarti, the President of the European Bank for Reconstruction and Development, said on Thursday.

The EBRD would support SME development both via its investment projects and by helping to create the right conditions under which SMEs can flourish, he added.

Sir Suma was speaking at the opening of a conference of the Deauville Partnership with Arab Countries in Transition at the EBRD’s London headquarters. The meeting was convened by the United States as Chair of the Group of Eight (G-8) specifically to discuss the development and promotion of policies for SMEs.

The EBRD is currently expanding its investment to include Egypt, Jordan, Morocco and Tunisia. The Bank places a very high priority on the development of the SME sector in all four countries as a way of tackling the important social problem of high unemployment, especially among the young.

Sir Suma told the conference: “We will certainly work on providing better access to finance to SMEs through the traditional channels of direct debt and equity financing, indirect credit lines via partner banks, or investments in equity funds focused on SMEs.

“But we will also do our best – in our advisory capacity – to help the partner governments establish the most appropriate frameworks to release the fantastic growth potential of SMEs.”

The Deauville Partnership was established in 2011 by the G-8 as a response by the international community to political changes in some countries in the Middle East and North Africa.

The meeting in London was co-chaired by Under Secretary of State for Economic Growth, Energy and the Environment Robert Hormats and Special Assistant to the President for International Economic Affairs Caroline Atkinson.

Discussions outlined support for SME programmes in the individual Deauville Partnership countries, which comprise the four countries where the EBRD will invest, as well as Yemen and Libya.

The transition countries, together with the Organisation for Economic Cooperation and Development (OECD), have drawn up a list of key near-term actions that need to be taken in order to stimulate growth of SMEs.

Those actions cover areas such as strengthening access to finance, reducing the administrative burden and simplifying the regulatory environment for SMEs; facilitating public contracting, improving entrepreneurship policies, including for women in business; and helping SMEs to integrate into global value chains and developing the capacity for best practices in SME management.

The multilateral development banks offered concrete and coordinated support. They stand ready to start discussing the implementation of some of those actions with the transition countries.

Specifically the EBRD expressed interest a series of activities, including facilitating coaching for young women entrepreneurs in Tunisia; enhancing regulatory monitoring and evaluation mechanisms in Egypt; further activating public-private equity funds in Morocco; and supporting the implementation and good governance of the Credit Bureau in Jordan.

These initiatives will complement the investments that the EBRD has already begun in the southern and eastern Mediterranean (SEMED) region.

In its early engagement in SEMED, the EBRD moved quickly to provide assistance with its Small Business Support (SBS) operations, which advise companies on managerial and structural change issues, as well as providing consultancy services for small enterprises.

The EBRD also extended to the SEMED region its Local Enterprise Facility, a €400 million investment vehicle that had previously successfully provided tailor-made financing instruments for SMEs in the Balkans and in Turkey.

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