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Catalyzing Job Creationand Growth Through MSME
Development in the Deauville Partnership Countries
Volume 2: Good Practices in Entrepreneurship Development and MSME Support
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Unemployment was a key factor fueling the
popular discontent leading to the 2011
revolutions in Egypt and Tunisia, and the
transformational processes in Jordan, Libya,
Morocco, and Yemen. The transitions that these
countries have been going through since 2011
have compounded the problem, and they
are now in need, more than ever, of support
to create employment opportunities for all.
They need to foster home-grown sources
of employment and income generation,
particularly by promoting entrepreneurship and
the development of micro, small and medium
enterprises (MSMEs), a sector that comprises
the majority of enterprises in the Middle East
and North Africa region, in addition to being a
major source of private sector employment.
At their Summit in Deauville, France, in May
2011, the G8 countries made a commitment to
provide support for the political and economic
transformation of the Arab Countries in
Transition – Egypt, Jordan, Libya, Morocco,
Tunisia, and Yemen – through the launch of the
Deauville Partnership. Gulf countries Kuwait,
Qatar, Saudi Arabia, and the United Arab
Emirates, as well as Turkey, joined the Deauville
Partnership subsequently.
A group of 10 international financial institutions
(IFIs) supporting the Deauville Partnership
countries agreed in September 2011 to
establish an operational platform, with a flexible
non-bureaucratic structure, to coordinate
responses to the countries’ urgent needs. The
coordination platform is supported by a
secretariat, which was hosted by the North
Africa Department of the African Development
Bank (AfDB) during its inception phase from
September 2011 to September 2012. Against
this backdrop and on behalf of its IFI partners,
the Bank has prepared this report to lay
the ground for better provision and more
coordinated and strategic MSME support in
Deauville Partnership countries, with a
particular focus on MSMEs with the highest
employment-creation potential. The first volume
of the report addresses several knowledge
gaps on MSME development in the region. To
inform policy and project interventions, it
provides a detailed analysis of current
knowledge concerning the link between MSME
development and job creation.
The second volume of the report focuses on
identification of good practices and success
stories in MSME support instruments and
programs in the region, profiling a selection of
these as examples for replication or adaption
in other Deauville Partnership countries. It
builds on the findings and recommendations
of Volume I and aims to provide concrete
examples of policy responses and how
interventions by IFIs and other donors could
be implemented. The objective is to share the
“how-to” of innovative and high-performing
Foreword
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entrepreneurship and MSME support
programs with a view to transferring lessons
learned to other Deauville Partnership
countries. It is intended to function as a
vehicle to facilitate an exchange between
Deauville Partnership countries/ partners and
the “good practice” proponents on possible
replication or adaption in the different country
contexts.
AfDB has always looked for multifaceted,
innovative, and efficient ways of supporting
SMEs. Recent initiatives have included the
African Guarantee Fund, which provides
partial guarantees, and other important risk-
sharing initiatives, such as the growth-oriented
women enterprises facilities. Others initiatives
include the provision of dedicated lines of
credit to financial intermediaries for lending to
SMEs, to improve their access to finance,
credit enhancement schemes, and capacity-
building activities. The Bank will continue to
collaborate with development partners to
ensure that, as we provide support to the
region, we integrate the latest thinking on
support to MSMEs in our activities, especially
in terms of creating a meaningful environment
for employment generation.
Jacob Kolster,
Director, North Africa Regional Department
(ORNA)
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This report was prepared by Lois Stevenson,
Senior Consultant, North Africa Department
(ORNA), African Development Bank (AfDB),
under the lead and supervision of Florian Theus
(Economist, ORNA). Overall guidance was
provided by Jacob Kolster (Director, ORNA).
Petra Menander Ahman (former Head, IFI
Secretariat, ORNA) and Yasser Ahmad (Chief
Country Portfolio Officer, ORNA) played an
instrumental role for the project during the initial
coordination efforts with other international
financial institutions (IFIs). The report
benefited from valuable comments on the
analytical framework and the executive
summary by Thouraya Triki (Chief Country
Economist, ORNA) and Vincent Castel (Chief
Country Economist, Morocco, ORNA). Philippe
Trape (Principal Country Economist, Tunisia,
ORNA) and Mickaëlle Chauvin, (Consultant,
ORNA) reviewed the report and provided
technical inputs as well as preliminary editing
and quality control. The final editing of the report
was done by Diana Saltarelli.
The project has also been served by the
collaboration with other IFIs and the Organisation
for Economic Co-operation and Development
(OECD). For initial coordination in the design
phase, the Deauville Partnership’s Small and
Medium Enterprise (SME) Working Group played
an important role. AfDB is also thankful to IFI
partners for the sharing of information, studies
and projects related to micro, small and medium
enterprise (MSME) development in the MENA
region, in particular Laurent Gonnet (Financial
Sector Specialist, MENA, World Bank), Hermann
Bender (Program Manager, West MENA, IFC),
Eman Omran (Small and Medium Enterprises
Team Leader, Canadian International
Development Agency, Egypt), Reem ElSaady
(Manager, Business Advisory Services Program
Egypt, European Bank for Reconstruction and
Development) and Monica Carco (Head,
Investment and Technology Unit, United Nations
Industrial Development Organization). The report
also benefited from the review of the draft by
Jorge Galvez Mendez (Policy Analyst, Private
Sector Development, OECD).
The report furthermore relied on the inputs
received from representatives of the Egyptian,
Jordanian, Moroccan and Tunisian governments,
namely Alaya Bettaieb (former Secretary of
State, Ministry of Development International
Cooperation) and Sadok Bejja (General Director
for SME Development, Ministry of Industry and
Technology) from Tunisia; Aicha Bouanani
(Ministry of Economy and Finance), as well as
Abdelkrim Belkadi (National Agency for the
Promotion of Employment and Skills - ANAPEC)
and Houria Nadifi (National Agency for the
Promotion of Small and Medium Enterprises –
ANPME) from Morocco; Hana Uraidi (Director
of Cross Cutting Support Directorate, Jordan
Enterprise Development Corporation) from
Jordan; and Ghada Waly (former Managing
Acknowledgements
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Director), Mohamed Abdel Aziz (Policy and
Coordination Specialist), Dr. Hatem Zaki (Head
of Non-Financial Services, Small Enterprises
Development Group), Marwan Abdel Razek
(Head of Franchise Development Department),
Dr. Raafat Abbas Shehata (Head of the
Technical Office) Hanaa El Hilaly (Director
General, Planning and International
Cooperation Group), all from the Social Fund for
Development in Egypt.
AfDB would also like to thank all individuals
and corporations that were available for
meetings, interviews and information sharing,
without whom the good practice profiles could
not have been completed. Gratitude goes
especially to Deema Bibi (Chief Executive
Officer, INJAZ, Jordan) and Shadin Hamaideh
(Head of Development Unit, INJAZ, Jordan),
Hassan Charraf (Manager of Development,
Fondation Création d’Entreprises, Morocco),
Abdelhamid Rouini (Conseiller Réseau and
Partenaires Investissement, Fondation Création
d’Entreprises, Morocco), Mohamed Zakaria
(Chief Director of Training, Egyptian Banking
Institute, Egypt), Dr. Khattar (Chairperson of the
Board and General Manager, Kafalat SAL,
Lebanon), Ralph Stephan (Officer - Energy and
Technology Department, Kafalat SAL,
Lebanon), Hicham Zanati Serghini (Secretary
General, Caisse Centrale de Garantie,
Morocco), Djamila Laaroussi (Chef du
Département de la Communication et du
Marketing, Caisse Centrale de Garantie,
Morocco), Kamel Krimi (Directeur des
Engagements, Tunisie Leasing, Tunisia), Ayman
Mahmoud (Executive Director, El Mobadara,
Egypt), Pierre Lucante (Project Manager,
German Agency for International Cooperation –
GIZ, Morocco), and Houria Nadifi (Chef de
Division, Cooperation Etudes, ANPME,
Morocco).
This report was made possible by the
generous financial support of the Department
of International Development, United Kingdom.
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Table of Contents
i Foreword
iii Acknowledgements
v Table of Contents
vi Abbreviations
viii Executive summary
1 1. INTRODUCTION
5 2. FOSTERING ENTREPRENEURSHIP AND BUSINESS CREATION
6 2.1 Strengthening the Culture of Entrepreneurship through the Education System
8 INJAZ, Jordan
22 2.2 Supporting Business Creation
23 Fondation Création d’Entreprises, Morocco
31 Souk At-Tanmia Entrepreneurship Development Initiative, Tunisia
46 3. ACCESS TO FINANCING FOR MSMEs
48 3.1 Loan Guarantee Schemes
48 Caisse Centrale de Garantie, Morocco
60 Kafalat SAL, Lebanon
71 3.2 Lease Financing
72 Tunisie Leasing, Tunisia
82 3.3 Capacity Building to Facilitate Bank Lending to SMEs
83 Egyptian Banking Institute, Egypt
93 4. BUSINESS DEVELOPMENT SUPPORT SERVICES FOR SMEs
95 El Mobadara Community Development and Small Enterprises Association, Egypt
108 5. DEVELOPMENT OF WOMEN ENTREPRENEURS/ WOMEN-OWNED MSMEs
111 Entre Elles en Régions Program, Morocco
122 6. CONCLUDING REMARKS
124 References
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Abbreviations
African Development Bank
Association of Women Entrepreneurs of Morocco/ Association des
Femmes Entrepreneurs du Maroc
National Agency for the Promotion of Employment and Skills/ Agence
Nationale de Promotion de l’Emploi et des Compétences
National Agency for the Promotion of Small and Medium Enterprises/
Agence Nationale pour la Promotion de la Petite et Moyenne Entreprise
Business development support
Business Development Services Support Project
Banque de Financement des petites et moyennes entreprises/ Bank
for Financing Small and Medium Enterprises
Banque Tunisienne de Solidarité
Central Guarantee Fund/ Caisse Centrale de Garantie
Canadian International Development Agency
Center for Young Business Leaders/ Centre des jeunes dirigeants
d’entreprise
National Center for Scientific and Technical Research/ Centre National
pour la Recherche Scientifique et Technique
Confederation of Tunisian Citizen Enterprises/ Confédération des
Entreprises Citoyennes de Tunisie
Regional Committees for Business Creation / Comités Régionaux pour
la Création d’Entreprises
Regional investment centers/ Centres régionaux des investissements
Civil society organization
Department for International Development, United Kingdom
Deloitte Touche Tohmatsu
Egyptian Banking Institute
European Bank for Reconstruction and Development
Egypt Enterprise Development Project
Espace Point de Départ: Association pour la Promotion de l’Entreprise
Féminine
Fondation Création d’Entreprises du Groupe Banque Populaire
German Agency for International Cooperation/ Deutsche Gesellschaft
für Internationale Zusammenarbeit
International Bank for Reconstruction and Development
Information and communications technologies
AfDBAFEM
ANAPEC
ANPME
BDSBDSSPBFPME
BTSCCGCIDACJD
CNRST
CONECT
CRPCE
CRICSODFIDDTTEBIEBRDEEDPESPOD
FCEGIZ
IBRDICT
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IFCIFIILOKAFDMDMMENAMFIMISMSEsMSMEsNIGDNPLOECDOFPPT
QMSREDECSAPSFDSMEsSMEDUPTLGUNDPUNIDOUNRWA
USAIDVSEWEF
Currencies
CADEGPEURGBPLBPMADTNDUS$
International Finance Corporation
International financial institution
International Labour Organization
King Abdullah II Fund for Development
Marocains du Monde
Middle East and North Africa
Microfinance institution
Management information system
Micro and small enterprises
Micro, small and medium enterprises
National Institute for the Guarantee of Deposits
Non-performing loan
Organisation for Economic Co-operation and Development
Office of Vocational Training and Employment Promotion/ Office
de la Formation Professionnelle et de la Promotion du Travail
Quality Management System
Regional Enterprise Development Center
School Adoption Program
Social Fund for Development
Small and medium enterprises
Small and Micro Enterprise Development in Upper Egypt Project
Tunisie Leasing Group
United Nations Development Programme
United Nations Industrial Development Organization
United Nations Relief and Works Agency for Palestine Refugees
in the Near East
United States Agency for International Development
Very small enterprise
World Economic Forum
Canadian dollar
Egyptian pound
Euro
British pound sterling
Lebanese pound
Moroccan dirham
Tunisian dinar
United States dollar
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The African Development Bank (AfDB),
on behalf of the international financial
institutions (IFIs) participating in the
Deauville Partnership with Arab Countries
in Transition, launched a two-volume study
aimed at enhancing knowledge exchange
and coordination among all Deauville
Partners and improving interventions
supporting the development of micro,
small and medium enterprises (MSMEs).
The study also seeks to lay the foundation
for further joint operations and research,
including actions by the Deauville
Partnership countries1 themselves. As it
covers activities by governments and
bilateral donors, it will help to streamline
the different initiatives around MSMEs in
the region, as well as across the various
pillars of the Deauville Partnership.
Volume I of this study, Catalyzing Job
Creation and Growth through MSME
Development in Deauville Partnership
Countries: A Gap Analysis of Policy
and Program Support in Morocco and
Tunisia, discusses the latest research on
the links between MSME development and
job creation, delineates policy implications
for MSME development in the two focus
countries, and makes recommendations
for future initiatives to address identified
gaps in MSME development support.
Building on the findings and
recommendations of Volume I, this
companion volume highlights nine good
practice initiatives from within the Middle
East and North Africa (MENA) region
geared to supporting entrepreneurship
and MSME development. This in itself
makes the publication unusual because
traditionally MENA countries have sought
to emulate good practices from outside
the region.
Good Practices in MSME SupportAreas
The good practices highlighted in Volume II
are found in initiatives focused on four
critical MSME support areas in the Deauville
Partnership countries, as outlined below:
(i) Fostering entrepreneurship and
business creation
• INJAZ, Jordan. A leading youth
economic education organization in
Executive Summary
1 Countries covered by the Deauville Partnership are Egypt, Libya, Jordan, Morocco, Tunisia, and Yemen.
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Jordan and across the Arab world,
INJAZ offers entrepreneurship courses
and programs in secondary schools
and youth centers, and provides
capacity building to university and
college students in business and social
entrepreneurship through practical
training and independent projects. It
has achieved impressive results in
terms of reaching students and
vulnerable youth nationwide, and
engaging corporate sponsors and
volunteers to support its activities.
• Fondation Création d’Entreprises
(FCE), Morocco. The FCE, part of
Morocco’s Groupe Banque Populaire,
has the principal mission of promoting
an entrepreneurial culture and supporting
enterprise creation in Morocco. It
provides advice, counseling, coaching,
mentoring and training support to
Moroccan youth to encourage the
creation of new enterprises. Its
success in terms of start-ups, jobs
created, investments, and facilitating
access to financing for its supported
entrepreneurs derives, in part, from its
ability to expand its reach through a
network of regional offices.
• Souk At-Tanmia (“market for
development”) Entrepreneurship
Development Initiative, Tunisia. The
Initiative is an innovative pilot partnership
between AfDB and 20 other donors,
public and private stakeholders, and
Tunisian civil society to provide an
effective response to the post-Arab
Spring unemployment challenges in
Tunisia, particularly for youth. It uses
a competitive process to identify
entrepreneurial projects, and provides
entrepreneurial training, start-up grants
to help defray initial costs and/ or
enable entrepreneurs to meet the
equity requirements to qualify for
additional bank financing, and one year
of post-creation coaching support.
It can be considered an “emerging
good practice” to address the low
entrepreneurial culture and level of
activity in the underdeveloped regions
of Tunisia.
(ii) Access to financing for MSMEs
• Caisse Centrale de Garantie (CCG),
Morocco. The CCG is a public institution
that provides credit guarantees to
banks of between 50% and 80% to
help mitigate the risk of lending to
MSMEs. Through more than a dozen
guarantee products, it extends
financing coverage to larger numbers
of start-ups and MSMEs and extra
classes of MSME borrowers than
previously, while extending the scope
of the formal financial system to
enterprises, including very small
enterprises, that would otherwise not
be able to meet the collateral
requirements for bank loans. It is a
good example of how continuous
improvement of a guarantee program
leads to performance gains in terms of
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attracting both MSMEs and banks to
participate, such as innovating with
new guarantee products, streamlining
the approval processes with the banks,
and reducing approval turnaround times
to 2–10 days on most guarantee files.
• Kafalat SAL, Lebanon. Kafalat is a
private for-profit financial company with
the broad development objective of
assisting SMEs in accessing commercial
bank funding by providing loan
guarantees based on business plans/
feasibility studies that demonstrate the
viability of the proposed business
activity. The company constantly
innovates with new guarantee products
to respond to the identified needs of
SMEs at different stages of development.
It currently offers six guarantee
products targeting SMEs in five
sectors: agriculture, high tech, industry,
tourism, and traditional crafts.
• Tunisie Leasing, Tunisia. The foremost
leasing company in the country, Tunisie
Leasing, entered the leasing market in
1984 in the belief that leasing was a
key source of finance to SMEs. With no
requirement for loan collateral, and a
generally lower risk burden to lenders,
leasing has essentially substituted for
bank credit for a number of SMEs. The
company has maintained its position
as market leader even while the leasing
industry has expanded and competitors
have established themselves in the
market. Its success is in part due to the
systematic approach it has developed
to assessing the leasing risk for SMEs
in the absence of complete financial
information.
• Egyptian Banking Institute (EBI),
Egypt. EBI is the official training arm of
the Central Bank of Egypt, serving the
professional development needs of all
banks in the country. Its mission is to
enhance the capabilities of the banking
sector and other financial stakeholders
through interactive educational programs,
training, up-to-date knowledge, and
consultancy. It is unique in the Deauville
Partnership countries (and in fact in the
MENA region) for having established an
SME Department and implemented a
complete range of training courses,
certification programs, and technical
assistance to increase the capacity of
banks for SME banking, while also
strengthening SME capacity to deal
with banks and develop bankable
proposals.
(iii) Business development support
(BDS) services for SMEs
• El Mobadara Community Development
and Small Enterprises Association,
Egypt. The Association has evolved
from a donor-funded project in the late
1990s into a self-sustaining non-profit
organization to support micro and
small enterprises (MSEs) through the
design and delivery of microcredit,
training, BDS services, technical
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assistance, and facilitation of access to
markets, financing and technology. The
case study illustrates good practice in
the provision of market-driven and fee-
based BDS services to MSEs. It also
underscores that effective BDS
provision is attained by experimenting
with different approaches, building the
capacity of BDS providers, ensuring
the quality of services, and being
sensitive to the specific BDS needs of
women-owned MSEs.
(iv) Development of women entrepreneurs/
women-owned MSMEs
• EntreElles en Régions, Morocco.
The program is implemented by the
government’s National Agency for the
Promotion of Small and Medium
Enterprises (ANPME), in partnership
with the German Agency for
International Cooperation (GIZ). Its
objectives are to build the capacity of
women entrepreneurs and their very
small and early-stage enterprises
through coaching, mentoring and the
formation of networks. The program is
an example of how dedicated efforts to
target improvements in the management
capacity of women can lead to
demonstrable results in terms of
enterprise development.
Concluding remarks
MSME development is increasingly
becoming a high priority for policymakers
in the Deauville Partnership transition
countries, given that the MSME sector
constitutes the backbone of the
economies and is the major source of
employment in these countries. Structural
deficiencies, both on the supply and
demand side, need to be resolved in order
to create both the quantity and quality
of jobs needed, and put the countries
on a pathway to an innovation-driven
knowledge economy. Learning from and
adapting good practices of institutions and
projects with a track record from within the
region, such as those profiled in this
publication, is of increased interest for
policymakers and affiliated agencies.
With transition countries making MSME
development a priority area since 2011,
a number of other new initiatives have
emerged, some supported by IFIs/ donors
and others by Deauville Partnership
governments and the private sector. These
include projects to address the equity gap
faced by promising new and growth-
oriented enterprises by increasing the
availability of early-stage venture capital
and angel investment; strengthen the
capacity of BDS providers; foster
entrepreneurship and business creation
among young people and women; promote
equality of economic opportunity in
disparate regions; and assist governments
in improving the business environment
for private sector growth.
At the present time, a great deal of
experimentation is taking place to determine
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the most effective approaches to stimulating
and strengthening entrepreneurial capacity
in Deauville Partnership countries. Efforts
should be made to monitor these
developments in order to identify the good
practice models from which all Deauville
Partnership countries and partners can
benefit. To advance learning about what
works best, more focus in the future
should be placed on performing impact
evaluations and sharing the results broadly
among Deauville Partnership partners.
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The African Development Bank (AfDB),
on behalf of the international financial
institutions (IFIs) participating in the
Deauville Partnership, launched a two-
volume study to lay the ground for more
coordinated and strategic support for
the development of micro, small and
medium enterprises (MSMEs) in Deauville
Partnership countries, especially those with
a strong employment-creation potential.
The objectives of the study are to enhance
knowledge exchange and coordination
among Deauville Partners and to improve
MSME development support interventions.
The study also lays the foundation for
further joint operations and research,
including actions by the Deauville
Partnership countries themselves. As it
covers activities by governments and
bilateral donors, it will help to streamline
the different current and emerging
initiatives around MSMEs in the region, as
well as across the various Deauville
Partnership pillars.
The study has four components:
i. A review of the recent literature on the
job-creating impacts of MSMEs.
ii. An analysis of the MSME landscapes
in Morocco and Tunisia, which
particularly requested this analysis,
including identification of the major
constraints to MSME development.
About the Deauville Partnership: The Deauville Partnership with Arab Countries in
Transition is an international effort launched in 2011 by the G8 at the Leaders Meeting in
Deauville, France, to support countries in the Arab world engaged in transitions toward
“free, democratic and tolerant societies.” During the G8 Finance Ministers’ meeting in
Marseille, France, in September 2011, ten international financial institutions agreed to set
up a coordination platform to facilitate joint operations and maximize synergies among
institutions in the region. The objectives of the platform, known as the Deauville
Partnership platform, are: (i) information sharing and coordination of activities among IFIs;
(ii) proactive identification of joint projects, policy and analytical work; (iii) regular
development of knowledge products; and (iv) monitoring and reporting on joint operations
in the region. The six transition countries targeted by the Deauville Partnership are: Egypt,
Jordan, Libya, Morocco, Tunisia and Yemen.
1. Introduction
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iii. Mapping and analysis of current and
pipeline MSME support initiatives of
governments and IFIs/ donors in
Morocco and Tunisia to identify gaps in
addressing MSMEs’ constraints.
iv. Identification of good practices and
success stories in MSME support
instruments and programs (financial
and non-financial) in the region, and
profiling of a selection of these as
examples for replication or adaption in
other Deauville Partnership countries.
Results of the first three components are
published in Volume 1 of the study, Catalyzing
Job Creation and Growth through MSME
Development in Deauville Partnership
Countries: A Gap Analysis of Policy
and Program Support in Morocco and
Tunisia (AfDB, 2014a). This companion
volume, focusing on good practices in
entrepreneurship development and MSME
support, builds on the findings and
recommendations of Volume I, and aims to
provide concrete examples of policy
responses and how interventions by IFIs
and other donors could be implemented.
The objective is to share the “how-to”
of innovative and high-performing
entrepreneurship and MSME support
programs with a view to transferring
lessons learned to other Deauville
Partnership countries.
The sharing of good practices can
produce much value in helping countries
learn from each other’s effective approaches
in fostering start-ups and the growth of
MSMEs and alleviating constraints. Good
practices can be used to demonstrate
what works as well as supply knowledge
about how and why they work in different
situations and contexts. The exchange of
good practices can be a key instrument for
shaping policy and program actions, either
through the replication or adaptation of the
good practices or stimulation of policy
improvements in existing programs and
measures.
Hence, Volume II discusses nine good
practice initiatives from within the Middle
East and North Africa (MENA) region
geared to supporting entrepreneurship
and MSME development. This makes
the publication unusual because, more
traditionally, the region seeks traditionally
MENA countries have sought to emulate
good practices from outside the region.
There are a number of merits in selecting
good practices from within the region: (i)
there are few knowledge exchanges
between the countries, so awareness of
regional good practices is limited; (ii)
good practices from within the region
may be easier to adapt due
to the existence of contexts and histories
in MSME development support that
share similarities; (iii) good practices in
the region are not well documented,
but of increasing interest to MENA
countries; and (iv) it may be easier to
promote the role-modeling effect (i.e. if
Morocco can do it, then we, in another
MENA country, ought to be able to do it
as well).
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For the purposes of this study a good
practice is broadly defined as one that
is well-documented, able to provide
evidence of success/ impact, and has the
potential to be scaled-up or serve as a
model for adaptation and transfer. The
good practices profiled were selected
using the following general criteria:
• Is it a policy, project, instrument or
other measure introduced by public
authorities or non-governmental MSME
support organizations at the national,
regional or local level with the aim of
supporting entrepreneurship and
MSME development?
• Is it particularly targeted at MSMEs (to
include new business creation) and
taking the needs of new entrepreneurs
and/ or MSMEs into account?
• Has it delivered tangible results (e.g.
created jobs, fostered entrepreneurship,
stimulated the creation of new businesses,
improved access to financing, improved
the operating performance and capacity
of MSMEs)?
• Is it a model or approach with useful
lessons for other Deauville Partnership
countries and potential for replication
or transfer?
Against the backdrop of the most
critical areas to be addressed in MSME
development in the Deauville Partnership
countries, examples of good practice were
identified in two ways. First, the Deauville
Partnership Secretariat sent a request to
the Partner countries, asking: (i) what types
of good practices they would like to know
more about from the other Deauville
Partnership countries, i.e. priority areas
where knowledge about what works well
would be of benefit to them; and (ii) for
nominations of good practice initiatives
from within their own country, according
to the set of criteria, with their reasons
for considering this as a good practice.
Second, AfDB conducted study missions
in Egypt, Morocco and Tunisia to validate
the list of nominated good practices. This
involved meetings with stakeholders to
gather more information on each of the
organizations/ practices put forward for
nomination.
The profiles cover some of the critical
MSME support areas in the Deauville
Partnership countries: stimulating an
entrepreneurial culture by promoting
entrepreneurship in the education system;
support for the creation of new enterprises;
improving access to MSME financing; the
offer of business development support to
existing micro and small enterprises; and
fostering the development of women’s
entrepreneurship (Table 1). The profiled
good practices have been particularly
beneficial in a national context and could
be of interest to other Deauville Partnership
countries.
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Theme Good practices
Fostering entrepreneurship andbusiness creation
INJAZ, JordanFondation Création d’Entreprises (FCE), MoroccoSouk At-Tanmia, Tunisia
Access to financing forMSMEs
Egyptian Banking Institute (EBI), EgyptKafalat SAL (credit guarantee company), LebanonCaisse Centrale de Garantie (CCG), MoroccoTunisie Leasing, Tunisia
Business developmentsupport (BDS) servicesfor SMEs
El Mobadara Community Development and Small Enterprises Association, Egypt
Development ofwomen entrepreneurs/women-owned MSMEs
EntreElles en Régions, National Agency for the Promotion of SMEs (ANPME), Morocco
Table 1: Matrix of good practice case profiles
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2. Fostering Entrepreneurship and Business Creation
Stakeholders in all the Deauville
Partnership countries suggest that
the culture of entrepreneurship is weak.
Although governments have implemented
initiatives to bolster the role of micro, small
and medium enterprises (MSMEs) in
private sector development, none of
the countries has an approved national
policy in place for entrepreneurship and
MSME development to specifically guide
comprehensive, integrated actions in the
field.
As noted in Volume 1 of this study,
research carried out in a number of
countries reveals that start-ups and young
enterprises (less than five years old) are
responsible for the majority of gross and
net new jobs. Although failure rates among
new start-ups are higher than among
established MSMEs, the jobs created by
the new enterprises that survive more than
compensate for the total job loss resulting
from the downsizing and death of
enterprises of all sizes and ages. There is
also evidence that the survival rate of new
start-ups can be improved by offering skills
development, training, advisory and
coaching support to entrepreneurs during
the pre-start-up, start-up and post-start-
up stages. To grow the economy, new
start-ups are needed to replace exiting
firms of all ages and sizes, generate
economic renewal, and introduce
innovativeness in products and services to
enhance overall productivity.
Increasing the start-up rates in an
economy should therefore be a policy
priority of governments. This is even more
important in countries with a low density of
MSMEs, such as the case in Deauville
Partnership countries where, even though
MSMEs make up over 99% of all private
enterprises, the private sector is not
growing fast enough to absorb surplus
labor. This calls for interventions geared to
altering the trajectory of start-up rates,
which unattended are unlikely to change
substantially. Experience in other countries
indicates that effective actions include
promoting a stronger culture of
entrepreneurship and putting in place
specific support systems to inspire future
entrepreneurs and equip them with the
knowledge, skills, and competencies to
identify high-potential business ideas,
develop these into viable business models,
and mobilize the necessary resources to
launch them into the marketplace.
