The Deauville Partnership with Arab Countries in Transition of the Meeting on Policies for Small and Medium-Sized Enterprises
On November 1 in London, United Kingdom, 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 of the United States chaired a meeting of the Deauville Partnership with Arab Countries in Transition. The subject of the meeting was the development and promotion of small and medium-sized enterprises in the transition countries of Egypt, Morocco, Tunisia, Libya, Jordan, and Yemen. The meeting brought together efforts on the development of small and medium-sized enterprises (SMEs) to spur job creation and economic growth in transition countries. The work of the Partnership in 2012 takes place under the G8 Presidency of the United States.
The governments of Canada, Egypt, France, Germany, Italy, Japan, Jordan, Kuwait, Libya, Morocco, Qatar, Russia, Saudi Arabia, Tunisia, Turkey, the United Arab Emirates, the United Kingdom, the United States, and Yemen, along with the European Union participated in the meeting. Representatives of the African Development Bank, the European Bank for Reconstruction and Development, the European Investment Bank, the Islamic Development Bank, the International Finance Corporation, the International Monetary Fund, the Organisation for Economic Co-operation and Development, the World Bank, and the Union for the Mediterranean also participated.
The Co-Chairs of the London meeting on November 1 summarize the results as follows:
The members of the Deauville Partnership with Arab Countries in Transition (the Partnership) continue to stress the importance of accountability and a fair and efficient regulatory environment to promote inclusive economic growth, transparency, rule of law, and job creation as part of a successful democratic transition. On November 1, 2012, representatives of the Partnership countries met at the headquarters of the European Bank for Reconstruction and Development (EBRD) in London, United Kingdom. Egypt, Tunisia, Morocco, Jordan, and Libya presented near-term action plans, developed with input from the Organisation for Economic Co-operation and Development (OECD) and EBRD, that focused on the development and promotion of small and medium-sized enterprises.
The Co-Chairs underline the contributions of international financial institutions in SME development in Arab countries in transition. They also note that the platform established by the OECD and others to facilitate information sharing, co-operation, and operational dialogue is an important element for its success.
The Co-Chairs welcome Yemen as the newest member of the Partnership. They look forward to working with Yemen on the development and expansion of small and medium-sized enterprises and other aspects of economic reform and growth, and identifying ways to encourage the growth of private enterprise. As in other transition countries, these actions can help to create jobs and increase opportunities throughout Yemen.
Policy Environments for Small and Medium-Sized Enterprises
The Partnership, with the assistance of multinational institutions, is reviewing legal, regulatory, and administrative practices for the establishment and growth of small and medium-sized businesses in transition countries. All parties recognize that governments can improve the business climate for SMEs by streamlining registration and permitting procedures; increasing competition; advancing rule of law; reducing corruption; improving banking and other financial services, including access to existing credit; improving the tax environment; and promoting cross-border trade. Improved practices will contribute to higher and more inclusive economic growth, more jobs, and a more vibrant civil society.
Members of the Partnership consider it a priority to advance economic growth in the Middle East and North Africa (MENA) region through the promotion of SMEs and entrepreneurship. To this end, transition countries, in consultation with experts from the OECD and EBRD, developed country-specific, near-term action plans to foster SME growth, improve job creation, and increase economic development in their countries. The action plans divide near-term policies for SME facilitation into six categories: 1) strengthening access to finance and guarantee mechanisms for SMEs; 2) reducing the administrative burden and simplifying the regulatory environment for SMEs; 3) facilitating public contracting, PPPs and procurement for SMEs; 4) improving entrepreneurship policies, including women’s entrepreneurship; 5) expanding the capacity of SMEs to integrate in global value chains; and 6) building capacity in best practices in SME management. Following the transition countries’ presentations, multilateral groups and partner countries began an open discussion on how best to support these recommendations. Partners will continue to collaborate, in particular with multilateral institutions, to provide expertise and technical assistance, including through the MENA-OECD Governance Center in Caserta. Given challenges related to reform of the regulatory environment and access to finance, multilateral institutions will be instrumental in helping to structure arrangements that give current and prospective business owners a stable operating environment, useful advice, and solid financial footing to start up, grow, and sustain their businesses.
The U.S. Treasury presented an overview of the recently launched Deauville Partnership Transition Fund. The Fund will provide grants for technical assistance to help transition countries strengthen public institutions and build the capacity to advance country-led reforms as identified in the SME action plans. Already, partner countries have pledged about $165 million to the fund, and the Chair encourages additional contributions to reach the goal of $250 million. Transition countries were encouraged to present projects on SME development to the Transition Fund, as a matter of priority.
Participants were presented with the key conclusions from the G8 Broader Middle East and North Africa (BMENA) Workshop on Economic Governance and Entrepreneurship held in Amman, Jordan on October 1-2, 2012, including recommendations provided by civil society and the private sector, many of which are already included in the SME action plans developed within the framework of the Partnership in coordination with the OECD. The United States, with the Government of Tunisia, will convene the Forum for the Future in Tunis from December 11-13. Within a broader agenda, participants are scheduled to review progress made in helping to improve SME environments.
The international financial institutions (IFIs) offered their coordinated support in helping transition countries implement key parts of the SME action plans, noting that much of their ongoing work is complementary to the priorities highlighted in the transition country presentations. The IFIs circulated a matrix that identified action items that specific IFIs might be willing to address. This matrix will serve as a basis for ongoing discussions between the IFIs and transition countries on the best way to develop proposals further. In addition, the OECD presented possible projects for implementation of the action plans to be carried out in the near term, the African Development Bank delivered a presentation on SME best practices, and the Islamic Development Bank presented ideas and suggestions on how best to coordinate IFI support for SMEs. The meeting concluded with a presentation from several IFIs on how to expand SME access to finance through the development of local capital markets.
Participants look forward to continuing the critical work of the Deauville Partnership with Arab Countries in Transition. Transition countries will continue to engage with members of civil society and the private sector as they implement key elements of their SME near-term measures. To help promote the efforts they have taken on SME reforms, transition countries will make their finalized SME near-term measures action plans available online for public access. By December, transition countries plan to prioritize the most immediate reforms in their action plans and identify steps and a time-line for implementation.
The Islamic Development Bank will form an SME working group with a focus on implementing the transition countries’ prioritized near-term measures and coordinating IFI support. The SME working group will present a plan for implementation of the near-term measures by December. Finally, the OECD will work with Yemen to help Yemen to produce an action plan on near-term SME reforms to catch-up with the rest of the transition countries on this process.
At the end of the year, the United States will transfer the Presidency of the G8 to the United Kingdom. Under the 2013 UK Presidency, the G8 will continue development of the Transition Fund, work with all Partners to support the initiatives identified in the action plans, and further the discussion on how to help improve the SME environment in the Arab countries in transition.