Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Salvatore Zecchini Chairman OECD WP SMEE Rapid change in economy and social spheres characterizes all the region Wind of economic liberalization blowing Ambitions and expectations of better living and more jobs are at all time high But reality is not encouraging, because of slowdown in world economy and limited room for expansionary fiscal policies in MENA region. 2 3 4 5 Oil exporting countries are benefiting from sustained oil prices, rising government spending and a positive business climate. In oil importing countries, economic activity is still under the impact of social unrest, political and institutional uncertainty, declining external demand and steep oil prices. 6 What factors can lead to a sustained and general improvement of economic prospects? Can entrepreneurship, start-ups and SMEs be the keys to renewed growth, particularly without having to add to fiscal imbalances? 7 1) The constraints and weaknesses SMEs are facing in MENA countries; 2) The government measures to support them; 3) The shortcomings in their policies; 4) The priority areas where governments should intervene decisively to fully exploit the potential of entrepreneurship. 8 In MENA region, such an approach is uncertain It all depends on an “Arab Spring for Entrepreneurship” It means a complete overhaul of the economic and financial systems, together with support policies for entrepreneurs To this end, road ahead is still long because environment is far from being favourable to business activity 9 According to WB “Ease of Doing Business” index, UAE rank has risen from 118th in year 2000 to 33th position in 2012 in world ranking. But major improvements are still needed in legal environment to provide certainty in business and credit relationships in business and credit relationships. 10 11 12 13 14 15 Source: S.Hertog, Benchmarking SME policies … 16 17 18 19 20 opacity about their conditions, weak corporate governance, inadequate management structures, poor bookkeeping and accounting practices, insufficient collateral 21 Jobs less secure than in public administration Wages lower than in P.A. and large firms Work conditions are less attractive Labour market is heavily regulated and rigid As a result, workforce at SMEs is made out mainly of low skilled labor 22 23 Simplification of procedures to start a business Diffusion of business incubators and business centres Funding of industrial zones Promotion of SME participation in value chains Labor training programs Promotion of links with universities and research centers Financial assistance through tax preferences, grants, credit guarantees and subsidies, soft loans, “private equity” investment, incentives to banks to lend to SMEs, public procurement 24 Uneven use of policy tools and wide differences in policy commitment across MENA countries Inadequate coordination in tool applications Lack of coherence with different industrial policy measures Inadequate targeting of measures with the consequence of room for benefits being captured by less competitive firms or wellconnected entrepreneurs Poor attention to the implementation and evaluation of outcomes 25 Hence, need of an “Arab Spring for Entrepreneurship” to overhaul the system To this end, renewed efforts by both, Government and SMEs Both have to take their share of responsibility to improve current conditions for business activity 26 1. 2. 3. 4. SME financing impediments; Shortage of technical and managerial skills which can match enterprises’ needs; Easing the burden of regulation and bureaucracy to allow more business initiatives, higher competition and innovation. No real policy alternatives for governments, but use all tools to customize policy mix to the specificity and intensity of SME problems in each country. 27 Overcoming banks’ reluctance to lend to SMEs, Fostering a broader recourse to equity investors, Promoting leasing, factoring, hire-purchase, bond issuance for SMEs and other alternative funding means. 28 An obligation to provide the lender with certified data on SME conditions; A compulsory recording in a central register of all loans to enterprises, a register that can be accessed by all financial institutions; A radical change in the system of collateral for financing (particularly, mortgages and foreclosures) through a reform of the legal and judicial system. A special support to mutual credit guarantee schemes, since they imply a sharing of risk among participating firms and consequently a closer monitoring among themselves. 29 Support should be tightly focused on the SMEs’ needs, Be demand-driven and managed together with business associations, Should leverage the national educational system, especially the technical universities and vocational training institutions through joint programs, incubators and voucher schemes. Government funding of “internship programs” at universities and management institutes for small entrepreneurs, Funding for “Hiring programs for new graduates”, Programs to engage students for a work experience in small firms. An active gender policy to bring the human capital represented by women to contribute to build a strong and competitive enterprise-based economy. 30 By removing regulatory and bureaucratic obstacles to business creation and expansion in a competitive market. It is not just a question of facilitating business entry, as gauged by WB indicators, but to make it easier for small firms to expand, invest, innovate and compete. To this end, the EU Small Business Act is a model to be heeded, since it is bringing about a true revolution in the way governments shape their policy making at all levels. 31 provide good public services to SMEs, such as information infrastructures, efficient utilities, functional industrial areas, mentoring, a level playing field in the marketplace procurement practices that are favorable to SMEs. 32 interacting among themselves with cooperative attitudes, entering into networking arrangements, supply chains, innovation chains, exploiting the synergies of business clusters being transparent about their activities investing in human resources, knowing that a skilled workforce is both a valuable asset for the enterprise and a prerequisite to lower the currently high unemployment, particularly among the young. 33 But the true spirit of the “Arab Spring ” should also be reaffirmed in the economic domain, i.e. overhaul not just institutions, but people’s cultural attitudes. Social norms and a widespread culture currently take a tarnished view of entrepreneurship. No Arab Spring for the economy can succeed unless such attitudes are countered by all means by government, starting from education at school level. 34 Only an entrepreneurs-friendly culture throughout the entire society can really make entrepreneurship the driver of the long-sought-after economic and social progress. 35