One of the key mechanisms for building a
stronger entrepreneurship culture is
integrating entrepreneurship in the
education system. This introduces a large
number of young people to the issue of
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entrepreneurship and plants the seed
of “creating your own job” and becoming
an employer rather than an employee
working for someone else. In the Deauville
Partnership countries, where youth
unemployment rates are exceedingly high
and there are limited opportunities for
new labor market entrants to secure paid
jobs in the formal sector of the economy
(especially graduates), increasing the
level of entrepreneurship-related knowledge
and skills should be a policy imperative.
In addition, it is critical to implement
support programs to build the level of
entrepreneurial capacity, and specifically to
assist young people in the business
creation process. This can be achieved by
offering entrepreneurship training programs
that are combined with coaching,
mentoring and other forms of technical
and financial assistance to assist the new
entrepreneurs through all parts of the start-
up process, including the post-creation
phase.
The good practice profiles in this section
focus on initiatives to integrate business
and entrepreneurship in the educational
system and to foster the business creation
process.
2.1 Strengthening the Culture ofEntrepreneurship through the EducationSystem
In the Deauville Partnership countries and
across the Middle East and North Africa
(MENA) region, a common challenge to
MSME development is the lack of
entrepreneurial and management capacity.
Considerable public resources are often
invested in programs to upgrade the
management quality and productive
capacity of MSMEs so they are able to
compete and survive in the globalization
era, such as training, counseling and
consultancy services. However, relatively
few businesses are reached by these
support mechanisms.
Over the past two decades, international
organizations and governments have come
to recognize that cultural aspects need to be
taken into account as one of the important
factors influencing the development of
entrepreneurship and enterprise creation.
The major policy question was about
how to create a more favorable societal
climate for entrepreneurship to unleash
the entrepreneurial potential of young
people. This led to an examination of the role
of the education system in developing
entrepreneurial mind-sets and key areas of
competence. Entrepreneurship education is
now widely considered as one of the
determinants of the level of entrepreneurship
in a country and an indicator of its
entrepreneurship performance (OECD,
2009b). By introducing entrepreneurship in
the educational curriculum, countries can
build their entrepreneurial capacity and
ability.
The goals of entrepreneurship education
policies are to promote an entrepreneurial
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mind-set from an early age, adopt
entrepreneurship as a key competency in
curriculum outcomes and expose students
to the principles and practices of
entrepreneurship and starting a business.
Education for entrepreneurship is expected
to enhance the supply of entrepreneurs
through three mechanisms (Levie and
Autio, 2008):
• A cultural effect on students’ attitudes
and behavioral dispositions (mind-set
aspects);
• Enhanced cognitive ability to recognize
and assess opportunities; and
• Provision of the required skills to start
and grow a business.
The World Economic Forum (WEF) argues
convincingly that entrepreneurship education
is essential for developing the human
capital necessary for the society of
the future, and that by making
entrepreneurship education available to
young people (and adults), countries are
preparing the next wave of entrepreneurs
“to enable them to shape our institutions,
businesses and local communities”
(WEF, 2009). In addition to evidence that
students who take entrepreneurship
courses are more likely to become future
entrepreneurs, the skills and knowledge
learned in these courses can provide
better preparation for all forms of work
(European Commission, 2012).
Governments in a number of developed
(and developing) countries have made
entrepreneurship education a priority of
their entrepreneurship policy efforts. These
include implementing national strategies
on entrepreneurship education to integrate
entrepreneurship into the curriculum at
all levels of the educational system
from kindergarten through to university.
However, there is limited evidence of
entrepreneurship education policies in
the Deauville Partnership countries. The
WEF (2011) has recommended that
entrepreneurship be brought into
classrooms throughout the Arab world
with the aim of teaching every student in
high school and university the principles of
entrepreneurship.
In the meantime, there are some bottom-
up and often donor-led initiatives to bring
entrepreneurship content into schools and
college classrooms in some of the Deauville
Partnership countries. The International
Labour Organization (ILO), for example, has
made inroads into the educational system in
Egypt and Jordan, to offer its Know About
Business curriculum. In addition, a few
universities are now offering credit courses
in entrepreneurship and encouraging
students to start their own businesses.
The most comprehensive attempt to bring
economic, financial literacy, business,
and entrepreneurship education into
classrooms across Deauville Partnership
countries is the INJAZ program. INJAZ is
the Arab affiliate of Junior Achievement, a
US-based non-profit entity started in 1919
with a mission to foster work readiness,
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entrepreneurship and financial literacy skills
to students from kindergarten to the final
year of high school, through the volunteer-
delivery of experiential learning programs
to inspire students to dream big and reach
their potential. Currently, INJAZ programs
have been launched in Jordan (1999),
Egypt (2003), Morocco (2007), Tunisia
(2010) and Yemen (2011). These programs
provide education and training to Arab
youth in work readiness, financial literacy
and entrepreneurship, working closely with
ministries of education and the corporate
community. A national board of directors
leads each INJAZ country operation, with
the INJAZ Al-Arab regional board
responsible for directing overall strategy
and organizational governance.
INJAZ Jordan was nominated and
selected as a good practice for this
study because, first of all, it is the oldest
and most established INJAZ operation in
the Deauville Partnership countries;
second, it has made impressive efforts in
expanding the reach of its programs to
students and vulnerable youth in all
regions of the country, engaging corporate
sponsors and volunteers, and partnering
with the Ministry of Education, as well as
the Ministry of Planning and International
Cooperation; and finally, because it is
recognized as a leading youth economic
education organization in Jordan and
across the Arab world.
INJAZ, Jordan
Overview: INJAZ is a non-profit organization
with the mission to “inspire and prepare
young Jordanians to become productive
members of society and accelerate the
development of the national economy”2.
It aims to unite Jordanians and key
stakeholders around “the common goals
of creating jobs, building a stable economy,
and providing a higher standard of living”.
INJAZ delivers a range of experiential
learning programs through three main
program units that develop students’ soft
skills, professional ambitions, and passion
for achievement: (i) the Skills Building
Program, targeting students in grades
7-11 in public and military schools, and in
schools run by the United Nations Relief
and Works Agency for Palestine Refugees
in the Near East (UNRWA); (ii) the Work
Readiness Program, reaching out to youth
in vocational training centers and youth
centers; and (iii) the Entrepreneurship and
Employment Program, for university and
college students. INJAZ works in full
cooperation with the Ministry of Education,
the Ministry of Higher Education, and the
King Abdullah II Fund for Development
(KAFD).
2 INJAZ website at: http://www.injaz.org.jo/
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A. Background and institutional history
INJAZ was introduced in Jordan in 1999
as a Save the Children project funded by
the United States Agency for International
Development (USAID). In 2001, it was
re-launched as an independent, non-profit
Jordanian organization under the patronage
of Her Majesty Queen Rania Al Abdullah.
Through cooperation with its partners in
government, the private sector, civil
society, and the formal educational
system, INJAZ seeks to empower youth
with the skills and knowledge needed to
successfully transition from the education
system to the workplace, both as
professionals and entrepreneurs.
One of INJAZ’s most important
achievements was to secure the decision
Quick facts
Start date 1999
Number of employees 63
Number of volunteersIn total, 22,000 qualified volunteers have been recruited to deliver programs;3,636 volunteers were involved in the programs during the 2012/13 academicyear
Beneficiaries
School students at public, military, and UNRWA schools, and in centers foryouth with disabilitiesStudents at public and private universities and collegesYouth at vocational training centers and youth centers
Total number of students reachedthrough INJAZ programs sinceinception
900,000
Number of schools and universities offering INJAZ programs (2012/13)
More than 200 schools; 36 universities and community colleges
Number of students/ youth participating in INJAZ programs(2012/13)
127,452 students in schools, universities and colleges; 6,103 youth in youthcenters
Number of strategic partnerships (2012/13)
More than 300 with the private and public sector
Number of universities and community colleges participatingin entrepreneurship-related programs (2012/13)
36
Number of university and community college students participating in entrepreneurship-related programs
8,221
Number of students in Entrepreneurial Master Class/ My Entrepreneurial Project (2012/13)
12,165 in 120 public schools; 2,501 in 26 youth centers (total 14,766)
Number of students participatingin the Business EntrepreneurshipCompany Program (2012/13)
309 school students running 10 ventures (Company Program)1,815 university and college students running 77 ventures (Company Start-upProgram)1,574 students with 66 ventures (“We Are Social Leaders” Program)
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of the Ministry of Education in 2003 to
mainstream INJAZ programs in the public
school system. Prior to this, INJAZ had to
offer its programs to students as an
extracurricular activity. With the Ministry’s
approval, INJAZ was allowed to deliver one
class a week in schools, now more than
200 schools, to students in grades 7-12.
INJAZ programs focus mostly on skills
development (work readiness, financial
literacy, soft skills, leadership, and
entrepreneurship), and include several
business and social entrepreneurship-
related programs and projects, such as the
Social Leaders Program, the Entrepreneurial
Master Class, and the Company Start-up
Program (where students start and run
a company for an academic year). The
Ministry has requested INJAZ to expand
into more schools and to train teachers on
the use of participative teaching-learning
approaches. Since 2006, INJAZ has been
a member of the Curricula and Training
Unit within the Ministry’s Committee for
Curricula Development.
Also critical in the development of INJAZ is
its partnership with the KAFD, which dates
back to 2004. Through this partnership
the two organizations have coordinated
their efforts to help youth at Jordanian
universities and colleges develop their life
skills and prepare to enter the job market.
Its partnership with the KAFD has also
greatly facilitated INJAZ’s access to
students in 36 universities and community
colleges across Jordan.
Through its various growth phases, INJAZ
has adjusted its organizational structure,
added new courses and programs, and
expanded it services to include job and
career fairs, social and business
entrepreneurship competitions, start-up
support, and opportunities for students to
dialogue with and learn from social and
business leaders in the community. For
example, in the 2005/06 academic year, it
introduced job shadowing and work
placements for students. In 2006/07, it
reviewed its curriculum, overhauled key
components, introduced new courses, and
entered Jordanian colleges for the first time,
primarily through the Company Start-up
Program. It began with four colleges, where
INJAZ programs provided the first
opportunities for these students to benefit
from economic/ entrepreneurial education
of any kind. In May 2006, it introduced the
School Adoption Program that became an
important part of its sustainability strategy.
With this approach, corporate sponsors
could align their financial contribution to
specific schools in specific regions, which
strengthened their commitment to their
local communities and to INJAZ’s programs.
During the 2009/10 year, INJAZ realized that
it needed to restructure its organization to
achieve its growth and expansion targets.
This involved hiring additional staff,
outsourcing human resources to improve
management of human resource affairs, and
expanding into a new office. INJAZ also
developed a Quality Management Plan,
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to monitor, evaluate, and improve its
operations, programs, and impact more
systematically. Key performance indicators
were also defined for INJAZ’s operations,
programs, and activities to foster
improvements in staff productivity, work
quality, teamwork, and problem solving.
INJAZ has received certification from the
International Organization for Standardization
(ISO). Its approach to ISO certification and
the regular external and internal audits of its
organization and operations provide a
systematic mechanism for assessing the
strengths and weaknesses of its governance,
management, and systems, and for working
towards continuous improvement.
Objectives: INJAZ defines its objectives in
the form of intermediate outcomes:
• Secondary school students (ages 11-
18) have developed their financial,
ethical leadership and business skills to
become more competent and aware of
their career choices.
• Students in vocational training centers
have enhanced their work-readiness
skills and career-planning abilities, and
have better access to employment
opportunities.
• University and college students
have access to better job opportunities,
including self-employment, by developing
their business entrepreneurship, social
leadership and employment skills.
• Jordanian society is more appreciative
and enthusiastic about volunteerism,
rooting it deeply in traditional beliefs
and community practices.
• The Jordanian private sector is
increasingly engaged in youth
development, realizes the value of
investing in youth, and is more socially
responsible.
• INJAZ’s impact and outreach is scaled
up to address national needs through
partnership with the government,
making it a key player in youth
advancement and volunteerism.
• INJAZ’s sustainability and growth is
attained by enhancing the quality of
its operations, institutional capacity,
governance, financial position, and
brand equity.
Beneficiaries: INJAZ programs are
implemented for students in secondary
schools, colleges/ universities and
vocational training centers. In recent years,
INJAZ has also focused on more inclusive
outreach, adapting many programs for
implementation in various social institutions
and youth centers (including centers for
orphans and for youth with disabilities),
and targeting youth who have exited the
education system early or otherwise find
themselves at the cusp of adulthood and
entry into the job market. While many
programs are designed for a particular
age set, some programs such as Job
Placement under the Work Readiness
Main Program have a broader beneficiary
pool and target all unemployed persons
between 16 and 30, regardless of their
educational background.
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B. Organizational model
INJAZ management is led by its Chief
Executive Officer and its Board of Trustees.
The organization is structured in eight
major units including three program
implementation units – Skills Building
Program, Work Readiness Program, the
Entrepreneurship and Employment Program
– and three support units Communications
and Partnership Unit, Business Development
Unit (responsible for the quality management
system, monitoring, evaluation and impact
assessment, and developing the growth
and sustainability plan), and Finance and
Administration Unit.
The Board of Trustees consists of 48
members who represent leading local and
international organizations and private
companies. Its functions are to provide
insight into the local business and political
environment, guide the design of INJAZ
programs, and establish the direction of
future growth. Having such a large Board
of Trustees is an effective strategy both for
engaging the corporate community in the
vision of INJAZ and its activities, and for
garnering sponsorship for its various
programs and initiatives. The 11-member
Board of Directors is elected from among
members of the Board of Trustees and
works closely with management to achieve
INJAZ’s mission and goals.
INJAZ prepares an annual action plan,
assigning responsibilities and setting
strategies and targets for each
implementation and support unit, as well
as targets for the delivery of each INJAZ
program (including the number of
educational institutions to be served, the
number of students to be reached with
each course/ program, and the number of
volunteers to be recruited). At the end of
each program year, INJAZ prepares an
annual report measuring its actual
achievements against these planned targets.
Staffing: INJAZ has 63 employees,
located in eight offices and working in 12
governorates across Jordan. The team
ensures proper implementation of the
programs and prepares INJAZ volunteers
to reach out to INJAZ students. Supervision
and direction of the staff is provided by the
Chief Executive Officer under the guidance
and support of the Board of Directors.
Responsibilities include recruiting and
training volunteers to teach the INJAZ
programs; organizing extracurricular
events and activities to inspire and
motivate students to strive for success
(e.g. job fairs, seminars, exchanges);
recruiting business leaders to mentor
students in INJAZ’s entrepreneurial, career
development, and inspirational programs;
attracting corporate sponsors; liaising
with the Ministry of Education, the KAFD,
universities/ colleges and schools; and
developing all necessary partnerships to
realize expansion of the programs to more
schools and students.
INJAZ is committed to building the
knowledge and skills of its staff by supporting
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their participation in training and capacity-
building workshops (e.g. time management,
presentation skills, mentoring, quality
management systems, client service),
internal review and assessment workshops,
and visits to similar programs outside
Jordan in order to learn from their
experiences. It has also developed
personnel manuals and implemented a
performance evaluation system.
C. Operational model
Products and services: INJAZ has
adopted a number of successful programs
from several international organizations.
It examines the list of offerings and
determines which particular courses to
introduce in Jordan. Course materials are
then translated into Arabic and adapted
to the Jordanian context. Many INJAZ
programs have also been developed by
the INJAZ Program Development team
to ensure that they serve the needs of a
wide range of youth of different ages,
educational backgrounds, and abilities.
INJAZ Jordan programs (see Table 2) are
clustered in three streams: Skills Building,
Work Readiness and Entrepreneurship and
Employment.
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Main Program Unit Tracks Programs Target Group
Skills Building Program
Schools andspecial education centers
Financial and socialeducation
More Than MoneyMy Well Being
Grade 7
Economics for Success Social ResponsibilityArtlink
Grade 8
My Money Business Leadership Course
Grade 9
Exploring Economics Creative Problem SolvingDebate
Grade 10
My Financial Career OptionsYoung Volunteers Day
Grade 7-11
Business and entrepreneurship
It’s My Business Grade 7
Be Entrepreneurial Grade 8Enterprise Business Challenge and Competition
Grade 9
Presentation Skills and CompetitionCompany Program and Trade Fair/Competition
Grade 10
Entrepreneurial Master ClassMy Entrepreneurial Project
Grade 11
TEAM Program and Competition Youth with disabilities
Career guidance
Personal Life Planning Grade 7
My Career Options Grade 8
Career Month Grade 9
Job ShadowBusiness Leaders Campaign
Grades 10–11Grades 10–11
INJAZ teacher awards
Work Readiness
Vocational trainingcenters and youthcenters
Soft skills
Professionalism at Work
Youth ages 15–25 in vocational training centers and youth centers
Business Ethics
Work Skills
Career development
Ask the Expert
Job for a Day
Career Wellness
Job placementJob Matching
Internship Program
Entrepreneurshipand Employment
Universities andcolleges
Business andentrepreneurship
Company Start-Up Program and TradeFair/ Competition
Youth ages 18–25 in universities and colleges
Enterprise Development Program
Socialentrepreneurship
We Are Social Leaders and Competition
Social Leaders Program and Competition
Employment
My Path to Employment
Communication Skills
Ethical Business
7iwar Al Ajyal
Link2Job
Source: INJAZ officials
Table 2: INJAZ Jordan programs by topic and age group or level of education
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Every university in every governorate offers
INJAZ courses and the majority offers the
Company Start-up Program. However,
only the German Jordanian University has
institutionalized the INJAZ courses for
credit. In 2013, Mu’tah University piloted a
model that embeds INJAZ soft skills
workshops/ courses within accredited
university courses. Mu’tah University is
now considering accrediting INJAZ soft
skills courses in the coming years.
In 2012/13, INJAZ established a new
Enterprise Development Program to
support the successful development of
enterprises arising from the Company
Start-up Program and INJAZ’s other social
and business entrepreneurship programs,
through an array of business support
services and resources coordinated by the
Business Development Unit. This takes
INJAZ into a new role beyond awareness-
raising and skills training.
Based on surveys of the evolving needs
and requirements of beneficiaries and
stakeholders, INJAZ is constantly reviewing
its menu of programs, adding new options,
and adapting approaches. For example, in
2011/12, it launched the Enterprise
Business Challenge Program, which aims
to inspire young people from deprived
communities to realize their talents and
potential. The program uses innovative
computer simulation training that allows
students to create and manage their own
virtual companies and perform virtual
financial transactions and trading. The
eight-school pilot in 2011/12 is being
expanded to 40 classes across Jordan.
Another program introduced in 2011/12 is
the Intel Youth Enterprise Challenge, which
helps students gain knowledge in
identifying key social issues and how they
could be addressed by innovative solutions
using technology.
Approach: Courses are taught by qualified
volunteers, so one of the major INJAZ
activities is recruiting and training the
volunteers who deliver all the courses in
schools and participate in some of the
extracurricular programs. The volunteers
spend one hour a week in school,
university or college classrooms to teach
the courses, assisted by the normal
classroom teachers. Training sessions
are held on an annual basis to prepare
as many as 750 new volunteers. The
performance of volunteers in the classroom
also has to be monitored, as well as efforts
made to retain them on an ongoing basis.
In 2006/07, only 40% of volunteers came
from the corporate sponsors; by 2011/12,
this had increased to 80%, reflecting
growth in the number of corporate
sponsors and their greater engagement in
the program.
INJAZ staff also provide training and
orientation to regular classroom teachers
who assist or aid the volunteers.
INJAZ organizes a number of annual
competitions for students participating in
programs that result in projects. In these
competitions, student teams compete with
each other for various awards associated
with project performance and outcomes.
These competitions can be motivating for
the students and contribute to developing
their confidence and presentation skills, as
well as exposing them to networks and
contacts that can be of value to them in
the future.
In promoting its programs, INJAZ makes
extensive use of social media (Facebook,
Twitter) to ensure that all its campaigns,
activities, programs, events and success
stories are broadly covered.
D. Financial model
INJAZ’s annual income comes from its
patrons (Board of Trustee members), the
government, corporate sponsors and
donor organizations. Its ability to offer (and
expand) programs depends on the amount
of funding it is able to raise, and so
financial sustainability is a major concern.
INJAZ has been innovative in its approach
to attracting funds. For example, increasing
the number of members on the Board of
Trustees is part of the sustainability plan.
Each member not only brings expertise
into the organization, but also pays an
annual fee of US$10,000 to the INJAZ
endowment fund, which builds the capital
of the organization. Aggressive recruiting is
done to sign on more corporate sponsors.
INJAZ develops a fundraising menu which
is presented to the public and private
sectors to help them in identifying various
funding opportunities. Thus sponsorship
can be tied to specific programs, to specific
governorates, or to specific schools.
In 2007, Credit Suisse support enabled
INJAZ to deliver the My Money Business
course to Grade 9 students; in 2009/10,
HSBC Bank granted INJAZ the funds to
adapt the More than Money curriculum for
delivery to about 1,000 students in 28
classes at ten schools; and the 2011/12
Enterprise Business Challenge Program
was funded by the British Embassy in
Amman. The School Adoption approach,
introduced in 2006 and supported with a
national media campaign (newspaper ads,
billboards), has been successful in attracting
corporate sponsors. In its first year, 37
schools were adopted, rising to more than
200 in 2013. In addition, the KAFD sponsors
INJAZ programs in over 36 universities and
community colleges throughout Jordan.
Donors are also involved in financially
supporting INJAZ. Save the Children and
USAID are two of the long-standing
supporters. USAID has provided a series
of five-year grants, the most recent one of
US$10 million to cover the 2009–2014
period.
E. Results and impact
Since its inception, INJAZ Jordan has
reached 900,000 beneficiaries across the
country and recruited a total of more than
22,000 qualified volunteers to deliver
its various courses and programs3. It is
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growing rapidly with significant annual
increases in the number of students
and youth participating in its courses
and programs (Table 3). Since 2005,
corporations have adopted a total of 220
schools. By 2013/14, the Board of
Trustees had grown to 48 members, up
from 26 in 2006, and INJAZ had built
partnerships with more than 300 private
and private sector organizations.
In 2012/13, INJAZ reached 127,452
students from schools, universities,
colleges, and social institutions.
Table 3: Growth of INJAZ from 2006/07 to 2012/13
2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13
Total number of students participating
57,921 81,796 110,227 75,689 112,529 128,811 127,452
Students–schools
42,335(courses
only) (63% girls)
57,749(68% girls)
67,936(courses
only)
66,940(courses
only)
77,952(courses
only)
88,414(courses
only)81,985
Students–universitiesand colleges
6,196 8,1229,559
(coursesonly)
8,749(courses
only)
9,704(courses
only)12,316 12,619
Youth in youth centers/ social institutions
- - - - 522 3,863 6,103
Number of schools participating
161 158 178 199 Over 200
Number of universitiesparticipating
18 18 17 20 21 24 23
Number of colleges participating
4 8 10 12 13 12 13
Number of youth centers/ social institutionsparticipating
- - - - 1566 (including26 new youth
centers)47
Total number of volunteers
1,497 1,445 1,600 2,444 3,358 3,585 3,636
Number of new volunteers trained
710 541 675 586 761 752 998
Number of schoolsadopted
3751 newschools
35 newschools
58 newschools
31 newschools
20 newschools
5 newschools
(total of 220)
Number of companies inSchool Adoption Program
1416 new
companies17 new
companies15 new
companies10 new
companies7 new
companies2 new
companies
Source: INJAZ Annual Reports for various years
3 “Key Highlights and Achievements 2012–2013”, supplied by the CEO of INJAZ.
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Of particular interest is the reach of the
entrepreneurial courses. In 2012/13,
12,265 secondary school students (in
120 public schools), 8,221 higher
education students, and 2,501 students
in youth centers took entrepreneurship-
related courses. Some 309 secondary
school students ran ten ventures as part
of the Company Program and 1,815
university and college students ran 77
ventures. In addition, 1,574 students in
the We Are Social Leaders Program ran
66 ventures. This is an impressive
number of students learning practical
knowledge and skills in the area of
entrepreneurship.
Regular surveys of students, teachers, and
volunteers indicate that INJAZ is effective
in meeting its objectives. In general, each
year it has exceeded its targets and
objectives, both for reaching students and
youth, and for retaining and recruiting
qualified volunteers. Overall, of the
approximately 50,000 students graduating
from Jordan’s universities each year, only
50% are reported to find jobs, whereas
87% of INJAZ graduates find jobs
within the first year. This indicates that
INJAZ programs considerably improve
employability skills.
INJAZ has consulted with impact evaluation
experts to build on their knowledge in
undertaking evaluation activities and is being
assisted with developing impact evaluation
plans. One important measure of INJAZ’s
long-term impact is the number of Company
Start-up Program graduates who go on to
start a business on a full-time basis. Such
an evaluation requires a longitudinal study,
since there may be a time lag between
finishing the Company Start-up Program
and actually becoming an entrepreneur.
INJAZ has conducted an impact
assessment study of the Program by
comparing treatment and control groups
(INJAZ, 2012: 38). This study revealed that
Company Start-up Program graduates
scored much higher on the following
variables than control group students:
• Knowledge of economic and
administrative aspects and of the ways
that entrepreneurs secure capital for
their projects (26 percentage points
higher than control group students);
• Confidence in their knowledge of
functional and practical aspects of
companies and how to start a
business (44 percentage points higher);
• Ability to solve problems, creative
thinking, and ability to successfully
create and manage their own business
(16 percentage points higher);
• Preference for owning their own
business rather than being employed
(10 percentage points higher);
• Trust in the support provided to youth
by the public and private sectors (25
percentage points higher).
INJAZ has also implemented systems to
improve its operational efficiency. It follows
a quality management system and routinely
subjects itself to internal and external
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audits to measure its compliance
performance. Staff receive regular training
and assistance in developing a strong
action plan with SMART (Specific,
Measurable, Achievable, Relevant,
Timebound) targets and measurable
performance indicators. The implementation
of the quality management system has
contributed significantly to improving the
efficiency of the organization.
Additionally, INJAZ has implemented an IT-
based platform to streamline and automate
its operational transactions. This includes
contact management, questionnaires
and surveys, report templates, donation
management, automation of marketing
management, web-based self-service
access functions for volunteers and
donors, plus other capabilities to improve
performance in managing records and
daily work output.
F. Success factors
A focus on strategic public-private sector
partnerships. Successful lobbying and
awareness raising to gain the cooperation
and support of the government, particularly
the Ministry of Education, was essential
because Ministry approval is needed to
introduce courses in school classrooms. In
addition, the partnership with the KAFD
offices across Jordanian public university
campuses has facilitated and deepened
INJAZ’s work in Jordanian universities and
colleges. Growing partnerships with the
Vocational Training Center and the Higher
Council for Youth since 2006/07 have
enabled INJAZ to reach students in non-
academic streams and to develop new
products to meet their needs, such as
trades-based career booklets.
Partnerships with the corporate sector.
INJAZ invests time and resources to
nurture these relationships. It holds events
to recognize the top sponsors in
supporting programs and activities. It also
holds events to show appreciation for the
volunteer teachers, trainers, and mentors,
and to present awards in a number of
categories. The launch of the Proud to be
an INJAZ Volunteer campaign in 2008/09
was geared to attracting new volunteers
and retaining existing ones by promoting
itself as the volunteer opportunity of choice
in Jordan. The message of volunteering
also plays a major role in promoting the
corporate social responsibility culture in
the country.
A good relationship with volunteers.
INJAZ has the largest volunteer network
in Jordan and the Arab region. It regularly
updates its volunteer database, offers
orientation and training, regular outreach
and support, and annual recognition and
appreciation events and activities.
Promotional activities. INJAZ has developed
strong relations with the media to improve
coverage of the INJAZ story and improve
its visibility and branding. It has developed
several agreements with newspapers,
radio stations and TV networks to profile
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success stories and cover its activities.
National marketing campaigns increase its
ability to attract individual and corporate
partners and volunteer trainers and
mentors. This media relationship is also
used to aggressively promote and profile
corporate and School Adoption Program
sponsors.
ISO certification. The certification process
enables INJAZ to continuously improve its
governance, management and systems,
and also enhances the credibility of INJAZ
with the business community and the
Ministry of Education. ISO procedures for
monitoring and evaluation are regularly
updated. INJAZ conducts surveys in
schools to measure the impact of courses,
and uses staff visits to schools to monitor
volunteer attendance, strengthen the
relationship with teachers and school
administrations, collect student feedback,
and observe volunteer sessions and report
on progress.
G. Lessons learned
INJAZ has had to overcome a number of
challenges from which it has learned
valuable lessons:
Recruiting and retaining volunteers to
cover its programs. Over time, INJAZ has
focused on recruiting volunteers from
within corporations rather than through
mass recruitment campaigns, which it
used initially. About 80% of INJAZ
volunteers now come from the corporate
sponsoring organizations, which commit in
formal partnership agreements to
providing volunteers from among their
employees. However, there is considerable
turnover, and as programs grow, so too
does the need for volunteers.
The challenge is therefore to develop a
pipeline of new qualified volunteers and
retain a higher percentage of existing
volunteers. INJAZ has implemented an ISO
system to enhance the retention rates of
volunteers. This is based on providing a
strong orientation and training program for
new volunteers, providing regular outreach
and support for their activities, and
recognizing their contributions through an
annual volunteers’ appreciation event.
