Micro, Small and Medium
Enterprises can be Employment Engine for Arab World
WASHINGTON, July 14, 2011 – Micro, small and medium enterprises
(MSMEs) in the Middle East and North Africa are key to driving employment
for millions of young citizens but businesses on the smaller end of the
scale in this region have some of the lowest levels of access to finance
in the world. Today’s approval of a $50 million loan to Tunisia marks
the launch of a World Bank facility designed to address this.
The World Bank Group’s MSME Facility is expected to channel over $500
million to Middle East and North Africa (MENA) countries over the next
five years including support from the International Finance Corporation,
regional partners such as the African Development Bank, and donors.
“This regional facility, a partnership with a number of development institutions,
is a strong and timely response to a MENA-wide lack of access to finance
and jobs and is a critical pillar of the World Bank's Arab World Initiative,”
said Shamshad Akhtar, Vice President for the MENA region at the
World Bank. “SMEs in the region have enormous potential
to create much-needed employment opportunities for a growing, young and
increasingly impatient population. A dynamic, open and growing MSME sector
can create jobs and open up access to market opportunities at a rate that
keeps pace with this growth. We urgently need to start this engine and
creating access to finance is critical.”
Akhtar pointed out that only 10 percent of MSME expenditures in the
MENA region are financed by bank lending. But as important as turning this
trend around was ensuring that money flowed to MSMEs in an atmosphere of
fair regulation, transparency and good governance, she said.
To this end the World Bank will make financing and risk-sharing instruments
available to partner MENA governments through the MSME facility and, jointly
with the International Finance Corporation (IFC), a comprehensive package
of technical assistance will be offered to governments, regulators, financial
institutions, and to MSMEs. Innovative and high potential enterprises will
be linked with growth capital, markets, and know how.
IFC, the private sector arm of the World Bank Group, will invest up to
$150 million in the facility that will make it easier for SMEs to access
financing and create opportunities and jobs. Additionally, it will offer
a comprehensive package of advisory services to governments, regulators,
financial institutions, and MSMEs to support the growth of this sector.
IFC is also collaborating with other international financial institutions,
including those in Europe, to support the new facility and to provide a
comprehensive response to the challenges in the region.
"There are up to 20 million SMEs in the Middle East and North Africa,
and millions of young people facing unemployment. But in their efforts
to grow, these companies face numerous challenges, including red tape,
a lack of access to finance and insufficient training resources. With this
facility we want to demonstrate that unlocking the potential of SMEs can
have a great effect on the growth of regional economies, and job creation"
said Dimitris Tsitsiragos, IFC Vice President for Eastern and Southern
Europe, Central Asia, Middle East and North Africa.
Tunisia is the first country to borrow under the new facility, with loans
to other MENA countries anticipated in the near future.
“Tunisian MSMEs face a difficult operating environment right nowwhile
Tunisian banks face liquidity constraints,” said Douglas Pearce,
team leader for the facility. “The World Bank loan is designed
to ease financial constraints of otherwise creditworthy enterprises during
this period, to sustain and grow employment, and to support an expansion
of Tunisia’s MSME sector.”
MSMEs are the backbone of the Tunisian economy, estimated at making up
more than 97 percent of Tunisian enterprises and accounting for a large
share of total employment. The World Bank support will also contribute
to the Tunisian government’s objective of improving governance so that
the financial sector can more effectively play its catalytic financing
role and contribute to growth and job creation through MSMEs.
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