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Working Group on SME policy - proposed areas of work for 2015-2016
1. MENA-OECD Working Group on SME Policy,
Entrepreneurship and Human Capital Development
Proposed Areas of Work for 2015-2016:
Supporting High-Growth Enterprises in the MENA Region
Global Relations Secretariat, OECD
Paris, 24 September 2014
Session 6
2. Outline of the presentation
1. Rationale: High growth enterprises in the MENA
region;
2. Proposed areas of work for 2015-2016:
a. Foster high growth SMEs (HGSMEs) in the MENA region;
b. Module on promoting access to finance for HGSMEs;
c. Monitoring and evaluation of SME policies in the MENA
region.
3. Proposed activities and outputs for 2015-2016
2
3. Rationale:
High growth enterprises in the MENA region
- Increasing evidence that high growth enterprises are
important for job creation, innovation and
productivity growth…
- The MENA-OECD Working Group on SMEs has done
analysis on this topic
- OECD – IDRC (2012) New Entrepreneurs and High
Performance Enterprises in the Middle East and North
Africa
- But evidence and analysis for the MENA region
remains limited…
3
4. Proposed areas of work for 2015-2016
4
MENA-OECD Working Group on SME Policy and Entrepreneurship
High growth SMEs in MENA Monitoring and evaluation
Further evidence,
policy analysis and
recommendations
Component on
access to finance
for HGSMEs
Data on
enterprises
Monitoring
and
evaluation of
policies and
programmes
5. Proposed areas of work for 2015-2016:
Foster high growth SMEs in the MENA region
- Focus on the development of HGSMEs to address
high unemployment among the youth and
graduates
- Collect further evidence on HGSMEs in MENA in
terms of:
1. The characteristics and needs of these firms;
2. Their role in promoting jobs among highly educated
youth;
3. Effective horizontal and targeted policies to support
them.
- Leverage on evidence and work from the MENA
region, OECD countries and other regions. 5
6. Proposed areas of work for 2015-2016:
Foster high growth SMEs in the MENA region
Activities:
-Collection of evidence on HGSMEs in MENA
- Stocktaking potential sources of data;
- Using the OECD definition of high growth enterprises and
gazelles;
- Combining surveys and case studies.
-Sectors relying on a highly skilled and educated
workforce and contributing to job creation for the
youth
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7. Proposed areas of work for 2015-2016:
Foster high growth SMEs in the MENA region
Two possible (non-exclusive) approaches :
Approach 1: Cross country, cross sector analysis
Approach 2: Sector specific analysis, focus on the
Information and Communications
Technology sector, particularly mobile and
web-based applications and services and
for a limited number of ICT hubs in the
region
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8. Proposed areas of work for 2015-2016:
Foster high growth SMEs in the MENA region
Approach 1: Cross country, cross sector
Objective: Provide guidance on how to design country strategies and action plans
aimed at supporting enterprise growth and employment among educated youth
-Identify sectors/activities with high growth potential (e.g., business services,
ICT, selected industrial sectors, e-commerce, selected tourism services, etc.);
-Assess their size, structure and expansion in the MENA region;
-Analyse enterprise characteristics and dynamics (entry/exit) in those sectors as
well as youth employment dynamics;
-Evaluate barriers to growth (e.g., access to finance, skilled labour or markets);
-Examine current policy experiences to address these. Identify ‘best practices’;
-Assess policy implications and formulate recommendations.
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9. Proposed areas of work for 2015-2016:
Foster high growth SMEs in the MENA region
Approach 2: Sector-specific analysis
Objective: Assess how sector-specific policy measures interact in promoting an enabling
environment for high growth enterprises in a specific industry
-Analyse firm and employment dynamics in a specific sector with a high density of new / young
enterprises and demand for skilled labour (e.g., ICT applications);
-Focus on a number (5?) of technological hubs where ICT enterprises are already present;
-Analyse and benchmark the performance of these hubs against similar hubs in OECD and
emerging countries;
-Identify key constraints to enterprise growth in these hubs through company surveys and
interviews of entrepreneurs (done with local partners);
-Analyse general success/failure factors of technological hubs and identify lessons learned;
-Formulate sets of policy recommendations.
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10. Proposed areas of work for 2015-2016:
Module on promoting access to finance for HGSMEs
A component on access to finance for HGSMEs
Objective: Shed light on specific constraints to access to
finance for HGSMEs in the MENA region
-In parallel and as an element of the overall HGSME
project;
-The collection of information and analysis will depend
on the approach taken;
-Will consider the financial needs involved in high
growth and will look at debt, equity and mezzanine
finance.