Maintaining the high quality of operations
and programs to keep pace with fast
growth. To respond to growing demand
and opportunities, INJAZ increases its
targets annually. The difficult balance to
achieve is to have rapid growth while still
maintaining high quality. Addressing this
challenge was one of the reasons INJAZ
introduced and implemented its quality
management system.
Competition from other NGOs for
sponsorship. Over time, there is more
competition from other Jordanian
organizations for sponsorship support.
This means more organizations approaching
a limited number of private companies. In
response, INJAZ has needed to intensify
its promotional activity to maintain its
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branding and image in the marketplace,
and to pay attention to publicly recognizing
and acknowledging its sponsors and
partners.
Gender imbalance among INJAZ
participants. The growth in INJAZ
participation has been higher in girls’
schools than in boys’ schools. In 2006/07,
almost two-thirds of participants were girls.
By 2008/09, the percentage of boys’
schools participating had dropped to 30%.
One way INJAZ addressed the gender
imbalance was to stop expansion in girls’
schools and direct its efforts to boys’
schools. In addition, by introducing INJAZ
programs in youth centers and orphanages,
the program increased the likelihood of
reaching more male beneficiaries.
Mainstreaming INJAZ at universities
and colleges. One of INJAZ’s challenges
is to strengthen its presence and outreach
to higher education students. Accrediting
INJAZ courses offered on campuses
would significantly increase registration in
the courses, but as yet only one university
does this. More efforts are being made to
build and strengthen partnerships with
universities and colleges.
Sustainability. INJAZ’s goal is to build its
endowment fund to the point where it
could sustain its operations independently
of external donors, but the amount
required is substantial. Fundraising,
Trustees’ annual contributions, the School
Adoption Program, and introducing new
fundable courses and other sponsored
programs are the vehicles for increasing
revenue to cover expenses and build up
the endowment. One of the challenges is
the constant pressure to sign on new
corporate sponsors in order to expand the
program and ensure sustainability.
Overcrowded mainstream media.
Marketing and public relations are important
to INJAZ. It needs to continuously promote
its brand and message in the public
domain. In the past, it has made effective
use of media tools, such as press releases,
media lunches, and mass media
campaigns, but over time, the media has
become overcrowded and it has become
more difficult to attract attention. One
response to this challenge has been to
divert more promotional activity to social
media channels.
Overall lessons learned
• Infusing entrepreneurship across
educational systems is the most efficient
way to develop a pipeline of future
entrepreneurs with the basic knowledge
and capacity to grow the private
sector.
• Credible organizations such as INJAZ,
with proven curriculum modules, are
important bottom-up initiatives to
expose students in schools, colleges,
and universities to an entrepreneurial
mind-set and entrepreneurship
concepts, principles, processes, and
the necessary aptitudes and skills.
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• Developing partnerships with ministries
of education and higher education is
critical to integrating entrepreneurship-
related curricula in schools and
classrooms. Evidence indicates that
they are willing to open the doors to
organizations with bona fide academic
courses and approaches. This is the
first step in eventually incorporating
entrepreneurship as a core curriculum
component and including
entrepreneurship modules and courses
across the educational system and at
different grade levels.
• Introducing entrepreneurship education
involves a large number actors,
including teachers; school, college
and university administrators; and
the private sector. Collectively, they
constitute important players in building
an entrepreneurship ecosystem.
• Promotional activity is important for
creating awareness of entrepreneurship
and building demand for the take-up of
entrepreneurship courses, programs,
and curricula offerings.
• Entrepreneurship education programs
should include experiential components
to give students the opportunity to
learn by doing.
• To meet the needs of an increasing
number of aspiring young entrepreneurs,
governments and support agencies
will have to help these young people
access the non-financial and financial
resources they need to launch and
grow their businesses.
2.2 Supporting Business Creation
Not enough attention is paid in Deauville
Partnership countries to supporting the
business creation process through
coaching and advisory services. Besides a
lack of knowledge, skills, and networks,
young entrepreneurs also face serious
difficulties in accessing bank financing. The
concept of business angels is not well
developed in the region, hence seed
capital for start-ups is hard to find. The two
good practice profiles presented in this
section are examples of models seeking to
address these challenges.
The Fondation Création d’Entreprises
(FCE) in Morocco was selected because
of its established presence as a credible
entrepreneurship support organization
targeting youth, its confirmed expertise,
its reach through a network of regional
offices, and its innovative approaches and
documented results.
The Souk At-Tanmia Entrepreneurship
Initiative in Tunisia was selected because
of its innovative partnership approach to
mobilizing the resources, expertise, and
networks of a large number of donor
organizations and local actors across
Tunisia; animating entrepreneurial energy
in underdeveloped regions; and supporting
innovative start-ups that would create jobs
and contribute to economic prosperity.
Although in a pilot phase, and thus strictly
an emerging good practice, the mid-term
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evaluation of the project’s performance to
date indicates a positive impact on job
creation and the entrepreneurial ecosystem,
and has identified a number of lessons
learned that may hold value for other
Deauville Partnership partners and
countries.
Fondation Création d’Entreprises,Morocco
Overview: The FCE, part of Morocco’s
Groupe Banque Populaire, has the
principal mission of promoting an
entrepreneurial culture and supporting
enterprise creation throughout the country4.
It helps young Moroccans develop their
entrepreneurial spirit and capacity, and
provides advice, counseling, coaching,
mentoring, and training to support the
creation of new enterprises. Its mission
is a reflection of the commitment of the
Groupe Banque Populaire to foster the
development of micro, small and medium
enterprises (MSMEs) and promote the
survival of new businesses. The FCE
operates through branch offices in 15
regions of the country. Its goal is to be a
center of excellence for entrepreneurship
and a model for others to follow.
Quick facts
Year started Incorporated as a non-profit charity in 2001
Number of employees and offices
27 employees; 15 regional offices
Beneficiaries Potential young entrepreneurs 20–45 years of age; Moroccans living abroad
Number of business start-ups supported(from 01/01/2005 to 13/10/2013)
1,717
Number of jobs created 8,535 (average of five per enterprise)
Total project investment stimulated
MAD 1.1 billion; average of MAD 630,000 per enterprise
Total amount of credit obtainedby the start-ups
MAD 490 million
4 http://www.fondationinvest.ma/
Note: MAD = Moroccan dirham
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A. Background and institutional history
The FCE was created by the Groupe
Banque Populaire in 1991 and registered as
a non-profit charity in 2001. Its first activities
were in partnership with the National
Council on Youth and the Future, whose
mission was to promote an entrepreneurial
spirit among young Moroccans and provide
assistance and support to unemployed
university or technical school graduates to
help them create their own jobs by starting
a business. The main objective at the time
was to put into place a national system of
support to deal with unemployed youth.
Prior to 2000, the FCE was one of the
few institutions in Morocco supporting
entrepreneurship development.
Subsequent political changes (entry of
Morocco into the World Trade Organization,
signing of several free trade agreements,
strategic focus on legislative and regulatory
reform to liberalize the economy, publication
of the 2002 Charter for Small and Medium
Enterprises) resulted in the emergence
of new organizations in the field of
entrepreneurship. The National Agency for
the Promotion of Small and Medium
Enterprises (ANPME) was created; regional
investment centers (CRIs) were launched
to act as one-stop shops for investors and
to assist new business creation; and
entrepreneur associations began to spring
up, such as the Association of Women
Entrepreneurs of Morocco (AFEM) and the
Center for Young Business Leaders (CJD).
As a result of this evolving infrastructure
and support for MSME development, in
2004, the FCE’s Board of Directors
commissioned an operational diagnosis for
a strategic reorientation of the activities of
the Foundation.
Based on the new business plan approved
by the Board in 2005, the FCE extended
the scope of its operations by signing
partnership agreements with the Banques
Populaires Régionales to establish a
network of regional offices that would be
in closer proximity to potential clients. It
also signed agreements with the CRIs to
establish regional committees for business
creation (CRPCEs) in the 15 new branch
office locations. The CRPCEs bring
together key regional partners representing
the Banques Populaires Régionales, the
Chambers of Commerce and Industry,
universities, regional directorates of the
Office of Vocational Training and
Employment Promotion (OFPPT), the
National Agency for the Promotion of
Employment and Skills (ANAPEC), and
national and regional NGOs involved in the
promotion of entrepreneurship, such as
AFEM and the CJD, with a view to creating
synergies in promoting entrepreneurship
at the regional level. The main tasks of
the regional committees are to promote
entrepreneurship, explore viable business
projects, and support the creation of
sustainable enterprises.
Objectives: The objective of the FCE is to
foster business creation among young
entrepreneurs and improve the survival
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rates of new enterprises by providing
support that is critical to developing
appropriate skills, preparing business
plans, accessing financing, and establishing
a sustainable venture.
Beneficiaries: The primary target of the
FCE is Moroccans aged 20 to 45 years,
with a university degree or a vocational
training diploma, who have an idea for
a new business, are ready to start a
business, or have a newly formed
enterprise in need of advice, counseling,
and mentoring. A secondary target is
Moroccans living abroad who can be
encouraged to facilitate new business
activity in Morocco, either by setting up a
branch office, starting a new business, or
investing in a partnered start-up. However,
the FCE offices are open to any Moroccan
who needs help in starting a business (e.g.
training, advice, counseling).
B. Organizational model
The FCE is a foundation of the Groupe
Banque Populaire. It is governed by its
Board of Directors, which provides
strategic direction and policy guidance,
and reviews and approves annual
workplans. The head office is located in
Casablanca; a network of 15 regional
offices, established in partnership with the
Banques Populaires Régionales, are
located throughout Morocco. Through the
formation of the CRPCEs, the FCE has
built a network of institutional members in
each of its regions to ensure that each of
its projects can benefit from support from
the definition of the project, through the
start-up launch, and up to two years post-
creation.
Staffing: In mid-2013, the FCE had 27
employees, one in each of the 15 regional
offices and the remainder performing
leadership, administrative, development,
and communications roles in the head
office. Seventeen of the employees (12%
women) are directly involved in providing
information and support services to the
young entrepreneurs.
C. Operational model
Products and services: Products and
services: The package of entrepreneurship
development services provided by the FCE
includes information, entrepreneurship
training, and counseling/ advice. Basically,
it supports young people in exploring
opportunities for a new enterprise,
developing their business ideas, formulating
business plans, securing financing, dealing
with business registration formalities,
starting the business, and gaining
entrepreneurial and management skills to
improve their business’s chances of survival
and success. These services are accessible
from the FCE regional offices to any young
entrepreneur with a business idea who
needs information and advice. In addition,
the FCE has two flagship programs: an
annual call for innovative project proposals
from young Moroccans living inside
the country, and the Marocains du
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Monde program targeting the Moroccan
diaspora.
The annual call for innovative project
proposals from potential young entrepreneurs
has been ongoing since 2006. Its objective
is to select up to 30 projects in each of
the 15 regions, depending on the number
and quality of submissions. The selected
projects benefit from the expertise of the
FCE and members of the CRPCE through
a program of pre-start-up, start-up, and
post-start-up services.
In the first phase, which lasts six months,
the potential entrepreneurs participate as
a group in a week of entrepreneurship
training (seminars on the business plan,
financing tools, the start-up process, etc.),
a week of managerial training (how to
prepare a bank financing proposal,
marketing, project management, etc.),
followed by individual coaching from the
FCE and CRPCE members in preparation
for the start-up phase. By the end of this
phase, entrepreneurs are expected to
have finalized their business plans and
strengthened their managerial skills.
In the start-up phase, the entrepreneurs
receive support from the regional FCE
offices and the CRIs in dealing with the
formalities inherent in registering a
business, preparing bank files, choosing
suppliers, and recruiting the best workers.
The entrepreneurs are also coached in the
processes of negotiating land purchases
or leases for business premises, contracting
with equipment suppliers, and other
necessary actions.
After creating their businesses, these new
entrepreneurs enter into the two-year post-
creation phase of the program. This entails
on-site visits by FCE advisors to each
business every three months to monitor
developments and help with solving
any problems, facilitate networking, and
provide coaching and mentoring support
to ensure the sustainability of their
businesses. Entrepreneurs also benefit
from thematic entrepreneurial and
management training (e.g. seminars on
taxation issues, financial management,
planning). All advisors in the program are
FCE employees, complemented by staff of
the CRPCE members, and all services are
provided free of charge.
From the 600 applications received in
response to the 2013 call for proposals,
381 were selected in the initial screening
and 196 projects finally approved, involving
215 young entrepreneurs spread across
the 15 regions. However, a unique feature
of this initiative is that non-selected
candidates who are eager to proceed with
their project ideas can still receive advisory
support on an individual basis from the
FCE regional offices, which are open to
anyone seeking support while trying to
start a business.
To help the young entrepreneurs obtain
financing for their projects, the FCE
provides assistance with preparing a
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financing file and facilitating linkages with
all of the banks in Morocco (although 80%
of FCE start-up clients are financed by the
Banque Populaire). Because of the difficulty
young entrepreneurs in Morocco have in
obtaining financing from banks, the FCE
encourages their clients to apply to several
institutions for financing. It also advises
them to take advantage of the rapid
turnaround of Damane Express, a Caisse
Centrale de Garantie (CCG) program
started in 2012 to guarantee banks loans
of up to MAD1 million for start-ups and
very small enterprises (VSEs).
FCE’s second flagship program is the
innovative Marocains du Monde program
through which it reaches out to the
Moroccan diaspora. Started in 2009, the
program creates awareness among the
diaspora of opportunities for starting new
businesses in Morocco and supports
implementation of the government’s
strategy for mobilization of Moroccans who
live abroad. The FCE provides information
about supply chain opportunities around
sector clusters (e.g. automotive, electronics,
etc.) and opportunities in the trade sector
(e.g. artisans, construction) that would
require investments of less than MAD5
million. For this program, the FCE targets
Moroccan professionals living abroad (e.g.
engineers, PhDs, university graduates,
experts) who have the experience and
skills to launch new businesses in
Morocco, set up branch operations in the
country, or become investors in Moroccan
enterprises run by others. FCE organizes
meetings abroad to attract investors by
offering its package of supports to setting
up a business in Morocco.
Approach: More broadly, the FCE targets
secondary school and university students
with promotional activity geared to
fostering an entrepreneurial mind-set,
improving their knowledge of how to
explore business ideas and develop
business plans, and inspiring potential
entrepreneurs to start a business. The
objective is to build awareness among
young people of the possibilities of creating
their own jobs through entrepreneurship.
Planting this entrepreneurship seed is
critically important in a country where the
unemployment rate among new graduates
is high because of the short supply
of paid job opportunities. To implement
these activities, the FCE has developed
partnerships with all of the Moroccan
universities, and commercial secondary
schools. FCE experts routinely make
presentations, conduct workshops at
national entrepreneurship conferences,
serve on juries of university business plan
competitions, and deliver business plan
elaboration training courses.
D. Financial model
For its core activities, the FCE operates
on an annual budget of MAD7 million
provided by the Banque Populaire
Foundation. This grant is used to cover
salaries of experts and trainers, pre- and
post-creation coaching support, sponsoring
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of events to promote entrepreneurship
among youth, and other entrepreneurship
promotion activities.
During the past three years, the FCE has
also attracted project funding from IFIs and
donor organizations. The Marocains du
Monde project also receives funding from
the African Development Bank (AfDB)
Migration and Development Fund.
Further, the FCE is partnering with Silatech,
a Qatar-based organization, to develop
new initiatives for the 18-35 age group,
which will enable it to reach out to more
young entrepreneurs.
The FCE occasionally enters into
contractual agreements to provide its
services to other organizations. For
example, through a contract with Royal
Air Maroc, the FCE has agreed to provide
entrepreneurship training, business planning
and advisory support to officers who
voluntarily leave the service, with the
aim of helping them make a successful
transition into economically viable business
projects in the industrial, commercial, and
services sectors.
E. Results and impact
FCE’s offices provide support services to
up to 3,000 persons annually. From
January 2005 to December 2012, they
received 17,731 approaches for support
and provided 48,026 services/ actions
(e.g. training, advice, etc.). These numbers
attest to the relevance of the FCE and its
offerings. In fact, it has become one of the
best-known entrepreneurship support
entities and champions of entrepreneurship
and new enterprise creation in Morocco.
From January 2005 to June 2013, the
FCE’s facilitation support directly contributed
to the creation of 1,717 new enterprises,
generating a total of 8,585 jobs (average
of five jobs per enterprise) (FCE, 2013).
However, the FCE’s impact goes beyond
its contribution to job creation. The FCE
approach also results in favorable survival
rates of the new enterprises. Follow-up
studies show that 77% of their assisted
start-ups are still active beyond the two
years of post-creation monitoring and
coaching support.
The total amount of investment generated
by the new enterprises exceeds MAD1
billion, averaging MAD 630,000 per
enterprise. The projects have been able to
obtain MAD 490 million in bank credit,
representing 45% of the total project
investments. A full 53% of the new
entrepreneurs were able to secure
financing either from the Banque Populaire
or other banks, while the remainder self-
financed their start-ups. By comparison,
only 19% of the young entrepreneurs
from the 2012 ANAPEC Moukalawati
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program5 were able to obtain bank
financing for their start-ups, even with
the special CCG guarantee; and of the
201 enterprises created by the Fondation
du Jeune Entrepreneur between 2011
and 2013, about 33% obtained bank
financing6.
Concerning the Marocains du Monde
program, from its launch in 2009 to the
end of 2012, it supported the creation of
197 enterprises in Morocco, averaging
about 50 a year, and producing 912 jobs.
Although Marocains du Monde projects
start with same average number of
employees as the other FCE start-up
programs, these enterprises have potential
for higher future growth. They have been
responsible for MAD 228 million of
investment, of which MAD 63 million was
raised from bank financing (about 28% of
the total investment). About two-thirds of
the Marocains du Monde enterprises are
in the services sector and 10% are
women-led. It is also important to note that
the majority of projects are in the regions
outside of Rabat and Casablanca,
indicating that they are benefiting local
economic development. Almost three-
quarters of the projects are led by the
Moroccan diaspora from France, Spain,
and Italy.
F. Success factors
There are five key factors in FCE’s success.
Its status as a subsidiary of the Banque
Populaire and the resulting stability of
its governing bodies and administration.
This has enabled the FCE to optimize its
efficiency, adopt a management-by-
objectives approach, develop financial
transparency (statutory accounts and
annual financial audit), and establish a
proper governance structure with
workplans approved by the Board of
Directors and General Assembly, and
monitoring and supervision by the
President. By establishing a network of
regional offices, it has made its services
more accessible to young entrepreneurs in
the different regions of Morocco.
Its partnership approach. The FCE has
formed the CRPCEs, and participates in a
network of networks that includes the
CRIs, the CJD, AFEM, the National Center
for Scientific and Technical Research
(CNRST), the Morocco Entrepreneurship
Network, and other key entrepreneurship
support entities at the regional level. It has
also established privileged relations with
ministries and public institutions. This has
helped build up a more integrated support
5 The Moukalawati Programme targets unemployed diploma graduates.6 http://fjemaroc.ma/page-4-Creationdentreprises-40-fr-1-fondationentrepreneur.html
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system for new start-ups and has also
broadened the scope of its assistance
package.
Its support approach to clients. This
approach, based on an integrated
package covering all aspects of the
entrepreneurs’ needs during the pre-start-
up, start-up and post-creation phases, has
been fundamental to FCE’s success. The
annual call for innovative project ideas is
also an efficient way of identifying potential
young entrepreneurs for group-based
approaches to start-up training and fostering
a mutually supportive network.
Its link with the Banques Populaires
Régionales. Not only do these banks
provide premises for the FCE regional
offices, but the relationship is important
in terms of facilitating access to financing
for the new businesses being created
with FCE support. Approval of financing
requests is in no way guaranteed, but this
bank network is also committed to
fostering entrepreneurship in Morocco and
open to considering start-up loans.
The quality of its staff. The FCE seeks to
hire advisors with business and financial
experience and with strong communications
skills, and it provides annual training
programs to upgrade their knowledge
and advisory skills. Over the years, it has
gained increasing respect for its expertise
in the entrepreneurship development
sector.
G. Lessons learned
In general, the thorniest start-up problems
in Morocco are related to the lack of
accompaniment support for entrepreneurs
and a poor relationship with financiers.
Thus, the FCE focuses strongly on building
a good relationship with the banks and
helping young entrepreneurs prepare their
financing proposals. The FCE will often
send the clients’ dossiers to all the banks
for review. Seminars are also offered to
young entrepreneurs on negotiating with
banks. Another lesson learned by the
FCE is that start-ups can have strong
business plans, but have many technical
weaknesses in their implementation.
Therefore, an important factor in success is
having experts/ coaches to help new
entrepreneurs identify these weaknesses
and overcome them in the post-start-up
stage.
Apart from lessons learned by the FCE in
designing support programs for young
entrepreneurs, such as the beneficial
impact of coaching and mentoring through
the three phases of entrepreneurial
development and using invitation calls to
discover latent young entrepreneurs with
innovative business ideas, the FCE sees
many gaps in addressing the support
needs of start-ups and VSEs in Morocco.
To provide a stronger ecosystem for
the FCE’s efforts, there needs to be a
more favorable environment for young
entrepreneurs. This could be achieved by
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providing more fiscal incentives for young
enterprises/ entrepreneurs, such as
tax exemptions to young entrepreneurs
who start businesses and other fiscal
advantages. In addition, more needs to be
done to promote entrepreneurship through
the media, such as online business plan
competitions, and projects to motivate and
inspire young people and provide them
with knowledge about the entrepreneurial
process. To address the problems that
young entrepreneurs have in accessing
bank financing, the FCE would like to see
a system of certification, whereby banks
would agree to finance start-up enterprises
when the FCE certifies that the young
entrepreneurs’ start-ups are bankable.
Furthermore, more emphasis should be
placed on promoting start-ups, particularly
in the IT sectors, and ensuring that bankers
have the knowledge to support enterprises
in knowledge-based sectors.
Overall lessons learned
• Demand for entrepreneurship among
young people can be stimulated
through calls for innovative project
proposals, but must be supported by
efforts to promote entrepreneurship as
a viable and attractive career and
employment alternative, strengthen the
culture of entrepreneurship, and inspire
young people about the possibilities of
starting a business.
• Start-up support to young entrepreneurs
must include a component to facilitate
their access to financing.
• Survival rates of new enterprises can
be positively influenced through better
preparation of entrepreneurs during the
pre-start-up phase and the provision of
post-creation coaching and monitoring
during the first two years of operation,
when enterprises are most
vulnerable.
• It is important to develop a regional
presence to make support services
available and accessible to aspiring
young entrepreneurs at the local level.
This can be achieved by establishing
regional offices and developing
partnerships with complementary
organizations with a regional/ local
presence. Forming partnerships with
other entrepreneurship-related entities
also helps to build a supportive
ecosystem for youth entrepreneurship
development.
• Positive results can be achieved by
targeting the diaspora living abroad
and linking them to business
opportunities in the home country, to
stimulate the return of talent, business
creation, investment and jobs.
Souk At-Tanmia EntrepreneurshipDevelopment Initiative, Tunisia
Overview: The Souk At-Tanmia (“market
for development”) Entrepreneurship
Development Initiative is an innovative pilot
partnership between AfDB, other donors,
public and private stakeholders, and
Tunisian civil society that seeks to provide
an effective response to the post-Arab
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Spring unemployment challenges in Tunisia,
particularly for youth7. Its objective is
to contribute to building momentum for
hope by generating jobs and income in all
regions of Tunisia. The Initiative invites
project proposals through a competitive
process and then provides entrepreneurial
training, one year of coaching support
through the implementation phase, and
start-up grants of between TND 10,000
and TND 30,000 to help defray initial
costs and/ or enable the entrepreneurs to
meet the equity requirements to qualify for
additional bank financing. The competition
is open to individual entrepreneurs, micro
and small enterprises, cooperatives and
NGOs. It gives preference to project
proposals from young people, women,
and the unemployed; and to proposals
for projects in disadvantaged regions
or projects that benefit disadvantaged
groups, especially in terms of job creation.
Above all, Souk At-Tanmia is distinguished
by being a broad partnership, in terms of
the number and diversity of its members,
and its budgetary scope. In fact, it has
been described as “the most important
mobilization of public-private development
partners, associations, civil society
and academia to promote employment
and entrepreneurship in Tunisia” (MDG
Achievement Fund, 2013:13).
7 http://www.soukattanmia.org/
Quick facts
Year started 2012
Primary goal To promote job creation and inclusive growth through entrepreneurship
Number of program partners20 organizations (international development organizations, private sector,civil society organizations, business associations, and public financial institutions)
Number of staff in Secretariat 5
BeneficiariesInnovative business creation projects that benefit youth, women and disadvantaged segments of society in marginalized regions of Tunisia
Number of business projects supported
61
Number of jobs created/ supported437 actual jobs in 2013 (245 direct jobs and 192 indirect jobs) and 641projected jobs for 2014 (330 direct jobs and 311 indirect jobs)
Total costs for pilot programTND 2,125,429 fundraised through partners’ donations for grant financing ofprojects. TND 1,787,502 disbursed for 61 grantees. Another TND 1 millionprovided via in-kind contributions of partners
Note: TND = Tunisian dinar
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A. Background and institutional history
The January 2011 popular uprising in
Tunisia highlighted a number of
socioeconomic problems facing a broad
segment of the population. Despite robust
growth and the significant progress
achieved in recent years in terms of human
development, major obstacles still impeded
the fair distribution of growth across
Tunisia’s regions. Youth unemployment
was, and still is, a serious issue. In 2011,
the unemployment rate in the 15-24 age
group was almost 44%, dramatically up
from an already high level of almost 30%
in 2010 (ONEQ, 2012). Unemployment is
even more serious for youth with a higher
level of education, especially for those
living in the interior regions of the country.
The private sector is not large enough
or growing fast enough to absorb the
growing number of new graduates into
the labor market due to low private
investment.
In addition, rigid labor regulations that
restrict the hiring and firing of workers
and high social security costs for employees,
are impediments to job growth (AfDB
et al., 2013).
The revolution also brought to light the
extent of regional disparities across
Tunisia, with the interior regions suffering
from much higher unemployment rates,
much lower private and public sector
investment, and significant gaps in the
density of private MSMEs and levels of
entrepreneurial activity compared with
the coastal regions. According to the
2010 and 2012 results of the Global
Entrepreneurship Monitor, few Tunisians
are engaged in trying to start a new
business – fewer than 2% of adults (18-64)
compared with an average of 6.7% of the
adult population (2010) in other countries
at a similar level of economic development
(Kelley et al., 2011; Roland Xavier et
al., 2013). The low level of nascent
entrepreneurship is also the result of the
comparatively low percentage of the
population who see good opportunities to
start a business, coupled with the weak
entrepreneurial culture in Tunisia.
Another obstacle to private sector
development is difficult access to the
financial system, particularly for vulnerable
groups who either lack funds to start
enterprises or cannot provide the personal
contribution or guarantees required by
banks to raise the necessary funds for
mounting a productive project. A survey
conducted in May 2012 by the survey
organization GeoPoll in 24 governorates
revealed that, for 66% of respondents,
the two main obstacles to developing
entrepreneurship in Tunisia are the inability
to provide the personal equity contribution
required (41%), and difficult access to bank
loans (25%).
In considering an appropriate and
immediate response to the dual challenges
of stimulating entrepreneurial opportunities
in Tunisia’s regions and improving access
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to financing, as well as offering an
alternative approach to addressing the
unemployment crisis in Tunisia, AfDB
examined lessons learned from model
donor projects in other regions of the world
and also the initiatives and ecosystem in
Tunisia. The Souk At-Tanmia Initiative was
designed in a way that would stimulate
Tunisians to develop innovative ideas
for new businesses to start in their
communities. It selects projects with the
greatest potential for creating jobs and
benefiting young people, women and other
underprivileged groups, and then provides
basic entrepreneurial and management
training, start-up financing and coaching
and mentoring to bring the projects to
fruition with a higher probability of
sustainability. By supporting the creation
of micro and small enterprises nationwide,
the Initiative is contributing to building
the momentum for growth and generating
productive employment, while helping
to reduce social and regional
disparities.
Another important element of the Initiative
is that it has brought together 20 major
partners to provide support to entrepreneurs.
In addition to AfDB, these include (i) three
bilateral donors (the United Kingdom’s
Department for International Development
– DFID, the Danish government, and the
United States Department of State); (ii) five
United Nations agencies (the Food and
Agriculture Organization of the United
Nations – FAO, the International Labour
Organization – ILO, the United Nations
Industrial Development Organization –
UNIDO, the International Organization for
Migration – IOM, and the United Nations
Development Programme – UNDP); (iii)
four private companies (Microsoft, Talan,
Total Tunisie, and Tunisiana); (iv) three civil
society organizations – CSOs/ professional
associations (the Centre des jeunes dirigeants
d’entreprise – CJD, the Confederation of
Tunisian Citizen Enterprises (CONECT),
and Touensa; (v) two academic institutions:
the British Council and the Mediterranean
School of Business; and (vi) two Tunisian
public MSME finance institutions (the
Banque de Financement des Petites et
Moyennes Entreprises – BFPME, and the
Banque Tunisienne de Solidarité – BTS).
