UNCTAD Training Course Key Issues on the International Economic Agenda Manama, Bahrain: 26 October to 13 November 2008 Promoting The Competitiveness of SMEs: Egypt Case Dr. Ahmed Bahloul Mohammed Hamza Mohammed Karim
Objectives of the Presentation • To understand the Policies that support or promote the competitiveness of SMEs in Egypt • To analyze the impact of these policies on the competitive position of Egyptian SMEs. • To conclude the lessons learnt from the Egyptian case study
Outline of the Presentation • Egyptian SMEs Definition and Classification • Profile of the SMEs’ Sector in Egypt • Policy framework vision and process. • Competitiveness Typology Factors of SMEs Sector. • Competitiveness of SMEs Enterprises. • An Overview of How Policies Are Designed & Implemented. • The Results of These Policies: Case of The Small and Medium Enterprise Policy Development Project (SMEPol). • Have These policies been successful? • What are the lessons learnt? • References.
Egyptian SMEs Definition and Classification(According to Small Enterprises Law No.141 , Year 2004)
Profile of the SMEs Sector in Egypt • SMEs constitute the bulk of private sector enterprises, approx. 98% of the non-agricultural private sector economic units and 81% of the total labor force in private sector establishments. • The Egyptian Labor Market Survey of 2006 shows that the number of business employing fewer than 50 workers has increased at an annual rate of 4.7% over the 1998-2006 period. • The 2006 census of Establishments shows that there were 2.4 million micro establishments with less than 10 workers and employing 5.2 million workers and another 39 thousand private establishments with 10–49 workers.
Competitiveness Porter's Typology Factors of SMEs Sector Adapted from: MOF, Enhancing Competitiveness for SMEs in Egypt ,2004,P.29.
Competitiveness of SMEs Enterprises • Achieve technological leadership in their field; • Negotiate higher prices for their products; • Reduce costs; • Ensure quality standards, which in turn presupposes a multi-skilled and highly motivated workforce along the entire value chain; • Improve opportunities for technological upgrading within a select group of SMEs.
An Overview on How Policies Are Designed & Implemented • Policy Framework Vision: The development of a competitive SME sector that can compete in local and global markets, and is hence able to continue to deliver its socio-economic and developmental benefits in the years to come, as well as play a significant role in improving the country’s balance of trade.
An Overview on How Policies Are Designed & Implemented? (Cont.) • Policy Process (Seven Stages as Stipulated by SMEs Development Unit at Ministry of Finance) • Desktop research; • Participatory research; • Consultation with experts; • Participatory development of action plan; • Refinement and finalization; • Update of action plan; • Approval on the general policy framework.
An Overview on How Policies Are Designed & Implemented (Cont.) • Policy Areas: The Seven areas of the policy framework are: • Promotion of direct exports; • Business development services; • Financial services; • Innovation and technology; • Organic clusters; • Networking and inter-firm linkages with foreign and large firms; • Regulatory changes.
The Results of These Policies:The Case of The Small and Medium Enterprise Policy Development Project(SMEPol) • The general impacts are : • The Egyptian prime minister endorsed a new strategy on enhancing the Egyptian SMEs competitiveness. • Regulatory changes for SMEs sector. • Establishing the SMEs specialized ministerial committees.
The Results of These Policies: The Case of The Small and Medium Enterprise Policy Development Project (SMEPol) (Cont.) • The capacity building impactsare: • Over 8000 trainees, 4 training national workshops ,and 18 regional workshops. • Study tours to Canada, USA, South Africa, and China. • Research and information impacts are: • Producing 39 policy research studies and reports. • Circulating 42 research reports to the stakeholders.
The Results of These Policies: The Case of The Small and Medium Enterprise Policy Development Project (SMEPol) (Cont.) • Networking and public awareness are: • Institutionalizing the stakeholder consultation in the ministry. • Over 40 events (conferences, focus groups, and workshops) involving 350 stakholders. • The project websites which disseminates publications and information. • Direct consultations for over 300 SMEs.
Have These policies been successful? • A CIDA review study of the last five years of the Egyptian SMEs program concluded that It has had a positive impact on the environment for fostering SME development and the competitiveness of SMEs. • The program should be put forward through the current country development programming framework (CDPF) which is endorsed by the prime Minister
What are the lessons learnt? • SMEPol lessons learned are: • Explicit policy focus; • Partnership; • Risk management; • Flexibility; • Project resources; • Consultative approach; • Strategic opportunism; • Research quality; • Consider implementation issues.
Success Story: UNCTAD’s Testimony • The software industry has specialized in two areas: (a) Enterprises that translate standard software products of leading brands into Arabic, including adapting the user interface; and (b) Enterprises that offer a comprehensive support package to users of standard software in the region.
Success Story: UNCTAD’s Testimony (Cont.) Egypt dominates the regional market, More than 80 per cent of software development in the Middle East is performed by Egyptians either from Egypt or based in the Gulf
References • AbdeelAziz,M.,(2008), The Small and Medium Enterprise Policy Development Project (SMEPOL) Experience In: The Past, Present and Future Policy in Egypt Conference, January 15-16,2008, Avaiable at : http://www.sme.gov.eg/EndConference/Day2.htm, Accessed on September 27,2008. • CIDA Evaluation Division (2006), Small and Medium Enterprise (SME) Program Review-Egypt: Executive Report, Canadian International Development Agency, Quebic. • Egyptian Ministry of Finance (November 2004), Enhancing Competitiveness for SMEs in Egypt: General Framework and Action Plan. • ElMahdi ,A. (2008),The Relationship between The Private Sector and Civil Society, The Center of economic and Financial Research and Studies, Cairo university. • The Small and Medium Enterprise Policy Development Project (SMEPOL) ,Enhancing Copetitivness for SMEs in Egypt, Available at http://www.sme.gov.eg/English/sme Copetitivness.htm, Accessed on September 22,2008.
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