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11. Proposed areas of work for 2015-2016:
Monitoring and evaluation of SME policies in the MENA region
There is important scope for improvement in MENA in
terms of:
-The availability of timely, reliable and comparable
data on enterprises
- By size, sector of activity, entry and exit rates, growth, etc.
-The introduction of monitoring and evaluation
mechanisms to assess the impact and effectiveness of
SME policies and programmes.
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12. Proposed areas of work for 2015-2016:
Monitoring and evaluation of SME policies in the MENA region
Activities:
-Undertake a feasibility study for improving the
availability, international comparability and timelines
on enterprise data in MENA;
-Analyse good monitoring and evaluation practices
from the MENA region and beyond;
-Develop a roadmap for implementing the findings and
recommendations of both analyses.
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13. Proposed activities and outputs for 2015-2016
Regional dialogue:
•Semi-annual working group meetings during spring
and autumn 2015 and 2016;
Analysis and policy recommendations:
•Report on HGSMEs and access to finance
•Roadmaps or toolkits for improving data availability,
comparability and timeliness;
•Roadmaps or toolkits for improving the monitoring
and evaluation of SME policies and programmes.
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Editor's Notes
From its onset WG 2 has been focusing on new and young enterprises with high growth potential, exploring their relevance and looking at policy supporting their expansion.
Evidence from OECD and other countries indicates that despite being a small fraction of the total enterprise population (2% to 6% and less than 1% for gazelles or HGSMEs younger than 5 years), high growth enterprises generate a high share of net jobs compared to other enterprises. This “type of firms” can also contribute importantly to innovation and productivity growth.
But evidence also finds that:
High growth is a temporary event and can occur in virtually any firm and sector;
High growth can be “organic” or external, and is usually the result of a mix of factors. Yet, growth ambitions appear as critical (and contrary to common sense, many firms do not wish to grow).
High growth can be a disruptive event for a small firm because of a sudden pressure on managerial, financial and technical resources.
There is no generalised credit rationing among innovative and HGSMEs (but this is country specific).
In 2012 the OECD and IDRC published a first joint report on high potential enterprises in MENA presented at the last WG meeting in Rome.
The report used proxies for high growth and high potential firms (there is no longitudinal data on HGSMEs in MENA) including firms likely to employ staff with technical skills; firms expecting job growth; enterprises with sales of over 25% to foreign markets; and others (data from the GEM);
The report also provided policy recommendations in terms of improving business environments and particularly improving competition;
Increasing entrepreneurship and enterprise creation rates;
Increasing women’s economic participation and women’s entrepreneurship given the low levels in MENA, which result inevitably in lower levels of enterprise creation and economic activity in general;
Promoting skills development and vocational training
And promoting SME and MNE linkages
Collect further evidence:
On the characteristics (which as we have seen there is no one specific but a combination of them);
Their role not only in overall employment but on jobs for youth and graduates given the importance of innovation for high growth and given how high levels of education can be linked to higher levels of innovation;
The policies to remove obstacles to grow such as improving business environments; access to finance; and regulatory and administrative simplification (horizontal measures benefiting all firms);
And targeted policies such as access to specialised sources of finance (e.g. risk capital); skills development, including managerial skills; improving access to markets, including foreign, etc.
Leveraging on existing evidence in OECD, MENA and other countries.
Possible activities include:
Identifying sources of data in a number of countries, using proxies for high growth but also using longitudinal databases where they exist.
If possible and relevant, using the OECD definition of high growth:
Enterprises with an average annual growth of 20% or more (in employment or turnover) over a period of three or more consecutive years and with at least ten employees at the beginning of the observation period.
And gazelles, or high growth enterprises of five years or younger.
Since high growth is difficult to identify ex ante (or before it happens) and since growth can be due to an important number of reasons, data may not offer a complete picture; hence, case studies could help to shed further light on specific cases.
To correspond to the special needs and characteristics of the MENA region, the study could focus on the role of HGSMEs in particular to address high levels of youth and graduate unemployment; the analysis could start from sectors with promising potential for these segments of the population.
(Caroline Lesser): Not sure what you mean by ‘advanced services’?
(Caroline Lesser): May be worth explaining what you mean by ITC applications