Each partner has signed the Framework
Agreement, which outlines the modalities
of the partnership and the partners’
responsibilities.
Objectives: The primary goal of the Souk
At-Tanmia Partnership is to support job
creation and inclusive growth in Tunisia
by helping entrepreneurs transform their
ideas into viable businesses, or early-
stage micro and small enterprises with
potential to grow. The partnership has a
particular focus on disadvantaged groups
such as women, youth, and economically
disadvantaged regions. It aims to address
barriers – both financial and non-financial
– that are currently hindering the
development of entrepreneurship and
an inclusive private sector in Tunisia.
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In particular, it helps to:
• Identify and support innovative
activities while mobilizing and allocating
seed funding for sustainable projects;
• Guarantee the quality at entry of
projects by setting up a selection
committee to ensure that supported
projects offer a potentially high positive
impact on social and human
development in Tunisia;
• Foster job creation while supporting
sustainable projects designed to
bridge social and regional disparities;
• Promote visibility of potential projects
to enable them to further benefit from
the support of existing and potential
partners; and
• Take advantage of the mix and
complementarity of partners’ specific
areas of expertise and make this
available to beneficiaries (AfDB, 2012).
Beneficiaries: The intended beneficiaries
of the Initiative are young entrepreneurs
(defined as less than 35 years of age),
women, and underprivileged groups, with
priority placed on underserved regions of
Tunisia. The competition is open to individual
entrepreneurs, NGOs, cooperatives, and
existing micro and small enterprises.
B. Organizational model
The Initiative is a new model for mobilizing
financial and technical resources to
promote entrepreneurship nationally. Such
a large group of partners requires a
systematic organizational structure (see
Figure 1).
• Steering Committee: The decision-
making and governing body for the
Initiative, the Steering Committee, is
chaired by AfDB and comprises one
representative from each of the
partners. It meets at least once every
three months. The Tunisian Ministry
of Investment and International
Cooperation is an observer on the
committee. The committee determines
the Initiative’s strategy, procedural
guidelines, and work program;
designates members of subcommittees;
approves all selected projects; and
coordinates the production of project
mentoring and monitoring reports;
• Secretariat: AfDB hosts the Secretariat,
whose role is to coordinate the
preparation of partnership strategies,
policies, and directives for approval by
the Steering Committee; prepare
operating manuals for project
implementation; monitor execution of
project components; manage and
monitor the implementation of
partnership activities; and consolidate
the production of all monitoring and
financial reports. The Secretariat is also
responsible for all aspects relating to
communication and branding. The
initial operational costs for the
Secretariat were covered by DFID
through a special trust fund at AfDB;
constant financial and in-kind support
from AfDB was also required.
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• Financial Agent: The BFPME receives
the financial contributions of partners
and manages the execution of grant
agreements and disbursements of
grant funds to project recipients. The
BFPME was chosen for this role
because of its solid experience in micro
and small enterprise (MSE) lending and
also because it would mark the
Tunisian government’s presence in the
Initiative, making its future replication
more likely to be sustainable.
• Selection Committee: This committee,
whose members are chosen from
project partners, is responsible for
launching the call for proposals,
reviewing and rating all submissions,
and recommending selections for
approval by the Steering Committee.
• Jury: Consisting of a group of
prominent Tunisian entrepreneurs and
public figures, this panel is tasked
with selecting the final set of “best
projects”.
Three working groups of the Steering
Committee are responsible, respectively,
for (i) ensuring that a complete program
of coaching and mentoring is available
to assist and guide the beneficiaries
in implementing and developing
their projects; (ii) coordinating all
communications activities during the
various phases of the project with a
view to maximizing the impact of the
partnership on the development of Tunisia;
and (iii) evaluating the pilot phase of the
Figure 1: Souk At-Tanmia Initiative Organizational Structure
Framework AgreementAnnex: Participation letter
(highlight respective contributions)
Beneficiaries/entrepreneurs
• Strategy • Coordination • Work program• Approval of selected projects
Steering Committee
Jury Secetariat Selection CommitteeFinancial Agent
Source: Souk At-Tanmia concept note.
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Initiative, including the performance of
partners in their respective roles, although
a final evaluation is undertaken by
an external and independent evaluation
team.
Staffing: The Secretariat in AfDB is staffed
by a project coordinator, a project manager,
and a small technical team consisting of a
disbursement and accounting expert, a
communications and partnership expert,
and a monitoring and evaluation expert.
Their work is assisted by the three working
groups and in-kind contributions of many
of the project’s partners for matters such
as developing the website, hosting the
help-line or organizing the dissemination
campaign with CSOs.
C. Operational model
Products and services: The Initiative
consists of the following five components:
a) Communications and promotion. The
Initiative was launched in July 2012
with a strong communications strategy.
Some 30,000 brochures were distributed
across Tunisia. The promotional road
show included 30 regional meetings to
present the project and encourage
participation in all of the governorates.
More than five million SMSs were sent
out via mobile phones thanks to the
partner Tunisiana. Extensive use was
made of media channels, including
social media (Facebook, Twitter,
YouTube), as well as local organizations,
in promoting the Initiative. Interested
parties were directed to the Souk
At-Tanmia website where they could
access the proposal application
form. All completed forms were then
submitted online. Fifty CSOs were
mobilized by Touensa to promote
the Initiative and help candidates
complete the proposal application
form. This intensive and comprehensive
communications effort resulted in
more than 2,000 applications and a
considerable amount of coverage in
the media. In January 2013, at the
end of the first competition, a press
conference was held to announce the
winners and to allow them to publicly
present their projects.
b) Selection of candidates. Two sets of
criteria are used by the Selection
Committee. The fundamental set
includes consideration of: (i) potential
for job creation; (ii) feasibility of the
project; and (iii) financial viability and
potential for sustainability. Extra points
are given for projects: (i) where the
applicant is young, unemployed, and/
or a woman, or that would bring strong
benefits to these groups; (ii) located in
an underserved region; (iii) demonstrating
innovativeness of the intended product,
its production or marketing process;
and (iv) that have the possibility of being
developed, transferred, or replicated
elsewhere in the country.
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c) Basic entrepreneurship training. Up
to 300 entrepreneurs are shortlisted in the
first selection stage and they are given a
month to develop their business ideas
further, including detailed financial
projections, and resubmit the revised
proposal on a new form. Early during
that month, the candidates are able to
participate in a three-day capacity-building
training course offered by British Council
trainers in collaboration with Tunisia
Gwent College, covering entrepreneurship,
business planning, basic accountancy, and
management topics. The workshops,
conducted in 15 regions, also provide
one-on-one assistance to those who need
help in completing the second submission
form. In the second stage, the Selection
Committee reviews the enhanced proposals
and selects the final list of up to 100
highest-quality projects for funding and
mentorship (British Council, 2013).
d) Project financing. One of the main
objectives of the Initiative is to address the
lack of access to bank financing for start-
ups and young enterprises. Thus, a major
benefit to the supported projects is its
grant component. In the pilot program,
each of the 71 projects was awarded a
grant of from TND10,000 to TND30,000,
which was to be used to cover start-up
costs or as the equity contribution to meet
the requirements for a bank loan from the
BFPME, the BTS, or another bank. The
cost of eligible projects was allowed
to range between TND10,000 and
TND180,000, based on evidence that
projects in this size range face the greatest
challenges in accessing funding in Tunisia.
Given the rules used by banks, equity (in
the form of the grant) of TND30,000,
would give entrepreneurs the possibility to
raise up to TND150,000 in debt funding
from partner financial institutions. Grants
were disbursed in tranches linked to
reaching certain milestones. The first
tranche, corresponding to the cost of
starting the business (registration cost,
equipment and input costs, etc.), was paid
once the coach approved the amount and
communicated the approval decision to
the Secretariat. Additional tranches were
disbursed based on estimates of additional
expenses (e.g. marketing, communication,
legal, etc.) following the same procedure.
e) Coaching and mentoring. Once
selected, the finalists are provided with
one year of comprehensive coaching and
mentoring support from the Souk partners.
This support is considered important to
ensure a higher probability of survival of the
enterprises during their first year of
implementation. Coaches and mentors
(volunteers) are drawn from UNIDO, UNDP,
CONECT, Microsoft, and others, and
assigned to projects that could benefit
from their sector expertise. For instance,
Microsoft was assigned information and
communications technology projects while
FAO was assigned agricultural projects.
Coaches are encouraged to have
frequent exchanges and interactions with
beneficiaries to guide them and transfer
knowledge and technical know-how;
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however, no specific frequency for
meetings was set for the coaches, which
led to significant variations in the time
spent by coaches with beneficiaries.
D. Financial model
Funding for the pilot program of
TND2,125,429 was covered by the United
States government, the Danish government,
and DFID, together with international donor
organizations. Part of the pooled fund
was used to disburse grants 61 of the
71 selected projects, for a total of
TND1,787,502.
The operating costs of the AfDB
Secretariat were covered by a contribution
of GBP 100,000 from DFID through an
existing technical cooperation agreement.
Nonetheless, without a proper institutional
set-up and ad hoc procedures, AfDB
struggled to deliver fully on its role without
breaking its own rules, which are generally
not adapted to the Bank playing the role
of project implementation unit. AfDB itself
thus had to contribute through in-kind
and financial contributions, for a total
of around US$100,000. In addition, the
in-kind contributions of partners for
accompanying activities are estimated at
more than TND1 million.
This financial model worked well for the
pilot program, but continuing the program
will require a longer-term commitment of
partnering IFIs/ donors. To make the model
more sustainable in the future, two
strategies are foreseen: (i) adding an equity
vehicle for early-stage companies, which
will generate profit and could cross-
subsidize the grant component for
start-ups; or (ii) reducing the grant amount
and offering instead a hybrid where one
part will be a grant, and the other a zero-
interest loan with a longer grace period of
repayment.
E. Results and impact
The pilot program reached – and, indeed,
slightly exceeded – its target of US$1.3
million for financing entrepreneurs. A total
of 71 projects were selected from over
2,000 submitted proposals and 300 short-
listed projects. This fell short of the target
of supporting 100 projects, primarily due
to the low quality of many of the proposals.
By the end of the pilot phase, officially
closed in December 2013, ten of the
projects had dropped out of the program,
leaving 61 operational after one year of
coaching support. More than 72% of the
projects were start-ups, with the remaining
27.3% consisting of existing enterprises
that were able to expand their operations.
The average grant per recipient enterprise
was TND 29,289, since almost all applicants
requested the maximum grant of TND
30,000. By December 2013, all the grants
had been fully disbursed, although some
disbursement delays were experienced
because the enterprises needed to do
more work on their financial projections
and business plans after being selected
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for the program. Beneficiaries’ lack of
familiarity with the administrative processes
for establishing a business was also a
delaying factor. Equally important were the
difficulties that some beneficiaries faced in
raising debt financing.
Data gathered through surveys and
interviews with the supported entrepreneurs,
together with the mid-term evaluation,
indicate that the pilot edition reached the
intended beneficiaries (vulnerable people,
youth and underserved regions) and
was highly relevant to their needs. Women
entrepreneurs initiated 32% of the
projects; unemployed persons, 31%; and
entrepreneurs under the age of 35, 50%.
About 63% of the projects are located in
underserved regions, such as Sidi Bouzid,
Gafsa, Kasserine, and Le Kef. Two-thirds
of the entrepreneurs valued both the
financial support and the coaching
program (AfDB, 2014b). In terms of visibility
and encouraging entrepreneurship, the
pilot edition was successful. The high
number of project applicants (2,000
proposals submitted) and Facebook fans
(3,200), and the amount of press coverage
all exceeded expectations.
The mid-term evaluation found early signs
that the partnership was effective, although
achievements at that point were mostly in
the form of outputs rather than development
outcomes. The 71 project proposals were
projecting to create up to 1,000 jobs,
anywhere from four to 70 depending on
the enterprise. Data from the 61 beneficiaries
drawn for the mid-term evaluation and
continued monitoring revealed that they
had created at least 437 jobs for 2013:
245 direct and 192 indirect jobs. Another
641 additional jobs are foreseen for 2014,
based on projections of the entrepreneurs
and coaches: 330 direct and 311 indirect
jobs. This means that the pilot program will
have surpassed the 1,000 job creation
target by the end of 2014, which in itself is
a good result.
The mid-term evaluation concluded that,
despite the large number of partners, the
set-up of the Initiative’s governance
structure resulted in an efficient management
approach. Coordination of the partners
was substantially enhanced with the
establishment of various task forces and
implementation of an operating manual
setting out cost-effective procedures for
following up on projects. The management
of information flow during the pilot phase
was applauded by project beneficiaries
who appreciated the Initiative and trusted
the partners driving it.
F. Success factors
A good partnership strategy and effective
division of labor between partners was
critical to the success of the pilot program.
It succeeded in gathering a broad set of
partners with focused sector expertise to
provide all-encompassing financial and
non-financial support to entrepreneurs.
AfDB was able to leverage the competitive
advantages of partners by assigning them
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specific leading roles, particularly for
financing needs, website management,
and the coaching and mentoring program.
Starting with a core set of committed
partners was important and helped create
a snowball effect that enabled the
partnership, over time, to increase in
both mass and momentum.
Engagement with stakeholders in Tunisia
was another key to success. AfDB
leveraged its network of contacts from its
regional department and the Tunisia desk,
taking full advantage of their knowledge
of the specific geographic and market
challenges, and building on their contacts
and expert network to leverage needed
resources and field expertise. However,
there is a limit to the number of partners
that can feasibly be involved in the program.
It is therefore advisable to commit to a few,
high-level partners who can guarantee
their participation in terms of financial,
organizational, and human resources
throughout all program phases.
A well-designed and executed communication
strategy and promotion approach were
important factors in (i) building trust and
ensuring transparency, (ii) creating broad-
based awareness of the program, and (iii)
stimulating a large number of initial project
proposals. This communication strategy
used tools ranging from grassroots
communication events via CSOs, road
shows by the Secretariat with a focus on
the disadvantaged regions, to web and
social media such as the sending out of five
million SMSs via its partner Tunisiana and
the creation of a Facebook page.
The capacity to offer coaching and
mentoring support to the projects was
essential. Some coaches and mentors
were paid while others were volunteers,
depending on the partner organization.
The mid-term evaluation found evidence
suggesting that the quality of the coach
and level of interaction with beneficiaries
significantly affected project business
success or failure. This was especially true
for the start-up projects initiated by
inexperienced entrepreneurs, for whom
external help was decisive for the future
of their businesses. Beneficiaries being
supported in an expansion phase of their
business also indicated that they were able
to improve their performance as a result of
the targeted and frequent intervention of
the coach.
The offer of grants played a leading role in
the pilot program’s success, providing a
major incentive for individuals and groups
to submit project proposals. However,
the combination of the financial incentive
and the training, coaching and mentoring
support added more value to the offer,
increased the likelihood of the entrepreneurs
accessing financing, and reduced the
risk of early failure.
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G. Lessons learned
Although the Souk At-Tanmia pilot
program has achieved early successes, its
implementation has encountered a
number of challenges, which can be
translated into useful lessons learned
for program modifications in subsequent
tranches.
First, the poor quality of many of the
submissions to the initial call for proposals
indicates that more work is needed to build
entrepreneurial capacity and know-how in
the regions. There may not be a lack of
ideas, but there is a lack of ability to flesh
out these ideas and develop them into
viable project proposals. This suggests
that more effort is needed to provide
some basic orientation to entrepreneurship
immediately following the public launch of
project proposals. This could take the form
of public seminars offered for interested
persons on the basics of entrepreneurship,
how to identify business opportunities,
how to assess the viability of a business
idea/ opportunity, elements to consider
when developing a project proposal, and
some basic financial skills.
Although the 300 shortlisted candidates
had the opportunity to participate in
a three-day entrepreneurship training
program, the selection committee was not
able to approve the target number of 100
finalists because not enough of the revised
proposals were strong enough. This
suggests that more intensive interventions
are required to help shortlisted candidates
work on refining their business plans. This
will be addressed in the next edition by
providing a five-week training course that
includes writing a business plan with the
help of a coach.
The main impetus for many applicants was
the grant component, providing start-up or
expansion financing that would be difficult
to obtain from formal financial institutions.
Many applicants were wary of commercial
financial institutions and deterred by
conventional banks’ complex bureaucratic
and administrative processes. Nonetheless,
a number did obtain the necessary
endorsement and the funds to start up
their business primarily thanks to the
Secretariat’s interventions. On the other
hand, several other beneficiaries
experienced delays in obtaining financing
approvals, which in turn delayed project
implementation; and some had their
applications rejected and had to abandon
or scale down their projects. This
suggests that future editions of the
program need to seek enhanced
coordination and cooperation with banks.
The second edition therefore foresees
involving banks early in the selection
process as well as in the training
component.
The program did not require beneficiaries
to make a personal equity contribution to
their project, although in many of the
projects, the financing model did include
some personal equity beyond the Souk
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grant. The mid-term evaluation found
that this partly explained differences in the
level of commitment and motivation of
beneficiaries. Entrepreneurs who had a
personal stake in the project (both in
absolute and relative terms) were more
motivated to make progress on their
projects (AfDB, 2014b). The future Souk
editions therefore will require a small equity
contribution as a condition of the grant –
large demands are to be avoided so as not
to unduly burden youth, women, and
lower-income applicants.
According to the mid-term evaluation,
beneficiaries found the coaching services
to be of good quality, with the majority
either fully or partially satisfied with them.
However, some beneficiaries complained
about the lack of availability of the
coaches. Many coaches were not paid for
their services, which might have affected
the level of priority they placed on their
coaching responsibilities. Although it is
difficult to draw any definitive conclusions
on the merits of paying coaches, it seems
important to structure the coaching
program in a way that ensures frequent
interaction with beneficiaries, such as by
setting a schedule of weekly meeting times
(AfDB, 2014b). Difficulties created by the
distance between the project location and
the coach can be overcome by using
phone or Skype meetings as an alternative
to face-to-face sessions, or through better
matching of coaches with beneficiaries.
Beneficiaries commented that the quality
of the coaching program could be
improved by using coaches with practical,
hands-on business experience and
more ability to expose them to marketing
opportunities and other stakeholder
networks. Future program editions will also
include an orientation program for the
coaches and more specific guidelines on
the scope of the coaching mandate and
relationship.
The pilot experience showed that
management of the Souk partnership
is time-consuming and requires a larger
number of staff. The use of working
groups and outsourcing of certain activities
achieved some operational efficiency, but
the multiplicity of requests, needs, and
partners put significant pressure on the
Secretariat, which on occasions caused
delays in delivery. To tackle this challenge,
AfDB staff were regularly solicited to lend
support to the Secretariat. Future program
editions will need to establish an
appropriate budget for the Secretariat to
ensure that adequate human and financial
resources are available to deliver on its
mandate.
Monitoring and evaluation is another key
component but was not as efficient as it
could have been in the pilot program.
More comprehensive data should have
been collected on applicants and finalists,
particularly baseline data on existing
enterprises being supported (e.g. current
number of employees and level of sales). It
would also have been useful to conduct a
control group study on a sample of the 229
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proposals that were shortlisted but not
selected as finalists, to find out whether
any of these were able to move forward
with their projects. Results of such a
study would substantiate more fully the
incremental impact of the Souk support.
Lastly, it is necessary to develop a
financially sustainable model for continuing
the operation in Tunisia. The pilot
model shows great promise as an
approach to stimulating entrepreneurship
in underdeveloped regions, contributing to
job creation, and helping to address some
of the financial constraints faced by start-
ups and undercapitalized micro and small
enterprises, but it cannot function without
funding from IFIs/ donor organizations.
The current challenge for the Initiative is to
formulate a strategy for the way forward,
including the ownership and resourcing
of the Secretariat. The strategy being
explored includes building a local structure,
and establishing an equity fund that would
generate reflows from investments in early-
stage enterprises and thus contribute to
overhead costs and part of the grant
financing. Another option under discussion
is lowering the grant portion and
supplementing it with a zero-interest loan.
Overall lessons learned
• Although large and broad-based
project partnerships can be difficult to
manage, the Souk At-Tanmia pilot has
demonstrated that this model can
work to achieve a bold vision for
building entrepreneurial momentum in
a country through collaboration and
sharing of resources, roles, and
responsibilities.
• A broad-based communication and
promotional campaign, which includes
different channels and the collaboration
of civil society and major institutions in
the ecosystem, is decisive in attracting
proposals especially from disadvantaged
strata of society.
• The offer of grant funding provides an
attractive incentive for the development
of project proposals from entrepreneurs
and groups.
• Considerable value is added to project
beneficiaries when the grant funding is
complemented with entrepreneurship
training and with coaching and
mentoring support. The program
works best when tailored around the
entrepreneur’s needs and should be
structured to support beneficiaries
throughout the implementation process.
• The quality of project proposals could
be improved with the provision of more
intensive orientation and training of
potential applicants during the process
of identifying, developing, and presenting
business ideas and proposals. This is
especially important in countries/
regions with a weak entrepreneurial
culture and low entrepreneurial
capacity. In the selection process,
more emphasis should be placed on
assessing the commitment and
motivation of the entrepreneur.
• Requiring some personal financial
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commitment from the applicant may
be an important factor.
• Stronger coordination with banking
institutions is often necessary to enable
assisted entrepreneurs to leverage the
funding support from entrepreneurship
development projects. Engaging
banks as project partners can be an
important asset.
• People matter: the quality, expertise,
and dedication of the team
implementing a program are the most
important predictors of success. The
principal factors are (i) the team culture
and team members’ understanding
of and belief in the program’s vision,
(ii) their approach and the right
combination of skills to tackle program
challenges systematically, and (iii) the
energy and drive they communicate to
each other to keep moving towards
realization of the collective vision of
the program. An important strategy to
keep partners motivated in the
Souk pilot was their involvement in
communication events with media and
their participation in regular steering
committee meetings.
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3. Access to Financing for MSMEs
Lack of access to financing is one of the
major challenges for micro, small and
medium enterprises (MSMEs). Deficiencies
in the Middle East and North Africa
(MENA) region include a general
reluctance of banks to lend to MSMEs,
underdeveloped equity markets, and few
alternative financial instruments, such as
leasing, available to MSMEs. An angel
investor community has been slow to
develop; venture capital funds tend to
favor more established and larger firms
over start-ups and early-stage ventures;
and secondary stock markets for growth-
oriented enterprises, where they exist, are
rudimentary with limited listing activity.
Microfinance is well developed in some of
the Deauville Partnership countries (such
as in Morocco), but often programs have
low lending limits and tend to cater more to
micro and small enterprises than to start-
ups. The vast majority of MSMEs in the
Deauville Partnership countries are self-
financed, either through the entrepreneurs’
savings or money provided by family and
friends. The lack of availability of external
sources of financing affects the scale of
start-ups and the expansion potential of
existing MSMEs, thus posing a barrier to
the creation of jobs.
MSMEs in the MENA countries are
particularly constrained by lack of access
to bank financing and considerably more
so than large firms (Rocha et al., 2011).
Only 20% of small and medium enterprises
(SMEs) have a loan or line of credit, lower
than in any other region of the world, and
only 10% of their investment expenditures
are financed by a bank loan (Rocha et al.,
2011). The International Finance Corporation
(IFC) estimates the credit gap for formal
SMEs in MENA to be in the range of
US$260 billion to US$320 billion: the
difference between the outstanding credit
amount to formal SMEs of US$80 billion to
US$100 billion and the estimated demand
of US$300 billion to US$360 billion (based
on 2011 data) (IFC, 2013). In 2010, loans
to SMEs accounted for only 13% of total
commercial lending in the developing
MENA countries. In the Deauville
Partnership countries, this ranged from
below 10% in Egypt and Jordan, and
15% in Tunisia, to 20% in Yemen and 24%
in Morocco (IFC, 2013).
There are many reasons for the low level of
bank financing to SMEs. First, there are
information asymmetries exacerbated by
the general absence of private credit
bureau data in MENA countries, which
means that banks lack access to reliable
credit information on SMEs and
entrepreneurs. Second, banks are
reluctant to lend to SMEs because of the
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higher transaction costs in processing
small loans and the perceived higher risk
of loan defaults. Third, banks cite as a
deterrent the lack of SME transparency
and SMEs’ inability to provide adequate
financial statements and bankable loan
proposals. In addition, since banks in the
MENA countries have traditionally lent to
governments and large corporations, they
lack knowledge in how to assess the risk
of dealing with SMEs, particularly start-ups
and small enterprises.
On the demand side, SMEs in the MENA
region cite many challenges in accessing
bank financing. Paramount among these
are high collateral requirements and
interest rates. Start-ups and emerging
small enterprises often cannot provide the
collateral required to secure a bank loan,
and even if they could, the lack of property
and collateral registries can be a barrier to
the bank accepting the collateral because
of the legal difficulties in recovering the
collateral in the case of default. There is
also evidence that a proportion of SME
owners do not seek to borrow money from
a bank either because interest rates are
too high or paying interest in not compliant
with Sharia law. In other words, more
SMEs would be encouraged to seek
external financing if Islamic products
were more available. It is also well known
that young entrepreneurs, women
entrepreneurs, and start-ups face even
more serious barriers to accessing
financing because they lack credibility,
experience, credit histories, track records,
and collateral.
One option to improve the capacity to
access bank credit is to offer loan
guarantee programs, which substitute for
the SMEs’ inability to meet banks’
collateral requirements. Alternatives to
bank credit are also needed. For example,
leasing provides an attractive option
for asset financing because it does not
require an equity contribution or additional
collateral beyond the leased asset itself.
In an effort to address the SME financing
gaps, governments and donors have
established development banks, credit
guarantee systems, government loan
programs, microfinance institutions (MFIs),
and alternative forms of SME financing,
such as leasing and Islamic financing.
Several MENA governments have
improved the regulatory environment for
SME financing, for example, by developing
laws to enable the establishment and
operation of private credit bureaus,
regulating MFIs and leasing operations,
putting into place property and collateral
registry systems, and reforming the legal
system to further protect creditors’ rights.
The central banks of some countries also
require (or encourage) private commercial
banks to establish SME windows.
Four good practice profiles have been
prepared for consideration by Deauville
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Partnership countries. Two deal with SME
loan guarantee programs: the Caisse
Centrale de Garantie (CCG) in Morocco;
and Kafalat SAL in Lebanon. One deals
with SME leasing: Tunisie Leasing in
Tunisia. The fourth deals with capacity
building of both banks and SMEs with
respect to SME lending and borrowing:
the Egyptian Banking Institute (EBI) in Egypt.
3.1 Loan Guarantee Schemes
The objective of loan guarantee programs
is to compensate for the lack of collateral
that SMEs can offer to secure a loan and
reduce the risk the bank incurs in lending
to undercollateralized enterprises. Studies
on such programs around the world
suggest that they can have a positive
impact on lending to SMEs especially to
riskier, but creditworthy SMEs (Saadani et
al., 2010; Riding et al., 2007). First, loan
guarantee programs increase the
probability of financing to SMEs that would
otherwise remain credit-constrained,
which means that, if appropriately
designed, they produce a high level of
additionality. Second, through a leveraging
(multiplier) effect, more bank financing is
made available to SMEs than otherwise
would be case. By covering a major part
of banks’ risk in supporting small firms,
public guarantees also reduce the cost of
finance to MSMEs. In the medium and
longer term, the existence of a loan
guarantee program should also increase
the experience of banks in lending to
SMEs and assist them in developing better
relations with the MSME population as a
whole, which over time will theoretically
result in a reduced need for loan guarantee
programs. Loan guarantee schemes are
considered highly market-friendly and
relatively unlikely to introduce distortions to
the financial markets (Aziz, 2013).
However, studies also reveal that the
success of a loan guarantee program
depends heavily on its design, institutional
arrangements, and operational efficiency.
Important to success are well-designed
eligibility criteria, proper coverage ratio and
fees, sound risk management, and efficient
operational procedures (European
Commission, 2006). The World Bank
review of credit guarantee schemes in the
MENA region noted that Lebanon and
Morocco have the top-performing
programs on many dimensions (Saadani et
al., 2010). Within these two countries,
Morocco’s CCG, a government program,
and Lebanon’s Kafalat, a private company,
have been particularly successful in
reaching the SME market. They also stand
out for their continuous innovation with
new guarantee products to respond to the
needs of SMEs at different stages of
development. Thus, these two programs
were selected to illustrate best practices in
access to financing for MSMEs.
Caisse Centrale de Garantie,Morocco
Overview: The CCG is a policy instrument
of the Moroccan government to provide
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credit guarantees to banks of between
50% and 80% to help mitigate the risk of
lending to MSMEs. By reducing the risks
to lending institutions, the provision of
guarantees increases financing coverage
to larger numbers and extra classes of
MSME borrowers, and extends the scope
of the formal financial system to
enterprises that would not otherwise be
able to meet the collateral requirements for
bank loans. At the end of 2013, the CCG’s
outstanding portfolio consisted of more
than 7,000 guaranteed loans (totaling a
commitment of MAD 6 billion).
