There are vibrant debates in the press and online about how to reform Middle Eastern and North African (MENA) economies in the wake of the Arab Spring. There are very different views on how to build a more equitable and inclusive growth model for regional economies. But from right to left, from Islamic parties to secular ones, and from academia to the private sector, there is agreement on one thing: the region urgently needs to create more jobs to meet the demand of a quickly growing labor force and micro, small, and medium enterprises (MSME) are part of the solution.
Regionally, MSMEs account for more than 40% of private-sector employment, yet in many MENA countries they lack access to finance, opportunities to market their products, and effective business development services.
In partnership with the World Bank, IFC is launching a new initiative, the MSME Technical Assistance Facility, to help unleash the potential of these businesses. The facility will operate on three levels:
Improve the enabling environment for MSMEs: The World Bank and IFC will partner with local governments to accelerate pro-MSME reforms to reduce the “red tape” and improve regulatory frameworks, making it easier for smaller businesses to access financing.
Provide technical assistance to banks and MFIs: IFC is ramping up its advisory programs for banks and microfinance institutions. IFC will help these lenders develop new products, build stronger risk management systems and adopt standards for responsible lending. Small and medium enterprises (SMEs) only account for 8% of the portfolio of banks in the MENA region, the lowest level in the world. IFC will help local banks to grow their SME portfolio by providing them with comprehensive advisory services and risk sharing instruments.
Offer training support to organizations: IFC will provide business development services and support SME incubators to help develop products that truly meet the needs of MSMEs.
The World Bank and IFC are currently discussing the details of this MSME facility with regional governments and international donors. The public and private sectors should be at the table to help define the most important needs and the project should catalyze the support of a broad range of actors. A new compact is needed to create programs that are results-oriented and create real value for regional entrepreneurs.
The MENA region has many hard working entrepreneurs, but some feel frustrated by legal and operational frameworks. A prime example of that is Mohammed Bouazizi, the Tunisian fruit vendor who set himself alight to protest against official corruption, touching off a wave of protests across the region. The political calculus in the Middle East and North Africa is changing. Now it’s time to unleash the talents of small business owners and transform the Arab Spring into an Entrepreneurial Spring.
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