A. Background and institutional history
The CCG was founded in 1949 as a
publicly funded financial organization with
a mission to boost private initiatives
encouraging the creation, development,
and modernization of enterprises. The
CGC also supports social development,
notably through social housing and
student loan guarantees.
In 2007, the Ministry of Economy and
Finance designed a new strategy for the
National Guarantee System in which the
state plays a key role through the CCG.
The implication for the CCG was a
complete overhaul of its operations and
product lines. As a result, it introduced new
guarantee products designed to meet the
financial needs of MSMEs at different
phases of their business development life
Quick facts
Start date 1949
Number of employees 90
BeneficiariesVery small enterprises (VSEs); SMEs in operation for less than three years;start-ups by young entrepreneurs; start-ups by women entrepreneurs; exporting SMEs
Active guarantee files at the end of2013
About 7,000, with guaranteed loan value of MAD6 billion, leveraging MAD9.5 billion in bank loans
Number of guaranteed loans peryear
Average around 1,800
Average number of jobs createdper assisted MSME
9.2
Penetration of CCG guarantees(2013)
62 loan guarantees per million population
Profitability of operations Generally operating at a loss; may be reaching break-even point
Default rate 6.3%
Notes: Data as of December 2013. MAD = Moroccan dirham
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cycle; and reengineered its processes to
remove unnecessary procedures and
simplify those that remained. It also revised
the guarantee parameters to reflect
international best practices (e.g. capital
allowances, commissions, simplification
and harmonization of eligibility criteria).
These actions helped to streamline and
strengthen the overly complex and
fragmented national credit guarantee
mechanism. The CCG has grown in scale
and scope since 2000, developing a
greater regional presence to enhance its
proximity with local commercial banks and
potential clients. These changes in the
structure, safeguards regime, operating
efficiency, and product lines have had a
significant impact on the volume of
guarantees, which almost doubled
between 2008 and 2009 (fueled mainly by
an increase in working capital loan
guarantees).
Objectives: The primary objective of the
CCG is to facilitate access to finance for
MSMEs with viable start-up or
development plans, or with potential for
restructuring their finances, but with
insufficient collateral security of the kind
required by the banks. By providing
guarantees for bank loans, the CCG
shares lending risk with the banks, which
in the medium and longer term is intended
to orient banks to the practice of lending
to MSMEs. A secondary objective is to
cofinance with banks investment programs
initiated by SMEs operating in key sectors
for the development of the country.
A third objective is to build, through the
guarantee system and investment fund, a
public-private partnership approach to
encourage more private sector investment
in SMEs by reducing the risk taken by
equity investors.
Beneficiaries: The primary beneficiaries
are MSMEs at different stages of
development. These include young
entrepreneurs, women, VSEs, small
enterprises within the first three years of
operation, and more established SMEs
requiring working capital and longer-term
loans for expansion. All sectors of activity
are eligible except property development,
deep-sea fishing and financial sectors. The
secondary beneficiaries are banks, which
through risk-sharing can reach out to new
market segments and grow a customer
base within the MSME sector. A third
beneficiary group is private investors who
can be encouraged to make investments
in SMEs by securing a partial guarantee
from the CCG.
B. Organizational model
The CCG is a public financial institution. It
is managed by its Board of Administration
chaired by the Minister of Economy and
Finance and comprises representatives
from the government, the private sector
and banks. As a financial institution, it is
supervised by the Central Bank of
Morocco. It operates out of its head office
in Rabat and has regional offices in major
cities of the country.
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Staffing: The staff totals about 90,
including a cadre of qualified executives.
Half of the staff are dedicated to operations
management.
C. Operational model
Products and services: The CCG
strategic plan for 2009–2012 introduced
new products designed to ensure more
focus on smaller firms, rebalance
guarantees towards the lower end of the
distribution of loan guarantees, and match
MSMEs’ operational requirements more
closely through the business life cycle with
guarantees on loans for investment,
working capital, financial restructuring, and
private equity.
Including the suite of new products
introduced in 2009, the CCG now offers at
least a dozen guarantee products targeting
different MSME groups (see Table 4).
Generally, these guarantees may not
exceed MAD 10 million and the combined
guarantees of a single borrower may not
exceed MAD 20 million, which ensures
that the guarantees are used by MSMEs.
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Table 4: Characteristics of CCG loan guarantee products for MSMEs
TargetedMSMEgroup
Product Type of loan guaranteed
Risk coverage
Guaranteeceiling
Guaranteeduration
Guaranteefee
CCG processingtime
Very smallenterprises
Damane Express
Short, medium- andlong-term bankloan not more thanMAD 1 million
70% ofloan value
MAD 1 million
Equal toloan duration
0.5% onshort-termloans; 1.5%on long-term loans
48 hours
Women-owned start-ups
ILAYKI Medium- andlong-term bankloan not more thanMAD 1 million
80% ofloan value
MAD 1 million
Equal toloan duration
1.5% flatfee onamount ofcredit
48 hours
Start-upsand enterprisesin operationfor less than3 years
DamaneCréa
Medium- andlong-term bankloans of more thanMAD 1 million. Forprojects includingfixed assets andworking capital.
70% ofloan value
MAD 10million(with nomore thanMAD 20million tothe sameenterpriseover time)
Equal toloan duration
2% flat feeon amountof credit
10 workingdays
SMEs inoperation formore than 3years
DamaneExploita-tion
Working capitalloans
60% ofloan value
MAD 10million(with nomore thanMAD 20million tothe sameenterpriseover time)
18 months 0.5% of thecreditamount pertransaction
10 workingdays
SMEs inoperation formore than 3years
DamaneDév
Long-term bankloans for expansion andmodernization
60% ofloan value
MAD 10million(with nomore thanMAD 20million tothe sameenterpriseover time)
Equal toloan duration
2% flat feeon amountof credit
10 workingdays
SMEs inoperation formore than 3years thatare undergoing a financial restructuring
DamaneIstimrar
Bank investment/working capitalloans to consolidate loansfor investment anddevelopment
50% ofconsolida-ted credit
MAD 10million(with nomore thanMAD 20million tothe sameenterpriseover time)
Equal toloan duration
2% flat feeon amountof credit
5 workingdays forloans of≤MAD 1million; 10workingdays forloans of>MAD 1million
SMEs realizing atleast 20% oftheir salesfrom exports
DamaneExport
Working capital 70% ofloan principal
MAD 10million(with nomore thanMAD 20million tothe sameenterpriseover time)
18 months 0.5% flatfee onamount ofequity
10 workingdays
SMEs tendering torealize projectsabroad
Caution-nementdes Marchésà l’Expor-tation
Bid bonds, advance payment,completion, holdback, etc. required for doingbusiness with foreign customers
70% of the bond
MAD 20million percompany
Equal toloan duration
0.5% of theamount ofbondspayable annuallyuntil releaseof the commitment
10 workingdays
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The product specifically guaranteeing
loans to women-owned start-ups (ILAYKI),
launched in March 2013, offers a
guarantee of 80% of a bank loan with a
value of less than MAD1 million to start-
ups wholly owned by one or more women
(normally the CCG guarantees no more
than 70% of a loan). This provides a
particularly valuable service to women
business owners by addressing their lower
capacity to meet collateral needs for bank
loans.
Another innovative CCG product, Damane
Capital Risque, offers a partial guarantee
to qualified private equity investors for
equity or quasi-equity investments made
in SMEs up to a maximum of MAD5
million. In this case, the CCG also shares
in the rewards of the investment by
applying a commission of from 7% to 10%
based on the capital gain realized on the
investment over the term of the guarantee
period. The scheme is meant to encourage
scaling-down of private equity/ venture
capital investment by guaranteeing a
share of the investment.
Approach: To ensure that the CCG serves
its intended constituency of MSMEs, low
ceilings are set on maximum guarantee
values: up to MAD 10 million per application
for SMEs, and MAD1 million for VSEs.
Previously, guarantees could be applied to
much higher loan values (on average,
approximately three times the new ceiling),
TargetedMSMEgroup
Product Type of loan guaranteed
Risk coverage
Guaranteeceiling
Guaranteeduration
Guaranteefee
CCG processingtime
SMEs inneed ofequity capital
DamaneCapitalRisque
Guarantee forequity or quasi-equity investments provided to eligibleinvestment companies
50% of theequity/quasi-equity investment(60% forinnovativeprojects)
MAD5 million perenterprise(with nomore thanMAD20 million tothe sameenterpriseor group ofenterprisesover time)
N/A 1.5% flatfee onamount ofequity/ quasi-equity covered bythe guarantee,plus commissioncalculatedon capitalgains realized during theguaranteeperiod,upon thesale ofshares
5 workingdays for investmentsof <MAD1million; 10workingdays for investmentsof >MAD1million
Companiesbenefitingfrom theSupportAgreementin the textilessector
IntegraTextile
Short-term loansto finance workingcapital in textile industry; medium-and long-termloans to financeinventory in textileindustry
70% ofloan value
MAD40 million: splitbetweenMAD20 million forshort-termcredit andMAD20 million forlong-termcredit
Equal to theduration ofthe loan
1% flat feeon amountof short-term credit;2% flat feeon amountof medium-to long-term loanvalue
15 workingdays
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which meant that larger firms were more
likely to benefit.
The CCG provides the guarantee to the
bank providing the credit, and works
with all banks operating in Morocco.
The MSME submits a credit application
to a participating bank, and the bank
processes the file and sends it to the CCG
for a guarantee. The CCG applies financial
techniques in assessing the risk of the
client and responds to the bank with its
guarantee decision, depending on the
type and size of the loan. Processing
times for applications range from 48
hours, to 5-10 days with 15 days for the
most complex loans. Costs of the loan
guarantees are low and transparent: a flat
fee based on the credit amount ranging
from 0.5% to 2%. This remains one of the
lowest levels benchmarked against
international practices (Saadani et al.,
2010).
The CCG does not directly engage
with entrepreneurs at either the loan or
debt reimbursement stage. However, it
provides a public information and advisory
service in order to explain its services
to the business community. Outreach
services are being rolled out across
the country to spread awareness of all
CCG products beyond the core Rabat-
Casablanca commercial/ industrial axis.
Presentations are made at business
fairs and other events. The presence of
regional offices plays an important role in
reaching out to local MSMEs (and banks),
with more regional offices planned.
D. Financial model
The endowments of the CCG’s guarantee
funds come from the government Treasury
through an allocation approved by the
Ministry of Economy and Finance. Funding
can also be mobilized from international
financial institutions (IFIs), and agencies
such as the European Union, KfW, the
International Bank for Reconstruction and
Development, and the French Agency
for Development. The amount of the
endowments is determined in advance by
using statistical techniques to calculate
the production trend and statistically
evaluated risk behavior. The goal is to
cover the projected default losses induced
by the additionality generated through
increased loans to SMEs.
The CCG has also set up a strong
partnership framework with international
institutions to back up its development
process. For example, the African
Development Bank (AfDB) provided
technical assistance to the CCG to
upgrade its information technology and
risk systems.
E. Results and impact
Improvements to the system as part of the
renewed focus on MSMEs in the 2009–
2012 strategic plan began to bear fruit in
2012, a pivotal year for the national
guarantee system. Overall, between 2009
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and 2012, about 4,000 projects benefited
from the scheme, representing a total
volume of MAD10 billion in bank loans,
covered by guarantee commitments of
MAD 5.5 billion (Ministère de l’Economie
et des Finances, 2012). These funds were
used to finance investment projects with
a total budget of MAD 11.7 billion and
are expected to create more than 18,000
jobs.
One of the significant ways in which the
CCG has demonstrated good practice in
the MENA region is by commissioning an
external impact evaluation of its loan
guarantee program, which was carried
out by Deloitte Touche Tohmatsu (DTT)
in 2011.
The evaluation, the first of its kind in both
Morocco and the MENA region, assessed
the scale and scope of CCG’s MSME
guarantee activity from 2000 through
2009, and provided a more detailed
analysis for the 2005–2010 period. The
study clearly demonstrates that the
institutional guarantee produces positive
benefits far outweighing its costs (DTT,
2012).
From 2000 through 2009, the CCG
provided a total of 4,362 loan guarantees
with commitments of MAD 4.133 billion.
Projects in favor of enterprise creation
represented most of the loan guarantee
activity (79% of loan guarantee recipients
and 57% of guarantee commitments),
followed by development/ modernization
projects (15% of the recipients and 26%
of the commitments) (DTT, 2012: 28).
A sharp increase in the number of loan
guarantees for development/ modernization
projects was noted in 2009, attributed to
improvements to the guarantee offer. The
great majority of the loans of all types were
for investments in productive equipment.
The average guaranteed loan value was
MAD1.05 million, with these guarantees
covering an average of 72% of the risk
of the banks’ loans to the beneficiary
enterprises.
The more detailed impact analysis reveals
that CCG guarantees support bank loans
with an average value of MAD1.62 million
and leverage total average project
investments of MAD2.52 million (being
the sum of the total bank credit and
investments from other sources). The
portfolio consists largely of credit to
MSMEs with small amounts of paid-up
capital; almost one quarter are sole
proprietorships/ family businesses in
which the business assets are inseparable
from those of the owner. The remainder
(77%) are limited liability companies,
mostly incorporated as sociétés à
responsabilités limitées (SARLs), but
nevertheless with limited capital resources.
Most (63%) of the loans are for industrial
enterprises, compared with 37% in
low-value services. High-value service
enterprises (information and communications
technologies – ICT, research, consulting
and design, etc.) are conspicuous by
their absence; however, this may reflect
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their relatively low proportion among the
general population of MSMEs in Morocco
(DTT, 2012: 53).
The leverage of CCG guarantees is
impressive, as are a number of other
performance measures (see Table 5).
These results indicate a significant impact
on the level of credit, investment, jobs,
and return to the public treasury per MAD
of guarantee commitment. An important
consideration in measuring the effectiveness
of a loan guarantee program is the level of
additionality. The CCG performs well on
this indicator – 81% of the supported loan
files would not have been able to qualify
for the bank loan without the guarantee.
CCG guarantees have also been effective
in supporting the creation of jobs by
improving access to financing for MSMEs.
Indicator Result
Multiplier effect on amountof bank credit
Every MAD1 of CCG guarantee generates MAD1.77 of credit.
Leverage factor on total project investment
Every MAD1 of CCG guarantee generates MAD4.16 of investment.
Leverage on direct and indirect tax revenues
Every MAD1 of guaranteed loan value generates an estimated MAD2.8 in direct and indirect tax revenues from banking activities.
Additionality*
Some 81% of the guarantee files and 63% of the value of bank credits wouldnot have been approved/ issued by banks without the intervention of the CCG in compensating for deficiencies in the level of collateral demanded by the banks, indicating a high degree of additionality.
Growth in investment loansapproved by banks
Credits approved by the CCG in 2010 represented 14.6% of investmentbank loans, compared with 7.5% in 2009, showing an upward trend in itsimpact on MSME access to bank financing.
Job creation
An average of 9.43 new jobs were created per guaranteed loan (rangingfrom 0 to 500), totaling a collective estimate of 18,400 net jobs (over the2005–2010 period), with 90% of jobs accruing from the business creationprojects.
Return on investment to thepublic treasury
The resource cost of CCG commitments to the public treasury is low sinceonly default cases are ever mobilized for payment to the banks. CCG guarantees were called on to the extent of MAD423 million from 2003–2010(consistent with the estimated default rate of 10% within the portfolio, givencommitments of MAD4.133 billion from 2000–2009). The guarantee-sup-ported enterprises generated revenue of MAD1.74 billion for the Treasury(against total CCG and Treasury costs of MAD707 million). An estimate of the direct and indirect benefits of the loan guarantee to the public treasury suggests that as an investment, funding of the CCG generated a return of 23% (DTT, 2012: 57). These figures together amount to a persuasive business case for the loan guarantee program in Morocco vis-à-vis otherpossible types of public expenditure.
Table 5: Assessment of the impact of the CCG guarantees over the 2005–2010 period
Source: Deloitte Touche Tohmatsu (DTT, 2012)Note: *In the DTT study, additionality is defined as the share of credit flowing to businesses that could not offer100% business-linked collateral. Firms often offered non-business-linked collateral as well, but this was ignored forthe purposes of the analysis
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The DTT evaluation concludes that the
relationship with the CCG is highly valued
by the banks, which have been submitting
increasing numbers of viable business
credit applications to the CCG each year.
Moreover, CCG-supported credits lead
almost automatically to further business for
the banks, which therefore perceive a loan
dossier opened with a CCG guarantee
attached as certain to lead to a good
return. In addition, if a business creditor
defaults, the bank receives speedy
payment from public funds, since CCG
commitments are a sovereign guarantee.
In terms of the efficiency of CCG
operations, the DTT evaluation finds that
the volume of business handled from 2009
onwards has attained the critical level,
demonstrating full recovery of its salary
and equipment depreciation costs from fee
revenues. On a cost-benefit basis, every
Moroccan dirham of guaranteed loan
value leverages 2.8 times its value in direct
and indirect tax revenues from banking
activities and guaranteed MSMEs. It also
concludes that the CCG guarantee
mechanism produces a much greater
effect than measures such as grants/
subsidies and interest rate rebates, which
are often cited as alternatives in the
international financial literature. Even with
the lower interest rates (coinciding with
liberalization of the banking sector in
Morocco), MSMEs still face problems of
access to finance due to insufficient
collateral, which is the major obstacle the
CCG seeks to address. The use of grants,
for example, which only produce a
multiplier effect of 1, is a much more
expensive alternative for governments to
use in addressing the MSME financing
issue, requiring a much larger initial outlay
of resources, while producing a smaller
impact because the collateral security
problem is not solved.
F. Success factors
The DTT evaluation concludes that
the CCG has an efficient management
structure and conforms to best management
practices for guarantee systems in terms
of coverage of operating expenses and
investment by income from guarantee
fees. One factor contributing to its success
is its flexibility in responding to the evolving
financing needs of different groups of
MSMEs at various stages of the business
cycle. The strategic planning process,
together with careful evaluations of
program performance based on detailed
record keeping and data underlies CCG’s
current level of success. Other success
factors are its efforts to simplify the
guarantee process for the banks, provide
speedy response times on guarantee
approvals, and reach out to both banks
and MSMEs to promote the system and its
benefits. Commercial benefits to banks of
collaborating with the CCG explain why
banks are forwarding increasing numbers
of case files to the CCG for consideration.
Gender mainstreaming also seems to
have been quite a successful approach,
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although there is no objective assessment
of CCG’s performance in this regard and
no apparent attempt to set targets or
quotas on support for women-owned
businesses. However, as women
entrepreneurs are an underserved part of
the business community, loan guarantees
appear to be a particularly appropriate
mechanism for improving their credit
access. Indications are that the CCG has
had a corrective function in this regard. The
recent collaboration with the Association of
Women Entrepreneurs of Morocco (AFEM)
seems an appropriate mechanism for
greater outreach to women business
owners, although performance targets
should be set and monitored.
Finally, CCG’s success is also due to its
ability to attract incremental funding from
IFIs to increase its capacity to provide
more guarantees to under-collateralized
start-ups and MSMEs.
G. Lessons learned
One obstacle to the CCG’s development
was the complexity of its operations. This
was overcome by improvements in its
effectiveness and efficiency that led to a
greater simplification of systems and
processes. A second obstacle was its focus
on guaranteeing larger loans, thus meeting
the financing needs of larger rather than
smaller enterprises (AfDB, 2011). Starting in
2005, it reversed this trend, refocusing its
product range and setting guarantee
ceilings well below previously realized
values (DTT, 2012). Before 2005, the
number of applications was low, and
applications were jointly scrutinized on an ad
hoc basis by the CCG and the banks. With
a higher case load, the CCG in 2005
delegated to the banks the front-line tasks
of assessing credit requests, scrutinizing
business plans, and evaluating the
securities offered. Thereafter, the CCG only
stepped in at a second stage, at the banks’
request, in cases where claimants with
viable business plans lacked the requisite
level and type of collateral. Further
simplification of the procedures for
processing loans with a ceiling of MAD1
million has filled a previous gap in the
provision of smaller guarantee amounts,
made it more attractive for banks to offer
loan products to VSEs, and increased the
amount of short- and medium-term bank
credit available to VSEs and start-ups. In the
first six months of the launch of Damane
Express, the CCG processed 300 files for
these guarantees. This initiative is in line with
one of the policy objectives of the National
Strategy for Promotion of Very Small
Enterprises, developed in 2011 to
encourage banks to scale down their
lending practices and to make guarantees
more available to VSEs.
An ongoing challenge for the CCG is its own
capitalization, which may prevent it from
expanding its guarantee business. On the
face of it, around 1,800 guaranteed loans a
year appears rather modest, given the size
of the Moroccan population and its MSME
sector. For example, in Canada, with a
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population only slightly larger than
Morocco’s and a SME population upwards
of two million, the government SME loan
guarantee program backs approximately
7,500 loans a year8. Based on data in a
2009 World Bank report, the benchmark
indicator for Canada was 300 guarantees
issued per million population, compared
with only 33 per million in Morocco (Saadani
et al., 2010: 26-27), although this had
increased to 62 per million in 2013.
With an efficient guarantee system and
adequate reserves, there is potential for
substantial increases in the number of
guaranteed loans, leveraging growth in
bank lending to MSMEs in Morocco.
Results of the DTT evaluation demonstrate
the need to generate a minimum critical
volume of guarantee commitments to
cover expenses through guarantee fees. In
the case of the CCG, this would be at
least MAD 30 million in commissions each
year to cover expenses associated with
anticipated steady growth. This would
represent the break-even amount and
correspond to 1,440 guarantee files,
averaging MAD1 million, with an average
guarantee of 60%, a flat fee equivalent to
1.25% of the guaranteed credit amount,
and a guarantee commitment of MAD1.44
billion on total loan volume of MAD2.4
billion. This balanced level was reached
in 2011.
A potential future obstacle to the MSME
guarantee arm of the CCG is the
diversification of the product range and
resources away from MSME loan guarantees
into guarantees for other lending activity,
such as mortgages and student loans,
which the CCG also provides and which
significantly outweigh the volume of
guarantees for MSME lending activity.
This is something that will need careful
monitoring.
Overall lessons learned
• It is important to diversify guarantee
products to target different classes
of MSMEs (e.g. start-ups, young
entrepreneurs, women entrepreneurs)
and needs (e.g. working capital,
equipment, equity).
• Ceilings on loan guarantee products
should be set at appropriate thresholds
to ensure that guarantees are used to
back loans to MSMEs.
• Ongoing market analysis should be
undertaken to identify gaps in the
market that can be usefully addressed
by the guarantee mechanism.
• Guarantee programs need to pursue
continuous improvements to make the
guarantee mechanism more attractive
to MSMEs and to banks (e.g.
developing new products, streamlining
application and review processes,
8 http://www.ic.gc.ca/eic/site/csbfp-pfpec.nsf/eng/la03032.html
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increasing efficiency in turnaround and
approval times).
• The volume of guarantee business
needs to achieve a critical mass in
order for guarantee operations to be
sustainable.
• Periodic independent evaluations of
the impact of the guarantees will
determine whether they are supporting
MSMEs otherwise not able to access
bank loans (additionality) and
producing value to MSMEs, banks,
and the economy.
Kafalat SAL, Lebanon
Overview: Kafalat is a Lebanese private
for-profit financial company with a broad
development objective of assisting SMEs
in accessing commercial bank funding by
providing loan guarantees based on
business plans/ feasibility studies that show
the viability of the proposed business
activity. It offers six guarantee products
targeting newly founded and established
enterprises with no more than 40 permanent
workers, and operating in one of five
sectors: agriculture, industry, tourism,
traditional crafts, and high tech. The
Lebanese private sector is dominated by
SMEs that face difficulties in accessing
classical commercial bank funding. Kafalat
loan guarantees bridge that gap by making
possible otherwise inaccessible commercial
bank financing. This allows SMEs to
increase financing for their business
activities, which leads to increased domestic
investment, output, and employment.
A. Background and institutional history
Between 1976 and the late 1990s,
Lebanon experienced a period of social
disturbance and civil war. Although the
banking sector coped relatively well
through this time, bank lending policies
suffered. Commercial banks were forced
to deal primarily with known enterprises in
the Beirut/ Mount Lebanon region and,
because of the uncertain cash flow
possibilities of private enterprises in the
medium term, to focus more on short-
terms loans. These policies had a
deleterious effect on the SME sector,
cutting SMEs off from their main access to
financing outside of the family and leaving
many underinvested, particularly in the
agriculture, tourism and high-tech sectors,
and in rural areas.
The Kafalat guarantee program was
created to address this gap. The premise
was that if Lebanon had a central
guarantee system, more bank financing
could be directed to start-ups, high-tech
enterprises, SMEs in the agricultural,
tourism and handicraft sectors, and SMEs
in the northern and southern fringes of the
country.
Kafalat SAL was established in 2000,
following the passage of special legislation
(in 1999) allowing the National Institute for
the Guarantee of Deposits (NIGD) to set up
a private guarantee organization. It was
incorporated with 75% ownership by the
NIGD and 25% by some 50 Lebanese
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banks. By law, Kafalat is restricted to
guaranteeing no more than 75% of a loan
amount (plus accruing interest during the
grace period), with the loan value not to
exceed LBP 300 million. If Kafalat wishes
to offer guarantee products covering more
than 75% of the loan amount or loans
exceeding the maximum set by the law
governing Kafalat activity, it must secure
external funds.
Since its launch, Kafalat has introduced
several guarantee products to meet SMEs’
financing needs, each one developed
in response to identified economic
inefficiencies affecting the country’s
development.
These have evolved from a basic product
for qualifying SMEs in certain sectors (even
if the SME was operating as an informal
enterprise), to a product addressing the
financing needs of formal SMEs (and
encouraging the formalization of informal
enterprises), to products specifically
targeting the needs of technology-oriented
SMEs and start-ups, and guarantees to
support the longer-term financing needs of
SMEs in agricultural development and
those implementing energy efficiency and
renewable energy projects.
Objectives: In bridging the financing gap
for SMEs, Kafalat has two main objectives:
• To make bank financing possible for
SMEs that otherwise would have
difficulty qualifying for loans because of
insufficient collateral and perceived
risk; and
• To reduce the lending risk of banks in
dealing with SMEs by providing a
partial guarantee.
Beneficiaries: Kafalat targets start-ups
and SMEs with 40 or fewer permanent
employees in five defined sectors:
agriculture, industry, tourism, traditional
crafts, and high tech. These criteria
(employment and sector) apply to all
Kafalat guarantee products. The sectors
were identified as those in which SMEs
had the greatest difficulty in accessing
bank financing and are also in line
with Lebanon’s economic development
priorities.
B. Organizational model
Kafalat is governed by a six-member
Board of Directors consisting of
representatives from the NIGD and banks.
The Board is chaired by the General
Manager of Kafalat, who represents the
NIGD in the capacity as Board Chair. It
operates from a single office based in
Beirut. A close relationship with the banks
is ensured by the fact that some 50 banks
participate in the share ownership of
Kafalat SAL.
Staffing: At the end of 2013, Kafalat had a
small staff of 28, of whom 12 were credit
analysts. It can draw on additional
resources and expertise from the NIGD,
when necessary.
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C. Operational model
Products and services: The guarantee
program started with Kafalat Basic, a
product targeting SMEs with 40 or fewer
permanent employees in the five defined
sectors. Basic guarantees loans between
US$2,500 and US$200,000, with a
maximum loan term of up to seven years, a
one-year grace period, and an interest rate
calculated as 40% of the one-year
Lebanese Treasury Bill yield plus 3%
(compared with market rates of up to 10%,
which are variable by year depending on
the economic situation in Lebanon). This
encourages banks to make medium- to
long-term loans with monthly loan
repayments. Another important feature of
the product is that the recipient enterprise
does not have to be formal, which, for
example, enabled farmers to obtain a loan
if they owned land or operated as part of a
cooperative. Kafalat Basic allows banks
to require SMEs to provide additional
collateral of up to 50% of the loan.
Subsequently, Kafalat identified a need for
new products with a higher guarantee and
loan ceiling than those allowed by its law.
To acquire the incremental funding to enable
it to exceed these limits, it received support
from the European Union. On this basis,
it introduced Kafalat Plus, a product
guaranteeing 85% of a loan up to the
equivalent of US$400,000, and removing
the banks’ option to take any additional
collateral from the borrowing SME. However,
to qualify for this guarantee, the SME has to
contribute 30% of the loan value in equity,
be able to produce clear financial statements,
and be operating within a formal corporate
structure (i.e. joint-stock company, limited
liability company, or cooperative).
Kafalat also saw the need for a guarantee
product supporting innovative high-tech
enterprises, which banks perceive as being
high risk. It therefore launched Kafalat
Innovative, a guarantee product available
only to start-ups (less than two years in
operation) with an innovative product or
process (e.g. intellectual property or
materials, invention, new technique, or
new marketing approach). The guarantee
is up to 90% of the loan value, not to
exceed US$200,000. In the case of Kafalat
Basic, the borrowing SMEs are required
first to approach the bank, which assesses
the file and then sends it to Kafalat
for review. Because banks are largely
unfamiliar with the high-tech field, Kafalat
Innovative allows this group of SMEs
to approach Kafalat directly for the
assessment. If approved, Kafalat provides
the start-up with an irrevocable promise of
guarantee that the entrepreneur can take
to the bank; however, the final lending
decision rests with the bank.
In 2013, Kafalat introduced three new
guarantee products: (i) Kafalat Start-ups
and Innovation; (ii) Kafalat Agriculture, with
two guarantee programs applying to small
farms for agricultural production or for tree
plantation (to address the need to encourage
the replacement and reinvigoration of the
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tree stock in Lebanon); and (iii) Kafalat
Energy, a guarantee product to address
energy constraints faced by SMEs by
providing eligible SMEs with loan guarantees
for investments in energy efficiency and
renewable energy projects (guaranteed for
up to 15 years and intended to free up
cash flow to encourage “green business”)
(see Table 6 for a description of all Kafalat
guarantee products offered as at the end
of 2013).
Kafalat applies an annual fee to the
borrower of 2.5% of the outstanding
value of the guarantee, plus a 0.3% fiscal
stamp fee. This fee is reduced to 2% for
the Kafalat Energy program. In addition,
the lending bank can apply a one-time
fee of LBP 400,000. Guarantee recipients
also benefit from an interest rate subsidy
that is financed by the Lebanese Treasury
and administered by the Central Bank of
Lebanon.
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Table 6: Kafalat guarantee products
Guaranteeproducts
Beneficiary criteria andloan use
Risk coverage(% loan principal)
Minimum-maximumloan value
Guaranteeterm (loanduration)
Graceperiod
KafalatBasic
Start-ups and existing SMEs (with fewer than 40 employees) – individuals, partnerships, limited liability company, etc. Sectors: industry, agriculture, tourism, high-tech, and crafts.For fixed assets and working capital.
75%Bank cannot require additionalcollateral from theborrower of morethan 50% of theloan value.
LBP 4 millionto LBP 300million
Up to 7years
6-12months
Kafalat Plus
Conventional start-ups and existing SMEs – only incorporatedenterprises/ cooperatives. Sectors: industry, agriculture, tourism, high-tech, and crafts.For fixed assets and working capital to finance newproduction capacity or sustaincurrent production and employment.(Borrower must commit at least20% equity towards the project. The final debt/equity ratioshould be at most 70/30).
85%Bank not allowedto take additionalcollateral from theborrower.
LBP 4 millionto LBP 600million
Up to 7years
6-12months
KafalatInnovative
Start-up businesses of less thantwo years – limited liability or jointstock companies or cooperatives.Sectors: industry, agriculture, tourism, high-tech, and crafts.For fixed assets and working capital needs to developthe business idea of activity. (Borrower must make a minimumcontribution of 10% equity towards the project.)
90%Bank not allowedto take additionalcollateral from theborrower.
LBP 4 millionto LBP 300million
Up to 5years
6-12months
KafalatStart-upsand Innovation
Innovative enterprises and start-ups – only those registeredas joint stock companies. Sectors: industry, agriculture, tourism, high-tech, and crafts.(The borrower must commit tomaking a minimum contributionof 50% in equity towards the project.)
85% for start-ups90% for innovationBank not allowedto take additionalcollateral from theborrower.
LBP 4 millionto LBP 650million
Up to 7years
6-12months
KafalatAgriculture
Small Agriculture:SMEs in small-scale agriculture,newly founded or established – alltypes of legal economic entities.For financing of fixed assets andworking capital needs. Must befirst and only Kafalat guaranteedloan.
85%Bank not allowedto take additionalcollateral from theborrower.
LBP 4 millionto LBP 65million
Up to 7years
6-12months
Tree Plantation: For financing of arboriculture activities.
75%Bank IS allowed totake additional collateral from theborrower.
LBP 4 millionto LBP 480million
Up to 10years
6-36months
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At the start of 2010, Kafalat also
developed a new guarantee product more
geared to smaller businesses, Kafalat
Delegation. This product has a quick
turnaround. The guarantee is approved
automatically once the bank approves the
credit, as long as the application reaches
Kafalat within three days from its approval
by the bank.
The newest product, which Kafalat still has
under development, is a guarantee to
encourage seed capital and equity
investments in innovative SMEs and start-
ups. Although Kafalat has a guarantee
product for loans to innovative enterprises,
small businesses can be constrained in
reserving cash flow to repay the loans. At
the same time, innovative entrepreneurs
have difficulty attracting seed capital
because their enterprises are not as
transparent as they need to be to enable
proper assessment by equity investors.
This situation is further exacerbated by the
current lack of availability of seed capital
due to the instability in Lebanon as a result
of the spillovers from the Syria conflict.
Kafalat considered these factors when
deciding to design its new product. The
aim is to guarantee up to 70% of the seed
capital investment, with the expectation
that the failure rate for equity guarantees
could be quite high. If the market becomes
more efficient in providing seed capital,
Kafalat could later convert the equity
Guaranteeproducts
Beneficiary criteria andloan use
Risk coverage(% loan principal)
Minimum-maximumloan value
Guaranteeterm (loanduration)
Graceperiod
KafalatEnergy
SMEs with fewer than 40 employees – all types of legal economic entities, newly foundedor established. For investments inenergy efficiency and renewableenergy. Three types of guarantees:
Bank is allowed torequire additionalcollateral from theborrower, but notexceeding 50% ofthe loan value.
Energy EfficiencyFor adoption of or conversion tosustainable energy consumption
75% LBP 4 millionto LBP 600million
Up to 10years
6-12months
Renewable EnergyTo install a renewable power generation system and consumethe produced electricity for internal use; to replace fossil fuel-based electricity.
75% LBP 4 millionto LBP 600million
Up to 15years
6-24months
Renewable EnergyTo install a renewable power generation system with aim ofselling all or part of the producedelectricity to others.
75% LBP 4 millionto LBP 1,320million
Up to 15years
6-36months
Note: LBP = Lebanese pound
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guarantee to a loan guarantee covering up
to 85% of the loan value, and increasing
the equity ratio requirement up to 50%. In
effect, this means that Kafalat could
become a silent partner in the business
during the term of the investment guarantee.
Approach: Kafalat loan guarantees are
issued based on the viability of the
business project to be financed. The
guarantee, which is made in favor of the
lending bank, allows the borrower to
provide the bank with collateral, which
reduces the bank’s loan risk. Kafalat urges
banks to waive complementary guarantees/
collateral from the SME applicant and base
their credit decision on the strength of the
business plan and the project’s feasibility/
viability. In some cases, the Kafalat offer
explicitly forbids the lending bank from
imposing any additional collateral requests
on the borrower.
The SME submits a feasibility study and
business plan to the bank. The bank reads
the proposal and after approval by its
credit committee sends it on to Kafalat for
review. However, the final decision (and the
conditions) for granting the loan rests with
the lender. Once the application is
transferred to Kafalat, the decision will take
a maximum of three weeks if all required
documents are provided.
In addition to the guarantee, the borrower
benefits from a subsidy on the interest that
is being charged by the bank, which allows
SMEs to access bank funding at a
reasonable cost. Kafalat-guaranteed loans
are subject to a Central Bank exemption
from the statutory reserve requirement,
which significantly reduces the lending
bank’s cost of capital, allowing lending at
lower interest rates. When Kafalat was
launched, the Central Bank stipulated that
the lending banks could release up to 60%
of the guaranteed SME loan value from the
banks’ statutory reserve at zero interest to
the banks, and the Central Bank would
provide a subsidy for these loans by way
of a reduced interest rate to the banks.
Kafalat still offers interest rate support to
Kafalat-guaranteed loans. The rationale for
lower interest rates is that the guarantee
reduces the banks’ risks so banks can
price the loans at a lower rate.
Kafalat does not assist clients in
developing their feasibility studies and
business plans, believing that this would
create a conflict of interest. SMEs with
less capacity to prepare these documents
may on their own accord engage consultants
to help them, including auditing firms,
private providers of business development
support services, or chambers of commerce
and industry. Some of these organizations
may provide assistance free of charge.
Innovative enterprises may also find support
from incubators and accelerators.
Kafalat does not have any products
specifically targeting young entrepreneurs
or women entrepreneurs, but many of the
Kafalat Innovative clients are young
people. According to Kafalat officials,
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social norms in Lebanon are not as
restrictive of the activities of women as
they are in other MENA countries.
However, if they wanted to favor women
entrepreneurs, the way to do it could be to
raise the guarantee ceiling. In the
meantime, they prefer to have a gender-
neutral policy.
D. Financial model
Kafalat was initially capitalized with LBP20
billion, which came through a pooling of a
percentage of the reserve requirements
deposited by the participating banks at the
Central Bank. This capital is used to issue
credit guarantees to the eligible SMEs.
Kafalat is a profitable operation, earning
commissions from each guarantee.
Revenue from commissions totaled
LBP14.6 billion in 2012, which accounted
for about 70% of its total revenue (the
remaining 30% coming from income on
investments and cash deposits). After-tax
profits in 2011 amounted to LBP11.3
billion, and, in 2012, to LBP 10.1 billion. In
2012, this amounted to a return on net
revenue of almost 64%, and 11.8% on
equity.
Although a for-profit company, Kafalat has
a sense of mission; as such, up to now, the
shareholders have agreed not to issue
dividends. This has enabled the organization
to reinvest profits into free reserves for later
use in operations.
E. Results and impact
Kafalat has grown significantly over the
past 12 years. Since 2000, it has guaranteed
13,000 loans totaling US$1.5 billion. At the
end of 2013, there were 7,500 active
guaranteed loans with an outstanding
value of US$550 million. The highest-
performing year was 2010. Since then,
Kafalat’s performance has been affected
by conflict in the region. In the years up to
2010, Kafalat was guaranteeing about
1,500 loans a year. Since 2010, the portfolio
volume has dropped by almost 20%.
However, in general, Kafalat guarantees
between 1,000 to close to 1,500 new
loans a year (Table 7), more or less
maintaining its outreach performance.
One measure of the impact of guarantee
programs is their penetration/ outreach. A
World Bank study, using the number of
guarantees issued per million people as a
benchmark, reported an indicator of 292
Kafalat guarantees per million people in
2009 (on basis of 1,169 guaranteed
loans for that year). This made Kafalat
the highest-performing scheme in MENA
countries in terms of outreach. Egypt’s
Credit Guarantee Company reported
issuing 3,595 guarantees in 2009, but
on the basis of Egypt’s much larger
population, this amounted to only 45
guarantees per million people (Saadani et
al., 2010). This demand for Kafalat
guarantees is evidence of its relevance in
the Lebanese market.
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Kafalat Basic is by far Kafalat’s most
popular guarantee product (more than
three-quarters of the guaranteed loans and
two-thirds of the loan values at issue),
followed by Kafalat Plus (almost a quarter
of the loans and a third of the guarantee
loan values). These are the oldest products
and consequently likely the best known.
Kafalat Start-ups and Innovation and
Kafalat Agriculture were launched in 2013
and hence need more time to achieve
traction in the marketplace. Although the
sector distribution of recipient SMEs varies
by type of guarantee product, overall,
manufacturing/ industrial SMEs make up
the largest group of beneficiaries (41.7%),
followed by agricultural SMEs (37.2%), and
SMEs in the tourism sector (17%)9. Just
over a third of the loan values at issue
are less than LBP 100 million, and 42%
are over LBP 200 million. The average
loan amount at issue is approximately
US$117,000.
In terms of efficiency in dealing with
guarantee requests, Kafalat commits to
providing its approval decision within three
weeks along with a letter of guarantee
back to the bank (if the decision is
affirmative).
The provision for default rates was initially
set at 3.8% to allow a comfortable margin
for operation, although historically the
actual default rate has been only 2%. As
the civil war in Syria has progressed and
9 Source of data: http://www.kafalat.com.lb/loans-statistics?field_category_tid_1=75&=Apply
Table 7: Number of guarantees by sector of recipient SMEs
2011 2012 01/01/201330/06/2013*
Sector No. of loans % No. of loans % No. of loans %
Industry 555 39,0% 449 38,6% 141 33,8%
Agriculture 531 37,3% 414 35,6% 162 38,8%
Tourism 282 19,8% 228 19,6% 80 19,2%
Craft industries 29 2,0% 48 4,1% 20 4,8%
Advancedtechnologies 26 1,8% 23 2.0% 14 3,4%
Total 1,423 100% 1,162 100% 417* 100%
Note: *Data were only publicly available for the first half of 2013
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filtered into Lebanon, the Lebanese
tourism sector has been especially
affected. In 2013, the default rate on
guaranteed loans in this sector jumped to
2.1% and was expected to rise to 2.75%,
but still within the set margin for risk and
carefully monitored.
F. Success factors
One of the most important factors in
Kafalat’s success is that it was established
as a joint-stock company owned by
the NIGD and the major banks, partners
that could provide sufficient capitalization
and also afford to recapitalize the
fund if necessary. Kafalat’s management
also has extensive knowledge of
banking, entrepreneurship, and economic
development, which are the foundations of
a successful SME guarantee scheme. In
fact, this may be one of the good practice
lessons learned from Kafalat relative to
other guarantee programs in the MENA
region.
Because the Chairman of the Board/
General Manager came from the banking
sector10, he had credibility with the NIGD
when setting up the fund. The organization
grew organically from within the country. In
other MENA programs, guarantee funds
often grew out of donor or government
projects and therefore reflect donor/
government priorities, which may impose
restrictions on the directions of their funds.
Having grown from the inside, Kafalat did
not have to compromise to meet the
priorities of donors/ governments.
In addition, Kafalat was founded in
response to a detailed assessment of
the economic development deficiencies in
Lebanon and the challenges faced by the
SME sector and the banking sector. This
was crucial to understanding the gaps
between banks and entrepreneurs/ SMEs,
and designing appropriate products to
address failures in allocation of financing to
the SME sector.
Another strength in the Lebanese context
is that the guarantee system is centralized
in one organization and able to work
through an efficient banking sector using
its broad network of branches. Lebanon is
a highly banked country, with close to
1,250 bank branches serving a small
population of about four million.
Support from the Central Bank was
important in getting the banks onside.
Apart from the fact that most of the banks
are shareholders in Kafalat SAL, various
government interest rate subsidies for
Kafalat-guaranteed products make the
10 The Chairman actually owns part of a bank, but adheres to a conflict of interest policy in carrying out his Kafalatresponsibilities.
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scheme attractive for banks (and SMEs),
with the Central Bank’s lower reserve
requirements for SME lending providing an
additional incentive.
On the other hand, in its initial three years,
Kafalat had to be aggressive in promoting
the guarantee system and breaking into
the market. The company made more than
200 presentations throughout Lebanon,
giving lectures to both banks and SMEs.
On the plus side, Lebanon is a small
country, which makes it relatively easy
to reach the entrepreneurial market. In
larger countries, these efforts would prove
more difficult. The growing popularity of
the internet has strengthened Kafalat’s
communication efforts and enabled greater
effectiveness in its marketing and advertising,
so the public can access more information
about the organization. Now, after several
years of use, the banking sector actively
promotes availability of the Kafalat guarantee
products (as evident by scanning their
websites). According to Kafalat officials,
some do more promotion than others,
but all are fairly active in extending Kafalat-
guaranteed loans.
The support donors has also been an
important factor in Kafalat’s success in
developing niche guarantee products
with parameters that fall outside their
legal framework. Partnerships with
international organizations such as the
European Union have been essential in
allowing Kafalat to respond to SMEs’
needs for the financing of higher-risk
activity, as well as for larger projects, not
covered by Kafalat’s core capital and
legal requirements.
G. Lessons learned
• Guarantee programs should begin
with a thorough assessment of the
economic context in the country, of
the entrepreneurial/ SME base, and of
the banking sector itself, because
the aim of guarantee funds is to
mediate the gaps between banks
and entrepreneurs/ SMEs by designing
appropriate products.
• Complementary incentives from the
Central Bank induce banks to lend to
SMEs and improve their receptivity to
and take-up of loan guarantee products.
• Intensive promotion efforts are
required to launch a guarantee scheme,
including outreach and communication
to banks and SMEs; aggressive
communication efforts are required on
a continuing basis to maintain awareness
of the availability of the guarantee
system and new products.
• Guarantee organizations need to
conduct regular surveys of the market
to identify gaps in financing to SMEs
and develop innovative new products
to address these gaps.
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3.2. Lease Financing
Leasing is an asset-based financial
transaction with the asset providing the
security for the transaction. Leasing
company decisions are based on the
ability of the lessee to generate cash flow
from business operations to service the
lease payment, rather than on the balance
sheet, past credit history, or supplementary
collateral. Leasing has many advantages
over traditional bank financing for the
purchase of buildings, production
equipment, automobiles, furnishings, etc.
First, the MSMEs do not have to meet the
rigid collateral requirements imposed by
banks. With leasing, the leased asset is the
security. Second, leasing offers MSMEs
access to medium- and longer-term
financing with payment periods that more
closely match the life cycle of the asset.
Banks, on the other hand, are more likely
to lend on a relatively shorter-term basis.
In addition, leasing companies are able to
process applications more quickly than
banks, with approvals generally made
within a week, and faster in the case of
small leasing deals. Also, the recovery of
leased assets is much easier in the leasing
sector than in the banking sector.
Leasing has the potential to be particularly
attractive to MSMEs that do not have a
long credit history or a significant asset
base for collateral. Since the principle
behind leasing is inherently Islamic Sharia
friendly, it is also a more attractive financing
option for many MSMEs in MENA countries,
which are reluctant to accept the interest-
bearing terms of traditional bank loans.
Quick facts
Start date 2000
Number of employees 28
BeneficiariesSMEs with 40 or fewer permanent employees in five defined sectors: agriculture, industry, tourism, traditional crafts, and high technology
Total number of guaranteed loans 13,000 guaranteed loans totaling US$1.5 billion
Number of guaranteed loans peryear
1,000 – 1,400
Active guarantee files at the end of2013
7,500 loans – outstanding loan value of US$550 million
Penetration of Kafalat guarantees 292 loan guarantees per million population*
Profitability of operationsProfit of LBP 10.1 billion in 2012; 63.8% return on net revenue; 11.8% onequity
Default rate 2%
Notes: Data to December 2012. *Benchmark based on data for 2009 from Saadani et al. (2010:27). LBP = Lebanese pound
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Most MENA countries have a leasing
industry, although some are more
developed than others. Among the
Deauville Partnership countries, the
leasing sector is assessed as being in the
late emerging stage (several competitors,
differentiated products) in Tunisia; in the
late nascent stage in Egypt, Jordan, and
Morocco; in the early nascent stage in
Yemen; and non-existent in Libya (Al-
Sugheyer and Sultanov, 2010). These
stage classifications of the leasing market
developed by the IFC are based on the
ratio of leasing volume to gross fixed
capital formation in the country. In
Tunisia, this ratio was estimated at about
9%, compared with less than 5% in Jordan,
Morocco, and Egypt, in descending order
(Al-Sugheyer and Sultanov, 2010: 10). As
a ratio of leasing volume to GDP, Tunisia,
at about 2%, also outperformed the other
Deauville Partnership countries, which
stood at 1% or less. Growth of the
leasing market, however, continues to
accelerate, indicating strong demand for
the product.
Development of the leasing sector as an
alternative source of financing for private
enterprises, especially MSMEs, has been
one of the priorities of IFIs. Consequently,
access to low-cost lines of credit has been
made available to leasing companies in the
MENA region to deepen their capacity to
on-lend to the MSME sector.
Tunisie Leasing was selected to be profiled
as a good practice for this report because
it was the first, and thus the longest-
established, leasing company in the
Deauville Partnership countries. It is the
market leader in Tunisia, with the highest
paid-in capital and the largest number of
MSME clients and volume of leasing
business. It was also a case study
specifically requested by the Deauville
Partnership countries.
Tunisie Leasing, Tunisia
Overview: Tunisie Leasing was the first
leasing company in Tunisia. It is the largest
division of the now diversified Tunisie
Leasing Group (TLG), accounting for 48%
of TLG’s total consolidated results in 2012
(TLG, 2013). Other divisions include:
Tunisie Factoring (8%), Tunisie Location
Longue Durée (car rental) (10%), and
Maghreb Leasing Algérie, its leasing
operation in Algeria (30%). The leasing
operation in Tunisia is the subject of this
good practice profile.
Tunisie Leasing has the largest portfolio of
any leasing company in Tunisia with total
assets of EUR 433 million as of June 2013.
It has maintained its position as market
leader even while the leasing industry has
expanded with a number of other leasing
firms establishing themselves in the
market.
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A. Background and institutional history
The TLG was established in 1984 by a
prominent Tunisian economist and
businessmen with international experience,
marking the launch of the leasing industry
in Tunisia. It was initially supported by
Credit Lyonnais of France. It is now a listed
company on the Tunisian Stock Exchange
with mixed ownership. The Amen Group,
a joint public-privately owned group, owns
53% of the shares; the Stusid Bank and
Rached Horchani11 each own about 8%;
foreign investors have a 6% stake, with
the remaining 25% held by public
shareholders (TLG, 2013).
Tunisie Leasing, along with the early
providers of credit for leasing operations in
Tunisia, entered the leasing market in the
belief that leasing was a key source of
finance to SMEs (World Bank, 2001). With
no requirement for loan collateral, and
generally lower risk burden to lenders,
leasing can be a feasible substitute for
bank credit for SMEs. In some economies,
such as Eastern European countries in
recent years, governments strategically
promote leasing to help the expansion of
the market for SME finance (White Clarke
Group, 2013). The government of Tunisia
has also sought to encourage the
development of the leasing market as a
partial remedy to SMEs’ lack of access to
bank financing.
The leasing market grew slowly from 1984
to 1990, but saw the movement of some
11 Rached. Horchani owns one of the largest multisector holding groups in Tunisia.
Quick facts
Start date 1984
Number of employees 140
Beneficiaries Primarily SMEs with fewer than 300 employees; at least one year of operation
Total number of leasing contractsas of 2013
5,185 contracts with value of over TND 300 million
Average size of a leasing contractin 2012
TND 59,870
Share of leasing market in Tunisia About 20%
Non-performing loan share of portfolio (2013)
6.1%
Notes: Information as of December 2012. TND = Tunisian dinar.
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banks into the field only in 1990. The sector
operated without a legal framework until
1994 when the government implemented
a leasing law to regulate the sector.
Over the last decade, the government
has strengthened legal and regulatory
frameworks in this area, created public
financing systems, facilitated the development
of financial markets, and helped to expand
the supply of financial products geared
to SMEs. Provisional conclusions from a
survey of SME finance in Tunisia, carried
out by Ernst and Young (due to be released
in 2014), reinforce the major importance of
the leasing industry in Tunisia.
Objectives: The primary and driving
objective of Tunisie Leasing is to be a
profitable business in the provision of lease
financing to Tunisian enterprises, as an
alternative to traditional bank financing, for
the purchase of fixed assets. Its goal is to
be the preferred partner of SMEs and
professionals (doctors, dentists, etc.) in
financing the equipment and property
necessary for their activities.
Beneficiaries: Tunisie Leasing has no
preference regarding the size of firms
within its portfolio, considering it desirable
to have a varied clientele. However, to
obtain a leasing contract, the enterprise,
which can have any legal form (including
sole proprietorships), has to have been in
operation for at least one full year. This
requirement effectively excludes leasing to
start-ups.
SMEs (with fewer than 300 employees)
constitute 95% of its leasing clients, the
remainder being a few large firms. This is
the general experience in the Tunisian
leasing industry as a whole (World Bank,
2009). Because SMEs12 dominate the
Tunisian entrepreneurial landscape,
accounting for well over 99% of all firms,
including in the industrial sector (INS,
2012), Tunisie Leasing’s main target and
actual beneficiaries are almost necessarily
SMEs.
The demand for leasing from the SME
sector is high due to the difficulty in
accessing bank financing. Unlike banks,
leasing companies require no collateral
beyond the leased asset, while banks
require collateral of, on average, 167% of
the loan value. This is somewhat less than
required in Morocco and Algeria, but
significantly more than in Egypt and
countries in other world regions (World
Bank, 2009: 32). From the supply-side
perspective, Tunisie Leasing views SMEs
as good clients. Not having the market
weight of larger firms, SMEs are essentially
price-takers, who accept the market price
12 Tunisia does not have an officially accepted definition for SMEs, but as per the Communique of the Council ofFinancial Markets (Bulletin 2588 of 3 May 2006), small and medium enterprises are defined as those with not morethan 300 employees and TND 4 million of net fixed assets.
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as it is with no power to change it, and are
less able to find other sources of finance
or negotiate terms on leasing offers. In
other words, they are a potentially more
profitable clientele. Irrespective of whether
they are inherently more risky as clients
than larger firms, Tunisie Leasing is
protected against risk of default.
B. Organizational model
As noted above, Tunisie Leasing is a
publicly traded company. Its head office is
in Tunis, and it has eight branch offices in
other parts of the country. Its activities are
governed by its 12-member Board of
Directors chaired by the President of
the TLG.
Staffing: Tunisie Leasing has a staff of 140
involved in carrying out its various
operations, such as dealing with clients,
assessing leasing applications, sourcing
the assets to be leased, negotiating
purchasing and lease agreements,
monitoring risk, following up on clients’
contracts, and disposing of assets that fall
into default or are not purchased by clients
at the end of the leasing contract.
C. Operational model
Products and services: Tunisie Leasing
offers leases for three product classes:
vehicles (cars, transport equipment);
production equipment (machine tools,
building and construction equipment,
medical equipment, materials handling
equipment, hardware); and buildings/
premises (construction or acquisition, plus
furnishings and office equipment), all of
which are attractive to SMEs. It also offers
a Sharia-compliant leasing product, IJARA.
Tunisie Leasing purchases the required
assets and leases them back to the client
firm on a rental basis. The average contract
term is 42 months (36-60 months for
vehicles, 36-84 months for equipment,
and 36-120 months for buildings). At the
end of the lease period, clients who have
met their payment obligations may
purchase the asset at a nominal price (e.g.
1% of the market value for real estate and
TND 1 for vehicles and equipment).
Approach: The leasing application
procedure entails submitting an online
application form stating the purpose and
amount of financing required, and
supplying copies of the company’s legal
documents, financial statements (for the
past three years, as applicable), and bank
account records for the past six months.
All applicant companies are given a unique
identification number and their legal and
financial documents kept on file, so that
repeat applicants need not re-supply them
each time. All applications are archived
electronically, including those that are
eventually rejected.
Tunisie Leasing uses a number of criteria
to assess applications. The size of the
applicant firm is not in itself a screening
criterion. In general, the financial health of
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the applicant has the strongest weighting
in the selection decision. However, the
financial information supplied is not always
definitive and supplementary information
is used to assess the basic information
provided in the application. First, the
applicant’s internal credit risk score is
calculated based on information from
the Central Bank of Tunisia’s Centrale des
Risques, a credit registry with a database
of past and outstanding loans for all firms13.
For repeat clients, Tunisie Leasing’s internal
records are consulted for the firm’s previous
repayment record. Finally, in doubtful cases,
local knowledge is garnered through the
company’s local agencies on the personal
standing and business reputation of the
applicant. The treatment of applications by
each of the nine offices follows company-
wide rules and procedures for making
leasing approval decisions.
Sectoral issues are not very important. Any
structural differences in risk are counter-
balanced by the case-by-case approach
taken by Tunisie Leasing in the issuing of
leasing contracts. In general, where a sector
as a whole is considered risky, the company
may raise the charge rate to the client. For
example, according to the Central Bank of
Tunisia, the rate charged to agricultural
producers averages 11.3%, compared with
the total industry average leasing rate of
9.77% in 2012 (BCT, 2013: 97).
Apart from assessment of an applicant’s
financial status and the risk status of the
industry and sector involved, the quality of
the asset to be leased is considered by
reference to its resale value in a secondary
market in the case of default. Applications
for lower-quality assets can also be
approved if the client has a strong financial
record and/ or if higher rental charges can
be applied. Assessment and approval
decisions are usually made within two to
seven days.
Clients in default may be passed to dispute
resolution and the assets reclaimed and
sold in batches of recovered used vehicles,
construction equipment, etc., including on
the company website. As full and exclusive
title in all of the leased-out products
remains with Tunisie Leasing, recovery
from defaulters is generally straightforward
and recovered assets are not subject to
large write-downs in value.
The gender of the firm’s owner/ manager is
not taken into account in the assessment
of applications. Increasingly, IFIs tend to
ask for “social” data of this kind. Pending
approval of a line of credit from the
European Bank for Reconstruction and
Development (ERBD), the Bank has asked
Tunisie Leasing loan officers to record social
information and to enquire about applicants’
employment figures and job creation
13 There is no register of securitized loans in Tunisia, which is a barrier in accessing traditional bank financing.
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expectations. So far, Tunisie Leasing does
not see any gender differences emerging
on this basis, at either the appraisal stage
or in clients’ repayment performance.
D. Financial model
Tunisie Leasing earns most of its revenue
from charge rates on leasing contracts. In
2013, this amounted to TND47.5 million,
generating before-tax profit of TND9.2
million (TLG, 2014: 15). The company’s
strategic approach in pursuit of profits is to
decide periodically – normally annually – on
target volumes and margins for each of its
three product group departments. To
finance the purchase of assets supporting
the leasing contracts, the company issues
bonds and negotiates lines of credit
with banks and IFIs. The advantage of
borrowing through IFIs is lower interest
rates, so they are better able to provide
competitive rates to clients, and longer
maturity terms. The IFIs may link the line of
credit to performance results, such as
providing access to SMEs. Over the years,
Tunisie Leasing has benefited from a
number of loan agreements from IFIs
interested in seeing an expansion of the
leasing industry in Tunisia.
Tunisie Leasing’s first IFI loan (covering
1993–2001) was through the Tunisia –
Private Investment Credit Project, which
aimed to contribute to the growth of
Tunisia's leasing industry by providing the
newly formed leasing companies with
medium-term credit and advice in
organizational aspects of their business
(World Bank, 2001). The project had a total
budget of US$200 million, financed jointly
by the World Bank/ International Bank for
Reconstruction and Development (IBRD)
and the Japan Bank for International
Cooperation. In addition, the IBRD lent a
total of US$19.4 million to three leasing
companies, of which US$6 million was
allocated to Tunisie Leasing. In total,
Tunisie Leasing drew down credit of
US$23.7 million from the project.
In 2003, Tunisie Leasing received a EUR 8 million
line of credit from AfDB to finance small
enterprises with small-scale leases of
TND20,000 to TND300,000. Subsequently,
the company secured a line of credit of
EUR 4 million from the OPEC Fund for
International Development in 2004, geared
to enabling the company to meet its
clients’ longer-term financing needs, and
to support the Tunisian government’s
industrial sector modernization program
funded by the European Union. In
June 2014, EBRD, together with the
International Cooperation and Development
Fund of Taiwan, agreed to extend to
Tunisia Leasing a loan of EUR 10 million
to increase the volume of its leasing to
MSMEs. EBRD’s interest is in increasing
MSMEs’ access to financing in Tunisia
in the face of persisting liquidity
constraints.
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E. Results and impact
The leasing industry in Tunisia has
expanded strongly over the past decade.
The leasing market experienced a surge in
2007 and has continued to expand since
then, but more modestly. The quality of the
sector portfolio improved over the same
period with better management and more
rigorous scoring of applications (World
Bank, 2009). In 2007/08, the share of
leasing in gross fixed capital formation
was approximately 11%, rising to 16.4% in
2012 (BCT, 2013), similar to the level
in Morocco. This increase reflects a 19%
growth in the leasing sector from 2011 to
2012, reaching TND1.4 billion. Following
Tunisie Leasing’s success in opening
up the leasing industry in Tunisia, more
companies have entered the market,
which in turn means that more SMEs
have access to this alternative form of
financing.
The increase in new business has resulted
in a steady rise in the value of total portfolio
obligations. The total number of leasing
contracts grew by almost one-third
between 2007 and 2012 (an annual
average of 6%), but dipped in 2011, while
the volume of new contracts rose by
60% (an average of 12% a year), and the
total outstanding portfolio of financial
obligations almost doubled (Table 8). By
2013, the number of leasing contracts had
risen to 5,185. The average size of
contract leases fluctuated considerably
over the period, from a low of around
US$30,000 (2007) to a peak of
US$60,000 (2011).
The annual increase in new contracts
and leasing volume indicates growth in
demand for leasing products. The high
volume of repeat customers is also
indicative that SMEs find leasing from
Tunisie Leasing a relevant and attractive
alternative to financing the acquisition
of assets. The entry of around ten new
leasing companies into the market has not
dislodged Tunisie Leasing from its position
as market leader, although its market share
has steadily declined from 25.6% in 2007
to 19.7% in 2012.
2007 2008 2009 2010 2011 2012
New contracts (TND million) 186.6 208.2 219.3 294.4 239.2 299.0
Number of contracts 3,783 4,135 4,044 5,118 4,033 4,994
Average contract size in TND 49,325 68,198 72,800 57,522 97,198 59,870
Total outstanding portfolio obligations (TND million) 280.2 328.0 373.0 460.6 489.6 519.5
Market share 25.6% 25.4% 21.7% 21.3% 20.4% 19.7%
Source: “Chiffres clés de la branche leasing en Tunisie”. Online at: http://www.tunisieleasing.com.tn/document/graphiques_2012.pdf?id_article=63
Table 8: Selected operational statistics for Tunisie Leasing, 2007–2012
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Leasing companies must abide by the
rules of the Central Bank of Tunisia, which
aim to improve the quality of leasing
companies’ portfolios. They must meet
international standards in terms of risk,
specified as a rate of non-performing loans
(NPLs) of less than 15% and a coverage
rate of at least 70%. Tunisie Leasing
performs well on the NPL indicator and
generally well on the coverage indicator,
except for the aberrations in 2011 that
were likely a result of the negative
economic impact of the Arab Spring (as
shown in Figure 2). Careful and efficient
monitoring of NPLs enabled Tunisie
Leasing to respond quickly to the spike in
2011 and bring the NPL and coverage
ratios back to acceptable standards.
At the end of 2013, NPLs represented
only 6.1% of the portfolio and the NPL
coverage rate had increased to almost
80%.
Figure 2: Trends in non-performing loans and coverage - Tunisie Leasing,2007–2013
10.4
7.2 6.1 6.3 8.7
6.5 6.1
0 2 4 6 8
10 12
2007 2008 2009 2010 2011 2012 2013 % of
leas
ing p
ortfo
lio
NPLs portfolio share (percent)
81.6 87.8 88.0 77.5 59.1
75.2 79.4
0 20 40 60 80
100
2007 2008 2009 2010 2011 2012 2013
% re
cove
ry on
NPL
s
NPL coverage (percent)
Note: * NPL coverage refers to the ratio of allowances for provisional losses to the gross of NPLsSource: “Chiffres clés de la branche leasing en Tunisie”
Fitch Ratings, a global ratings agency,
confirms that Tunisie Leasing is the market
leader in leasing in Tunisia with sustained
profitability, satisfactory asset quality
(better than the sector average), good risk
management compared with peers (bad
debt ratio below the industry average),
and, given its superior capital ratio,
better placed than peers to cope with a
deterioration of credit risk.
The entry of new leasing companies
into the market obliges Tunisie Leasing
to continuously seek improvements in
its operational efficiency to remain
competitive. In 2012, its operating ratio
(expenses to net income) was 48.1%,
ending the year with an after-tax profit of
25% on net revenue (TLG, 2013). This is
highly competitive with other leasing
companies in Tunisia.
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F. Success factors
The success of Tunisie Leasing’s
operations can be attributed to factors that
are both internal to the company and
external. First, operations are conducted
within the framework of the Tunisian
Leasing Law (Law 94-89 of 26 July 1994).
The law is conducive to good performance
because it sets the terms and conditions
for the industry, defines the scope of
the market, and establishes benchmark
indicators for minimizing risks.
Second, Tunisie Leasing’s expansion in
the mid/late 2000s and the subsequent
consolidation of the industry have been well
managed. When the risks in the portfolio
increased without commensurate financial
coverage, the company tightened its
assessment procedures, introduced a
system for setting targets for contract
volumes and margins by product category,
tightened up supervision of payment arrears
and delinquencies, and speeded up asset
recovery (TLG, 2013). This turned the
situation around and brought down the
share of NPLs within a short period.
Management effort continues to seek
improvements in financial risk assessment
procedures for leasing applicants.
Third, expansion has been fueled by the
high proportion of repeat clients, who
account for 60% of the business. This
strong client retention rate is attributed to the
high quality of service offered by Tunisie
Leasing and actions taken by the loyalty
marketing teams (customer visits, telephone
contacts, operations conducted by the call
center to encourage customers whose
contracts come to maturity to renew
contracts), which are facilitated by the use of
commercial customer relationship management
software.
Fourth, Tunisie Leasing’s relatively large
and expanding branch network facilitates
greater outreach to SMEs and other
regional businesses than other leasing
companies in Tunisia may manage. In
2013, Tunisie Leasing operated through
eight regional offices, compared with only
one or two for other leasing companies.
Last but not least, commercial success
has been supported by its strong record in
obtaining lines of credit from the IFIs. This
has provided it with relatively low-cost
sources of finance and associated
technical advice, and given it commercial
advantage in a competitive market place.
G. Lessons learned
A major challenge for Tunisie Leasing is
that as many as 90% of applicants do not
generally provide accurate or complete
financial information. Tax returns are not of
help since only enterprises with a turnover
of at least TND5 million (US$3.9 million) are
legally obliged to submit certified and
independently audited accounts to the
authorities (World Bank, 2009). Tunisie
Leasing finds that SMEs regularly declare
up to 50% less than their real turnover to
the tax authorities, so applicants’ bank
statements give a truer picture of their
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financial health. The opacity of Tunisian
SMEs is also of great concern to the
banks, which cite the poor quality of
financial information submitted by SMEs
requesting loans to be a major constraint.
The Central Bank does not have a
database on SMEs’ financial status, and
the credit risk registry relates only to firms’
credit histories and outstanding loans.
Although leasing has been gaining ground
as a financing alternative for SMEs in
Tunisia, continuing efforts are needed to
educate the market about leasing as a
financing tool. Tunisie Leasing is addressing
this issue by promoting its services through
its branch offices and making use of a call
center to prospect for new clients. This
approach has helped reach a wider pool
of potential clients.
Competition from other leasing companies
is also a challenge. Gross margins for the
industry are relatively tight. In 2012, the
average rate of interest in industry-wide
leasing contracts was 9.77%, while the
average cost of borrowing resources from
money markets was 5.6% (BCT, 2013:97-
98.). To improve its margins, Tunisie Leasing
seeks to lower its operating costs and to
secure lower-cost sources of capital, such
as from the IFIs (as discussed). Not only do
loans from IFIs carry lower rates of interest
than local money markets, but also
longer maturity dates. In addition, the
development IFIs are keen to support
leasing activity that is geared to MSMEs.
The impact of recent economic shocks on
Tunisie Leasing’s business has been
mixed. The global recession has not had a
great effect in Tunisia, but the situation is
delicate in the aftermath of the revolution.
Political uncertainty has negatively affected
investment and growth in the country,
causing some firms to close, but it has not
had much of an impact on Tunisie Leasing.
The ratio of NPLs did increase sharply in
2011 – though not reaching 2007 levels –
but fell in 2012/13. Tunisie Leasing’s
experience in this respect thus echoes,
with a lag, the performance of the leasing
industry worldwide, which increased in
total size by 21.9% in 2010/11 after a
collapse the year before (White Clarke
Group, 2013). Another negative factor for
the company is inflation, which has
resulted in a declining exchange rate. This
has pushed up the cost of imported
vehicles and equipment and made
them more expensive under leasing
contracts.
Overall lessons learned:
• A separate leasing law provides a
sound legal basis for developing the
leasing industry. Legislation needs to
cover the roles and responsibilities of
lease parties, effective procedures for
repossession of leased assets in case
of default, a registry for leased assets,
and neutral tax treatment to ensure
equal treatment for leasing companies
vis-à-vis other forms of credit.
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• Access to low-cost lines of credit from
IFIs (with long maturity dates) to
finance the purchase of leased assets
for SMEs, allows leasing companies to
keep costs competitively lower for
clients and still generate profitability. IFI
lines of credit may also bring technical
advice to the leasing companies.
• It is important to actively promote
leasing as an alternative form of
financing among SMEs. Effective
strategies include: forming cooperative
relationships with vehicle and
equipment dealers to develop referrals
to SME customers; operating through
a regional office network to increase
exposure and accessibility; and making
use of advertising and coordinated
prospecting approaches.
• Leasing to SMEs can be a profitable
business, but leasing companies must
pay attention to the quality of SME
applicants and leased assets, and
develop effective systems for assessing
financial risk (e.g. credit scoring methods)
and monitoring the level of NPLs.
• Screening new leasing applications
from SMEs requires innovative (and
often qualitative) approaches to assessing
their financial health, as many do not
have accurate and reliable financial
statements.
3.3 Capacity Building to Facilitate BankLending to SMEs
Although a few banks in the Deauville
Partnership countries have begun to
recognize the potential of the SME market
and have experimented with different
models of promoting their services,
including loan products, to SMEs, the
majority are still reticent about lending to
SMEs. Their reasons for this vary, from lack
of credit information, to higher risk, to
higher transactions costs. But one of the
biggest barriers is their lack of knowledge
of the SME market and the know-how and
tools for assessing the risk of smaller
enterprises in an efficient and cost-effective
manner. According to a European
Investment Bank report on access to
finance for MSMEs in MENA, “human
resources is one of the main limiting factors
of this industry….[especially the] limited
capacity (mostly shortage of trained
professionals) of existing financial
institutions to process financing proposals,
and the need to train professionals in the
main proposed fields of intervention” (EIB,
2010: 4).
The Egyptian Banking Institute (EBI) was
selected to be profiled as a good practice
because its uniqueness in the Deauville
Partnership countries (and in fact in the
MENA region) for having established an
SME department and implemented a
complete range of training courses,
certification programs, and technical
assistance to increase the capacity of
banks for SME banking. It also targets
the financial literacy of SMEs to enhance
their knowledge of dealing with banks
and their ability to develop bankable
proposals.
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Egyptian Banking Institute, Egypt
Overview: The EBI is the official training
arm of the Central Bank of Egypt and a
center of knowledge excellence, serving
the professional development needs of all
banks in Egypt. Its mission is to enhance
the capabilities of the banking and financial
sectors through interactive educational
programs, training, up-to-date knowledge
and consultancy. Its SME Department
offers a wide range of capacity-building
services to SME units and staff in all
banks and extends the EBI’s services to
entrepreneurs and SMEs by enhancing
their awareness about access to finance.
A. Background and institutional history
The EBI was established in 1991 as a not-
for-profit organization under the auspices
of the Central Bank of Egypt. Its mission is
“to apply international best practices in
developing the technical and managerial
skills of financial service professionals
as well as learning, consultancy and
knowledge management to enhance the
capabilities of the banking and financial
sectors on the national and regional
levels14.” The EBI aims for excellence
in banking education for banking
professionals, and to produce world-class
research and dissemination on related
topics. Its training and support services
are intended to improve the management
14 www.ebi.gov.eg/about-us/
Quick facts
Start date EBI in 1991: the SME Department in 2009
Number of employees Total of 170 in the EBI; 5 in the SME Department
BeneficiariesBanksBanking professionalsEntrepreneurs and SME owners
Number of bankers trained in SMEbanking
2,000
Number of entrepreneurs/ SMEstrained in financial literacy anddoing business with banks
2,000
Increase in the number of bankswith SME banking operations
In 2013, 10 of the 41 banks in Egypt had SME Units or specialized SMEoperations, up from 3–4 banks in 2009
Increase in the volume of SME lending
From 2011 to 2013, the volume of SME loan portfolios increased from EGP 20 billion to EGP35 million
Notes: Data as of December 2013. EGP = Egyptian pound
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and profitability of financial organizations,
including in their dealings with SMEs. Its
activities mostly take place in Egypt – in its
own premises and elsewhere – in banks
(public or private) on demand, or in regional
venues and occasionally abroad.
Since 2003, the EBI has experienced
significant growth and development in
terms of the size and diversity of its
constituency, training facilities, internal
resources and, most importantly, its
training services and products. It values its
international standing as a service provider,
and in 2009, became the only financial
institution in Egypt and the surrounding
region to be accredited by the Accrediting
Council for Continuing Education and
Training – a United States-based accrediting
agency for improving continuing education
and training. This distinctive advantage
allows the EBI to satisfy professional
certification and development qualifications
for continuing education units for all of its
training courses, as well as the credit hours
of its certificates. In 2009, it also received
accreditation from the International
Organization for Standardization for the
quality and customer responsiveness of its
services and its organizational learning
capabilities.
EBI’s SME Department was set up in 2009
as part of a national financial sector reform
program in Egypt. It was created under a
Central Bank decree for improving access
to finance, which included a regulation
that reduced the reserve requirements
of banks on any lending to SMEs. The
SME Department was established in
collaboration with the Business Development
Services Support Project (BDSSP), a major
SME development project funded by
the Canadian International Development
Agency (CIDA).
The rationale for the EBI’s SME banking
program came from the highest levels
when, in the late 1990s and early 2000s,
the government of Egypt began to
acknowledge the importance of the SME
sector to the economy. In 2004, the
Ministry of Finance issued an influential
strategic framework and action plan for
developing the SME sector, which included
a number of measures to improve access
to both credit and equity financing
for SMEs (Ministry of Finance, 2004). By
2008, the financial sector had been
significantly restructured and its capital
position improved. The interests of the
Central Bank then became more focused
on (among other things) improving SME’s
access to finance. The challenge is great.
The general level of financial penetration is
low (only 10% of all adults in Egypt engage
with the banks), the share of total bank
lending to SMEs is below 6% (Rocha et al.,
2011: 45), and SMEs have disproportionately
low levels of capital accumulation. Of
formal SMEs with five or more employees,
excluding the small-scale personal
services and retail industries, only 47%
have dealings with banks (where dealings
include any kind of operation: bank
account, credit card, loan, etc.) (El-Said et
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al., n.d. 2013; El-Said et al. n.d.). An OECD
assessment of SME policies in Egypt
reported that 92% of SME applications for
bank loans are rejected, and included
among its recommendations the need
for improved service provision and
financial support to innovative SMEs
(OECD, 2010).
The premise underlying the work of the
EBI’s SME Department is that the banks’
portfolio composition of SME loans could
be improved if: (i) they paid more attention
to risk mitigation and increased their
technical expertise; (ii) they were
familiarized with the needs and difficulties
of accessing bank finance from the
perspective of entrepreneurs; and (iii)
business development support services
were provided to improve the quality of
start-ups (and lending proposals) by
reaching out to university students and
graduates.
The EBI achieves its goals by providing
a cluster of training programs, technical
assistance services, and research to both
enhance the capacity of the banks in this
domain and raise the awareness of SMEs
concerning banking requirements and
good governance.
Objectives: The aim of the SME Department
is to boost the volume of bank financing to
Egyptian SMEs by providing training,
technical assistance, and knowledge
management activities to the benefit of
banks and SMEs.
Its specific objectives are to:
• Identify the training needs of
stakeholders regarding future prospects
for the role of SMEs;
• Design the required training and
events, including the application of
international best practices in supporting
the SME sector;
• Provide the financial sector with the
mechanisms and essential tools to
enable a better financing environment
for SMEs;
• Support the banking sector to
establish qualified and specialized
units to provide SME banking products;
• Establish a strong SME database to
provide the required data and information
to policymakers, planners, the banking
sector, and SME entrepreneurs;
• Conduct applied research on SMEs
to identify trends in new financing
programs; and
• Exchange experiences relating to
successful models for developing SME
banking in developed and developing
countries.
Beneficiaries: The SME banking program
addresses three audiences:
(i) Banking professionals in SME finance
operations, with training courses and
technical assistance;
(ii) Senior bankers, with round tables and
forums to stimulate interest in the
potential for increased lending to SMEs
in Egypt;
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(iii) SMEs and entrepreneurs (including
would-be entrepreneurs, pre-start-ups),
with banking awareness campaigns
and financial literacy programs.
B. Organizational model
The EBI is governed by a nine-member
board of directors, chaired by the Governor
of the Central Bank of Egypt, with
members comprising strategic banking
specialists and executives. The SME
Department is one of eight departments
and the Director is a member of the senior
management team.
Staffing: The SME Department is staffed
by five persons with different disciplinary
backgrounds. The expertise of staff is
maintained through the establishment of
individual professional development plans
and annual performance assessment
reviews. The staff develop the annual SME
banking training program, organize training
courses and sessions, manage the EBI’s
SME banking promotion and knowledge
management activities, and deliver training
courses in collaboration with a roster of
externally contracted experts and trainers.
C. Operational model
Products and services: The EBI provides
a range of products and services to
improve the governance and efficiency
of banks and provide professional
development for banking officials. It also
delivers financial literacy programs to youth
through partnerships with the education
system and by supporting train-the-trainer
programs for educators to create niche
financial education teachers.
The SME Department offers a comprehensive
range of capacity-building and training
services to all banks and their SME units,
and initiatives to enhance the awareness
and skills of entrepreneurs regarding
access to finance. It has four areas of
activity: (i) training services; (ii) networking
initiatives; (iii) technical assistance services;
and (iv) studies and applied research.
Specializing in products and services
geared specifically to expanding SME
banking services, it follows a beyond-
training concept by offering a wide range
of capacity-building services to SME units
and staff in banks, which include training
and certification, as well as financial
awareness and training sessions with
entrepreneurs and SMEs.
Training courses. The SME finance training
program is designed to provide professionals
with SME banking qualifications, promote
best practices for supporting the economic
viability of SME banking clients, and
reinforce and nourish the potential of
SMEs. Two SME finance-related courses
were offered initially: SME Banking for
Bankers (20 hours) and Financing SMEs
(16 hours). Later, a specialized SME
Banking Certificate was developed,
requiring 116 hours of course work and
followed by a study tour to a developed
country demonstrating good practice in
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SME banking (see box). Also on offer is a
range of courses for bankers working in
microfinance units, including Management
Functions for Microfinance Units (8 hours),
Delinquency Management for Microfinance
(12 hours), and Credit Officers Skills for
Microfinance (30 hours). The full list and
description of SME banking courses
offered by the EBI during 2013/14 can be
found on their website15.
Improving SME access to finance also
requires efforts to improve the demand
side. To contribute to the development of
stronger entrepreneurial and managerial
competencies, the SME Department
provides several training packages for
SME owners that seek to enhance their
knowledge of good practice in managing
and operating a small business, and
their understanding of dealing with and
satisfying the requirements of banks. One
of the major training courses is the 15-hour
SME Guide for Dealing with Banks,
which covers the basics of business
management, strategic planning and financial
forecasting, and explains the sources of
external finance, discusses banks as
institutions and explains techniques for
dealing with banks.
For delivery of its training courses, the SME
Department provides its own staff and
draws on a pool of local trainers (banking
professionals) and international experts. At
the banks’ request, the Department has
recently introduced a number of courses
on Islamic banking for SMEs. Four of the
41 currently accredited banks in Egypt are
fully-fledged Islamic banks, and about ten
others have Islamic finance windows.
Many small entrepreneurs in Egypt prefer
to deal with banks on the basis of Islamic
financial principles, and they will expect
to find those operations amenable to
SME business lending. The Department is
also developing a special program on
agricultural finance for SMEs.
15 See: http://egyptianbankinginstitute.com/category/sme-department/
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Networking initiatives. An important part
of the SME Department’s mandate is the
hosting of networking and policy dialogue
events. The aim of the SME Bankers’
Forum, designed for the heads of banks’
SME units, is to provide a platform for
dialogue among bankers working in SME
units to discuss bottleneck issues, assess
training needs, and share international best
practices. Nine meetings of the Forum
were held in 2009–2011. Round-table
meetings are held to bring senior
bank officials into contact with senior
policymakers, experienced local and
international professionals in the field, and
entrepreneurs, with one of the aims being
to stimulate interest among senior bankers
who are unconvinced of the potential of
SME lending. Networking activities also
include consultation round tables with
The SME Banking Certificate from the EBI
Certificate objectives:
By the end of the certificate program, participants will be able to: (i) understand the
importance and techniques of strategic planning; (ii) apply the operational setup for an
SME banking unit; (iii) define SME customers’ product needs and get acquainted with
successful clients’ product management; (iv) identify tools for marketing and delivering
SME products and services; and (v) determine major risk and how to mitigate it in SME
banking.
Certificate outline:
Module 1: Strategic planning for SME banking (28 hours)
Module 2: Operational set-up for SME banking (24 hours)
Module 3: Product development for SME banking (24 hours)
Module 4: Marketing and delivery channels for SME banking (24 hours)
Module 5: Risk management for SME banking (24 hours)
Module 6: International exposure.
Assessment strategy:
Participants are assessed based on participation (interaction and group exercise) and
through a written test after each module. Participants are also required to submit a project
in one of the designated areas of study that will be presented and assessed by a panel
of SME banking experts.
Source: http://egyptianbankinginstitute.com/sme-banking-certificate/
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sector and industry associations to identify
the financial challenges of SMEs and build
a constructive dialogue between banks
and SMEs.
The SME Department has collaborative
agreements with the IFC and the World
Bank and has established links with SME
banking experts in India, Kenya, Malaysia,
the United Kingdom, and other countries
to facilitate study visits for participants in
its SME banking courses and for some
start-up entrepreneurs.
Technical assistance services. The SME
Department facilitates technical assistance
to banks in the field of SME banking
through the use of international experts.
Egyptian banks are in different circumstances
and at various stages in terms of SME
banking. Some of the banks are more
advanced with access to SME banking
expertise via parent banks and international
networks, while others are less advanced
and have little support. The SME Department
has succeeded in facilitating technical
assistance to help several banks introduce
SME banking in their operations, including
with the necessary infrastructure and tools
to facilitate the process of high-quality
lending to the SME sector.
Studies and applied research. The SME
Department carries out knowledge
management activities to provide
information to bankers and entrepreneurs
on international best practices, success
stories, and information on the current
state of SMEs in Egypt. One of the
central components of this knowledge
management work is the operation of
an SME electronic portal16. This online
resource contains data, analytical papers
by EBI staff and others on SMEs in Egypt
and in other countries, and information
about SME training and related events in
Egypt and abroad.
D. Financial model
The EBI collects membership fees from
participating banks and charges them for
its training and certificate programs. It also
draws on funding and technical support
from a range of external donors and
technical agencies, including central
banks, IFIs, bilateral donors (from Canada,
France, Japan, the United Kingdom, etc.),
international educational providers, and
professional financial training and technical
bodies. Fees are generally not charged to
SMEs for training on how to do business
with banks or participation in awareness-
creating events.
The initial development of the SME
Department was funded by the BDSSP,
including the pre-establishment business
16 See: http://www.sme-egypt.org/Pages/About-Us.aspx
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plan. The project also supported many of
the Department’s initial activities (such as
course preparation). Other donors have
supported aspects of its operations,
including the World Bank and the IFC,
with a specific focus on expanding
the SME banking training programs and
implementing the National SME Census.
E. Results and impact
Since 2009, some 2,000 bankers have
attended the EBI’s SME banking
courses. In addition, another 2,000
persons have attended awareness
campaigns for entrepreneurs organized
in various locations around Egypt. This
has resulted in a much higher level of
awareness and competence in the area of
SME banking, both on the supply and
demand sides. The SME banking courses
are developed to be highly relevant to the
learning needs of both bankers and SMEs.
They are popular, with interest growing
over time, and now account for one-third
of all the certificates issued by the EBI.
Bankers find the training courses of
considerable value because they cover all
of the areas of knowledge required to
develop and integrate an effective and
efficient SME banking service. The training
courses for entrepreneurs and SMEs
are designed to address the key areas
of competence required and improve
participants’ ability to develop bankable
proposals and deal with banks, as well as
enhancing their overall management
competency.
In terms of the wider impact of its work, the
SME Department has two performance
metrics: the number of specialist SME
units in banks; and the quantum of bank
lending to SMEs. A major indicator of EBI’s
effectiveness is the growth in the number
of Egyptian banks engaging in SME
banking. In 2009, only three or four banks
had SME units or specialist SME
operations. By 2013, ten of the 41 banks
in Egypt had set up specialist central SME
units and another nine had dedicated SME
operations within the retail arm. This is
close to a fivefold increase in the number of
banks with an SME focus since 2009
when the SME Department started its
work in the EBI.
In terms on the volume of bank lending
to SMEs, over the 2011–2013 period,
Egyptian banks experienced almost a
doubling of their SME loan portfolio – from
EGP 20 billion in 2011 to EGP 35 billion in
2013. Although the substantial increase in
volume of bank lending to SMEs cannot be
attributed solely to EBI’s competency
building and technical assistance, the
doubling of the banks’ SME loan portfolio
over the last three years can be seen as a
testament to the effectiveness of these
efforts.
Egyptian stakeholders are now relatively
well informed and familiar with best
practices in SME banking. The challenge
going forward is to implement a coherent
and coordinated development process for
SME banking and strong leadership
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involving many stakeholders (Poldermans,
2011).
F. Success factors
The success of the EBI’s SME financing
program has been driven by strong
interest at high levels of government and
policymaking in improving SME’s access
to finance in Egypt, specifically the strong
commitment of the Central Bank.
The SME Department’s strategy has been
to make use of all available resources to
raise its profile and gear up its work,
aware of the importance of linking with
and leveraging all stakeholders in the
field according to their special areas of
competence. For instance, regulatory
change and dialogue with the Central Bank
was essential. Also fundamental has
been its efforts to become familiar with
international best practices in order to
transfer these to the banking community,
and to develop close professional
relationships with international organizations
and experts.
There is no one-size-fits-all approach to
SME banking. Access to expertise and
recourse to technical assistance is
essential for understanding the specific
economic and cultural situation in
each country. The SME Department’s
commitment to developing all-round
expertise and maintaining its knowledge
management function has been one
of its major success factors. Having the
competence and capacity to provide
technical assistance and advisory services
to banks has been indispensable for
recommending the design of appropriate
interventions.
G. Lessons learned
One of the main problems faced by the SME
Department has been bankers’ resistance
to the idea that providing banking services
and financing to SMEs is viable and
profitable, with due attention to risk mitigation.
Convincing them rested on bringing bankers
into dialogue with senior policymakers,
entrepreneurs, and technical experts, and
then providing the necessary technical
training and advice for the implementation of
SME finance operations. The SME banking
training courses have evidently succeeded
in this respect, at least in terms of the two
measures of impact noted earlier. Still, the
portfolio performance with increased SME
lending has to be proven.
In developing its own competencies in
SME banking, the EBI had to invest in
developing relationships with international
good practices models in this area
and engage international experts in the
delivery of training courses and technical
assistance to banks in Egypt. Entering the
arena slowly by offering only a few courses
initially was an important strategy for its
start-up, but developing a sequence of
courses that could be accredited towards
the full SME Banking Certificate was
ultimately necessary and appropriate.
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One of the lessons for other MENA countries
is that, while providing technical assistance
to the banks is important and leads to
results, capacity building and training efforts
need to be complemented by other public
support policies. These include Central Bank
incentives to encourage banks to direct
more of their lending to the SME sector
(such as reduced reserve requirements);
increased guarantee schemes to help
mitigate the risk to banks in lending to SMEs
(and promising start-ups) that are viable
but lack credit histories, track records, and
collateral; and wide coverage of individuals
and SMEs in a private credit bureau. Egypt
has achieved some success with passing
legislation for the establishment of a private
credit bureau: the introduction of the I-Score
credit bureau in 2005 has been instrumental
in providing rapid credit data to the banks
and facilitating their lending decisions.
The new Egyptian government (2013) is
expected to announce new policies to
increase the package of incentives to the
banks to lend to SMEs. Changes of this
kind might in due course lead the
remaining Egyptian banks to follow the
example of the pioneers in building their
capacity and adapting their operations for
increased SMEs lending.
Overall lessons learned
• In addition to its regulatory and
supervisory roles, the Central Bank can
play an important role in helping to
build the capacity of the banking sector
to provide SME banking services.
• Shifting into SME banking requires
changes in the operating culture of
banks, which can be facilitated by
setting up an SME unit or distinct
operating department with a certain
amount of decentralized autonomy.
• To serve SMEs effectively, banks have
to change the way they do business
and manage risk, implement credit
scoring techniques, innovate with
appropriately priced SME products,
implement fast and simple application
and decision processes, educate and
advise customers of the services, train
bank officers in customer relationship
management, and innovate with client
delivery systems.
• The presence of an institutional body
to promote SME banking and build the
capacity of banks and bank staff to
deliver banking (and lending) services
to SMEs is an effective model for
improving performance at the national
level.
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4. Business Development Support Services for SMEs
The aim of business development
support (BDS) programmes and
services in the developing economy context
is to help start-ups and existing micro, small
and medium enterprises (MSMEs) become
more stable and grow so that they can
improve the livelihood of families, generate
jobs, and contribute to economic growth
(McVay, 1999). The most common services
in Middle East and North Africa (MENA)
countries are advice and counseling for pre-
start-ups and start-ups, entrepreneurship
training, advice and counseling for existing
enterprises, help with developing business
plans, and training in business management
skills, although many also help with feasibility
studies, marketing planning, and access to
financing (OECD, 2014). BDS provision can
serve to develop the capabilities of the
entrepreneur so they are able to plan and
manage their operations more effectively as
well as to move out of low-quality, low-price
products and services to higher-quality and
value-added markets. One of the major
principles of BDS is that services need to be
tailored to fit the particular needs of individual
enterprises and/ or sectors: that is, they
need to be market-driven rather than
supply-driven (CDASED, 2001).
Although a wide array of government
agencies, business associations, NGOs,
and community-based organizations offer
different types of support services to
entrepreneurs, BDS is largely underdeveloped
in the MENA region (Stevenson, 2010),
with large gaps between their provision in
rural areas versus urban centers. Global
Entrepreneurship Monitor surveys in MENA
economies (IDRC, 2010) found that fewer
than 5% of early-stage entrepreneurs made
use of professional services for business
advice (e.g. accountants, lawyers, and
MSME support centers), being much more
likely than their counterparts elsewhere to
seek advice from within their personal
networks of family and friends (regardless
of its quality).
International donors have been
instrumental in seeding MSME support
agencies and programs. For example,
the Industrial Modernization Center in
Egypt was started with donor funding, the
National Agency for the Promotion of Small
and Medium Enterprises (ANPME) in
Morocco relied heavily on donor funding at
the beginning of its mandate, and programs
of the Jordan Enterprise Development
Corporation continue to receive donor
support for its programs. A challenge
posed by donor funding, however, is that it
may not be continuous and therefore may
not be available on an ongoing basis.
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The Canadian International Development
Agency (CIDA) has long sought to answer
the question of how best to promote the
development of market-driven, high quality,
affordable, and accessible BDS services for
the MSME sector in Egypt, starting with the
launch of the CAD 11.9 million Small and
Medium Enterprise Development in Upper
Egypt Project (SMEDUP) (1996–2004). The
goal of SMEDUP was to build private sector
capacity to deliver good practice BDS to
SMEs. The rationale for CIDA’s support for
BDS development was based on situational
analyses of the challenges faced by
Egyptian MSMEs in accessing BDS
services, specifically: the scarcity of BDS
service institutions that could efficiently and
effectively offer tailored non-financial services
to MSMEs; the supply-driven nature of BDS
services; and the lack of awareness among
MSMEs of the availability of BDS and its
value, which led to low demand for such
services and difficulty for BDS providers in
attaining sustainability.
The El Mobadara Community Development
and Small Enterprises Association, profiled
below for its good practice in BDS, is a by-
product of the SMEDUP project and has
been involved in CIDA’s efforts to build the
BDS market in Egypt for the past 15 years.
El Mobadara was selected after being
nominated by other stakeholders in Egypt.
It demonstrates a number of good practices
in the provision of BDS, specifically for:
• Its network approach to delivering BDS
services throughout Egypt through
partner community-based Regional
Enterprise Development Centers
(REDECs);
• Its commitment to capacity building
and ongoing professional development
of the business advisors through
training courses, study tours, coaching,
and exchanges;
• Its development of BDS tools and
materials that can be used by its
advisors network-wide;
• Its approach to surveying the needs of
micro and small enterprise (MSEs) and
tailoring BDS services to meet those
needs, often on a cluster or value chain
basis;
• Its proactive approach to working with
MSEs, rather than waiting for clients
to come to the REDEC offices;
• Its commitment to gender
responsiveness, setting targets for the
inclusion of women among its clients
and beneficiaries, and adapting its
BDS approach to accommodate the
needs of women entrepreneurs;
• Its incorporation of an advocacy
component whereby the REDECs
identify problems affecting MSEs and
advance these issues to policy- and
decision-makers for resolution; and
• The value it places on monitoring and
evaluation of the BDS services,
including client satisfaction surveys
and impact assessments.
El Mobadara also provides an example of
a donor-funded project that has achieved
sustainability as a spin-off organization,
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and illustrates how microcredit services
can support BDS provision, and other
good practices in effective BDS provision,
such as experimentation with different
approaches, quality issues, outreach, and
addressing the BDS needs of women-
owned MSEs.
El Mobadara Community Development andSmall Enterprises Association, Egypt
Overview: El Mobadara is an apex
organization that supports the development
of MSEs through the design and delivery
of microcredit, training, business
development support, and technical
assistance programs that are implemented
in collaboration with branch institutions,
partner agencies, and donors17. It provides
BDS services through units set up in
its partner network of six REDECs and
delivers microcredit through 23 of its
own branch offices throughout Egypt.
The focus of this profile is on the
El Mobadara approach to the BDS
component.
A. Background and institutional history
El Mobadara evolved as an outcome of the
SMEDUP project developed and funded
by CIDA. The goal of SMEDUP (1996–
2004) was to improve the economic
conditions of marginal groups of the
population in three lesser-developed
governorates of Upper Egypt (Beni-Suef,
Qena and Sohag) through small enterprise
development. The aim was to promote
the creation of new enterprises and the
sustainability of existing MSEs by improving
the availability of financial and non-financial
17 See: http://www.mobadara.org
Quick facts
Start date Incorporated in 1998
Number of employees 560
Number of employees directly involved in providing BDS services
Six in El Mobadara and 23 business advisors in REDECs, forming the El Mobadara Network
Beneficiaries Start-ups and existing MSEs in six governorates of Upper Egypt
Number of BDS clients served 8,964 MSEs from March 2009 to June 2013
Percentage of women clients 37%
Sustainability of BDS servicesREDECs price BDS services to recover an average of 25% of their salarycosts, with the goal of reaching 50%
Notes: Information as of July 2013
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support services, the combination of which
was seen as essential to strengthening
the economic fabric of these regional
economies. In the project, CIDA partnered
with the Social Fund for Development
(SFD) and the Foundation for International
Training (FIT).
At that time, the BDS market in Egypt
was not at all developed. There were few
business advisory services available to
MSEs in remote regions and a big need
for education and professionalization of
BDS providers. Thus, the project aimed to
stimulate the creation of new institutions able
to provide competent business advisory
services on a long-term market basis. Local
institutions for this purpose were formed
in the three governorates and a central
organization, the beginnings of El Mobadara,
was established in Cairo to build the
capacity of the local institutions and
provide facilitation support.
In 1998, the central organization
incorporated itself as the Community
Development and Small Enterprises
Association – El-Mobadara – an NGO, to
respond to the needs of the MSE sector in
Egypt, and in turn to provide support to the
three governorate-level operations to
enable them to achieve independent legal
status. This led to the incorporation of the
three local organizations as community
development associations, which became
known as Regional Enterprise Development
Centers, each with management systems
and support infrastructure to provide
business support services to start-ups
and existing MSEs, and each with a team
of business advisors and information
specialists. The formation of local organizational
structures, such as the REDECs, with clear
goals, functions, systems, and resources
was fundamental to the effectiveness of
SMEDUP.
The creation and viability of these
institutions, which have emerged as
pioneers in their governorates in providing
high-quality training and technical assistance
for business start-ups and MSEs, was one
of the overarching and most enduring
achievements of this project.
However, a sustainability strategy was
needed to ensure that the work initiated
during the SMEDUP would continue. One
way of achieving this sustainability, both
in reach and financial terms, was to
supplement the BDS services with the
delivery of microcredit programs to low-
income MSEs. The offer of microcredit
services would address unmet demand
for MSE financing in remote governorates
and provide a core business that could
generate long-term financial sustainability
for El Mobadara itself, a goal that could not
be achieved from consulting assignments
and donor-funded projects.
A key achievement at the end of SMEDUP
was the signing of a five-year contract
between the SFD and the three REDECs
allowing them to access credit lines from
the SFD for on-lending of microcredit to
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new and existing MSEs. Under the
arrangement, REDECs would earn an
administrative fee of 3% based on the
value of each disbursed loan. El Mobadara
assumed the quality control and
monitoring in exchange for a fee of 1% of
the disbursed loan value. This produced a
revenue stream for the four organizations.
Another key achievement was the signing
of a five-year contribution agreement
between CIDA and El Mobadara, signed
by the Egyptian Ministry of International
Cooperation, for the Enterprise Graduation
and Promotion through Technical
Enhancement Project, the goal of which
was to provide additional support for the
development of new and more sustainable
MSEs in Upper Egypt. This project entailed
developing the competence and capacity
of the REDECs (as lending institutions) to
provide working capital loans to targeted
MSEs that incorporated an integrated BDS
package. The objective was to increase
the availability of both financial and non-
financial services to MSEs.
In 2008, El Mobadara became the executive
agency for implementation of the CAD
4.75 million CIDA-funded Egypt Enterprise
Development Project (EEDP), the first
Egyptian entity ever to be assigned an
executive agency role by CIDA in Egypt.
The EEDP is a five-year project (2009–
2014) with the goal of generating improved
employment opportunities (and reduce
poverty) through support to MSEs,
with emphasis on Egypt’s marginalized
groups, in particular women and youth18.
The main focus is on skills training and
BDS services. The target for the El
Mobadara Network under the EEDP is to
provide complementary financial and non-
financial services to support 6,000 start-up
and existing MSEs (3,000 of each) and
create 15,000 jobs (of which a minimum of
30% are to be for women) (CDSEA, 2009).
The El Mobadara Network had already
demonstrated that it could operate without
CIDA funding prior to the EEDP funding
in 2009. However, the EEDP further
strengthened El Mobadara, enabled
expansion of its partner network to three
new REDECs (and outreach to more
MSEs), and helped to solidify the REDECs
to better ensure the sustainability of this
network.
Objectives: El Mobadara’s mission is to
improve economic and social conditions
for low-income people in the governorates
of Egypt through the design and direct
delivery of microcredit, training, and
technical assistance services to MSEs,
and to build the capacity of CSOs working
in the field of MSE development.
18 See: http://www.eedpeqypt.org
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With respect to BDS services, the specific
objective is to provide gender-sensitive,
demand-driven, non-financial services
to MSEs, through the REDECs in six
governorates, in an effective and sustainable
manner, including facilitating access to
finance. In fulfilling this objective, El
Mobadara places considerable focus on
building the capacity of the El Mobadara
Network (El Mobadara, the REDECs, and
other project partners) to deliver the BDS
services and to effectively engage policy
and decision makers on MSE issues.
Gender equality in BDS is a strong cross-
cutting aim of El Mobadara. The objective
is to encourage women entrepreneurs
to develop and improve their enterprises
and move from the informal to the formal
sector. Annual and monthly targets are set
for the inclusion of women in BDS services
and their satisfaction with the delivered
services is monitored. In addition, there is
a commitment to provide soft loans to
women entrepreneurs.
Beneficiaries: The beneficiaries are
potential entrepreneurs, start-ups, and
existing MSEs in six of the poorest
governorates of Egypt: Beni-Suef, Behira,
Fayoum, Gharbia, Qena, and Sohag.
B. Organizational model
El Mobadara is governed by a seven-
member Board of Directors, which meets
at least once every three months. The
Executive Director is the Board Vice-Chair.
The Board is accountable for the formulation
and development of all regulations
governing the work of the organization and
reviewing all funding proposals.
Over the years, El Mobadara has developed
an extensive management structure
operating across three areas of focus:
microcredit, non-financial services, and
headquarters support. The non-financial
services are currently organized around the
EEDP and led by a BDS coordinator.
A Project Steering Committee was
established to implement the EEDP. The
Committee consists of representatives
from El Mobadara, CIDA, the Egyptian
Ministry of International Cooperation, and
the SFD. Its main tasks are to review and
approve the EEDP annual workplans,
provide overall guidance on major policies
and activities, and monitor progress
towards the achievement of project results.
In addition, Regional Facilitation Committees
have been formed in each of the six
governorates to serve in a consultation
capacity. These committees review annual
workplans and reports of the REDECs,
provide recommendations and advice on
advocacy activities, and actively participate
in these activities.
Staffing: El Mobadara has 560 employees,
38.5% of whom are women. The majority
of these staff work in the microfinancing
arm of the organization. The staff for
implementing the EEDP at El Mobadara
headquarters includes a full-time project
manager, a senior business advisor, a
senior communication and advocacy
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advisor, a senior capacity-building/ human
resource development officer, and a senior
monitoring and management information
systems officer, in addition to other field
and support staff.
Only six El Mobadara employees, located
in the El Mobadara branch offices in
Gharbia and Behira governorates, work
directly with MSEs in an advisory, counseling
or training capacity. Each of the REDECs
is staffed with a manager, three field
business advisors, and in some cases an
accountant and an administrative assistant.
In total, the REDECs employ 23 staff (of
whom, six women) who are delivering BDS
services to MSEs.
When hiring staff to provide BDS services,
El Mobadara looks for people with a
university degree in business, commerce,
engineering or relevant studies; two to three
years of experience in BDS provision to
MSEs; extensive knowledge of MSE issues
and constraints in the Egyptian context;
and personal competencies in the areas
of leadership, communication, business
awareness, planning and organizational
ability, computer, and language skills.
Finding people with the right set of
qualifications is often challenging, especially
in the rural governorates.
C. Operational model
Products and services: El Mobadara
provides three general kinds of products and
services: BDS services, microcredit, and
capacity building for the partner REDECs
in the provision of BDS and MSE support
in the governorates. BDS services can
encompass a wide range of activities. El
Mobadara uses the classification proposed
by the Small Enterprise Education and
Promotion Network – a global network of
123 international practitioner organizations
dedicated to combating poverty through
promoting inclusive markets and financial
systems – as the guide for BDS planning,
implementation, and evaluation. This
classification is based on addressing the
challenges typically faced by small
enterprises: (i) market access; (ii) input
supply; (iii) technology and product
development; (iv) training and technical
assistance; (v) infrastructure; (vi) policy/
advocacy; and (vii) facilitation of finance.
The El Mobadara Network through the six
REDECs offers the following BDS services:
• Entrepreneurship training, with 1- to
4-day courses on such subjects as
business start-up, business management,
financial literacy, and the use of ICT for
business development.
• In business management training, El
Mobadara often uses the Business
Edge training materials specifically
developed by the International Finance
Corporation for use with the SME
market.
• Other training and technical
assistance, in the form of advice and
counseling; help with feasibility studies
on business ideas and new projects
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and developing business plans; advice
on improving accounting systems and
setting up costing systems; help in
securing skilled employees for the
business; management consultancy to
tackle business problems; and tax and
legal services (e.g. help with business
registration, licensing requirements,
environmental certification, and other
regulatory issues);
• Facilitating access to finance, by
helping MSEs prepare their financing
proposals and developing linkages
and/ or referrals to microcredit and
other financial entities; and
• Market access, including facilitating
participation in product exhibitions;
provision of information on markets
and business opportunities; and
• Input supply, with advice on sources
for equipment and raw materials, and
other business-related matters.
The El Mobadara Network provides
additional value to MSEs by supporting
the implementation of their start-up,
improvement, or expansion projects. In this
regard, business advisors engage with
the clients in supervision and business
monitoring that includes counseling for up
to two years. El Mobadara also performs
an advocacy function on MSE issues.
Approach: El Mobadara and the REDECs
take a proactive comprehensive approach
in identifying and stimulating the demand
for their BDS services. This involves initial
surveys of the needs of MSEs in the
governorates being served and analysis of
gaps in sector value chains where BDS
services could add value to MSE
participation. It actively promotes BDS
services within the community of MSEs
and proactively engages in developing
BDS opportunities. One way of building
demand is to conduct one-to-one visits to
potential MSE clients and offer services.
This is supported by dissemination of
promotional materials and hosting of
promotional seminars. Efforts are also
made to ensure that BDS services are
accessible to women, and that these
services meet the needs of women
entrepreneurs/ managers and workers. El
Mobadara conducts training with REDEC
staff to raise their level of gender
awareness and understanding of gender
equality, and their ability to integrate the
gender approach in all REDEC activities.
Under the “facilitating access to finance”
component, El Mobadara has negotiated
agreements (through the SFD) with three
banks to give consideration to loan
proposals from MSEs that are receiving
BDS services from the REDECs (National
Development Bank, Banque Misr, and
Principal Bank for Development and
Agricultural Credit), with some private
banks, such as the El Ahly Bank, also
participating. These agreements are based
on an SFD-issued credit line of EGP 120
million that is available to banks for lending
to MSEs. REDEC business advisors assist
MSEs in preparing their loan documents,
which are first approved by the Regional
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Facilitation Committees, thus reducing the
due diligence requirements of the banks.
El Mobadara provides training to bankers
in the six governorates and also promotes
capacity-building opportunities for bank
staff to attend the SME Banking workshops
organized by the Egyptian Banking Institute.
As coordinator of BDS services for six
governorates, El Mobadara also provides
services to the REDEC network. These
include capacity building; executive
recruiting and management; and business,
technical, and managerial support to
project staff. El Mobadara has developed
several tools for use by REDEC business
advisors, such as a BDS management
manual, a BDS pricing tool, and a simple
e-Business Planner, this last based on a
Canadian good practice, translated into
Arabic, “Egyptianized” and made accessible
online for potential entrepreneurs and
MSEs. It regularly develops and updates
management information systems, including
databases of businesses, suppliers and
trainers; develops and updates gender
policies and procedures; supports REDECs
in undertaking environment and safety
mitigation procedures; prepares reports on
BDS services delivery by the REDECs; and
coordinates field surveys (e.g. on jobs
created, participation of women, and
environmental issues).
D. Financial model
El Mobadara started with a grant of
EGP600,000 from CIDA in 1996 to subsidize
the provision of BDS services, and by
2013 had EGP 50 million of capitalization.
It has achieved financial sustainability from
a combination of revenue sources: it earns
revenue from its microfinance activities,
and fees for facilitating access to financial
services that can cross-subsidize operations;
charges MSEs a fee for BDS services; and
pursues grants from donor or government
programs for specific services.
The 2011 report of an external evaluation
of El Mobadara’s organizational capacities
found that it was financially self-sufficient
thanks to the income from its microcredit
activity, which covers operating and
financing costs plus loan loss provisions
(Lynch, 2011).
El Mobadara has a policy of charging
clients a fee for the BDS because, in
principle, it would like to see BDS for MSEs
in Egypt become more of a commercial
value proposition. However, the professional
provision of BDS in Egypt is a relatively
new concept and MSEs are not used to
paying for these services. In addition, it is
well known that achieving full cost-
recovery on fees paid by MSE clients for
BDS services is difficult. Consequently, the
REDECs adapt the fee policy for certain
clients. Small clients usually pay the full
cost of service (because they are more
likely to be able to afford to), but
microenterprises pay only a portion of the
service cost. Fees for training are
discounted for women clients to reflect
their lower ability to pay the full costs. In
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many cases, initial BDS services are
offered at no charge to the client. This
serves to promote the services during the
early stages of a project and to gain
credibility and trust with the client. To
reduce the cost of services to individual
MSEs, El Mobadara works with groups
on a sector basis whenever possible and
feasible. As a result of these various
tactics, it anticipates that the portion of
revenues contributed by these fees will
increase over time.
From April 2010 to March 2013, the
REDECs generated revenues of almost
EGP 1.1 million from BDS services. These
earnings are held in reserve accounts and
can be applied to operational costs after
donor funding ends. The EEDP Annual
Report for 2010/2011 showed that BDS
revenue covered about 25% of REDECs’
staff salary costs that year, ranging from
16% to 39% depending on the REDEC.
By the end of the EEDP (in 2014), El
Mobadara estimates that fees for services
will cover half of the cost of BDS, while
revenues generated from the mediation
and direct provision of financial services
will serve to cover the costs of BDS on a
declining basis.
El Mobadara also receives project
funding from various donors, including
the European Union, but CIDA is the most
significant. The five-year EEDP (2009–
2014) received CAD 4.75 million from
CIDA and a contribution from El Mobadara
of CAD 550,000. Separately, the SFD
filtered a CAD 24 million credit fund to El
Mobadara for re-lending to MSEs.
E. Results and impact
El Mobadara’s commitment under the
EEDP was to offer BDS packages to
approximately 6,000 start-ups and
existing MSEs and enhanced access to
affordable financial services to support
the creation of at least 15,000 jobs with a
minimum of 30% for women. As of June
2013, El Mobadara had exceeded these
targets by providing BDS to almost 9,000
MSEs, with women accounting for about
37% of beneficiaries (Table 9). About
20% of the MSEs are repeat clients, with
women twice as likely as men to make
ongoing use of BDS services. Direct BDS
provision resulted in the creation of 2,973
jobs in the supported MSEs (66% of
them for women), and success in
enabling BDS clients to access financing
from partnering and other private banks
resulted in the creation of more than
15,000 jobs (more than 30% for women),
and attracting over EGP 126.5 million in
loan financing.
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The El Mobadara Network has achieved a
favorable representation of women among
BDS clients, which reflects its commitment
to gender mainstreaming of BDS services.
Women represent over 55% of those
receiving entrepreneurship training, over
33% of those receiving other training and
technical assistance and market access
BDS, and more than 25% of those who
have benefited from access to finance
facilitation. This has been the result of
special efforts to respond to the needs of
women entrepreneurs in Egypt. Because
of mobility restrictions, especially in rural
areas, services need to be offered in
close proximity to the woman’s enterprise.
To accommodate the demands on
their time due to family responsibilities,
entrepreneurship and other training has to
be delivered to women clients in shorter
modules. Women in rural areas also often
have less education and experience, so
they need simpler training materials. They
also need more flexibility with cost-
recovery fees because they have less
ability to pay for training.
Working through the REDECs, El
Mobadara, has responded to these
circumstances by making training and
advisory services available closer to the
woman entrepreneur’s residence and
often providing group transportation to
bring women to training locations. Training
materials have been simplified and the
scheduling of training takes into account
Table 9: Number of MSEs receiving BDS services by gender, 2009–2013
2011-2012 2011-2012 2011-2012 2012-2013* Total
M F M F M F M F M F
Entrepreneurshiptraining 0 7 223 166 149 115 79 272 451 560
Other training and technical assistance
128 87 1,559 956 2,257 1,169 572 281 4,516 2,493
Facilitatingaccess to finance 22 4 118 46 191 75 122 36 453 161
Market access 7 1 7 16 50 25 19 2 83 44
Input supply 0 3 12 4 85 27 61 11 158 45
Total 157 102 1,919 1,188 2,732 1,411 853 602 5,661 3,303
Combinedmale-female 259 3,107 4,143 1,455 8,964
Notes: M = male; F = female. *As of June 2013.
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women’s time constraints. In addition, the
fees charged to women clients are lowered
(never more than EGP 100).
El Mobadara was subject to an
organizational evaluation in late 2010 to
identify its capacities and performance
in fostering BDS service delivery and
recommend improvements to its operations
and organizational sustainability. The
assessment report stated that “the
commitment to providing quality services
to SMEs is strong within the organization
and across all levels of staff….The ‘brand’
El Mobadara and its approach to service
delivery give it a competitive advantage
within the market”. The overall conclusion
was that it “is an efficient and effective
organization that possesses a high degree
of relevance in terms of meeting the needs
of SMEs in Egypt” (Lynch, 2011: 26).
F. Success factors
An underlying key to El Mobadara’s
success has been the vision, leadership,
and commitment of the Executive Director
and the BDS Coordinator, who have been
with the project since its beginning and
come from a long association with CIDA
projects designed to experiment with
effective BDS practices in Egypt. Also
important, as El Mobadara grew over time,
was building an institutional system with a
capable second layer of management and
staff who could carry out management
roles. Job descriptions and performance
indicators were developed for each job
and efforts made for continuous capacity
building of every staff member.
Besides the high quality of its management
and staff, the following contributed to El
Mobadara’s success:
Building on the good practice of others.
El Mobadara benefited from lessons
learned from CIDA’s Business Development
Support Services Project in setting up the
BDS initiatives in the REDECs. The main
lessons were related to how to properly
design BDS services and select partner
organizations, and the importance of
offering a diversity of services, building
efficient networks, and engaging all
stakeholders in the design and planning
processes.
Partnering with the REDECs and other
NGOs. Through this practice, El Mobadara
has been able to extend the reach, quality
and consistency of BDS services. This has
been backed by its commitment to build
the capacity of BDS staff in the REDECs
through training, study visits, workshops,
coaching, and opportunities to participate
in the Business Advisors Program at the
American University in Cairo, and the
provision of BDS tools and training
materials.
Partnering with other microfinance
institutions MFIs to expand the provision
of BDS services. Most MFIs in Egypt do
not provide BDS services to their clients,
so El Mobadara can assist them in setting
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up BDS units alongside the microcredit
services, training BDS officers, and
providing ongoing monitoring.
Combining the provision of microcredit
with BDS services. This has been a
success factor on two levels: first, it has
increased the probability that entrepreneurs
can access both non-financial and financial
services to support further development
and job creation; and second, the surplus
generated from the 40,000 active microcredit
clients enables the organization to be
financially sustainable in offering BDS
services.
Responding to clients’ needs through
regular surveying. El Mobadara has
developed a database to track the
performance of its BDS and microcredit
clients on indicators related to sales,
needs, and impact. The loan-tracking
system monitors average loan size,
number of jobs created, share of women
among clients, and loan values. Clients
who have participated in entrepreneurship
training programs are tracked to ascertain
the percentage that go on to start a
business and the number of jobs they
create, as well as the percentage who
obtain employment following the training
program. Client satisfaction forms are
completed after each BDS service is
delivered to evaluate the level of client
satisfaction on the services offered through
the REDECs, and semi-annual client
surveys are used to assess the impact of
services on the enterprise in terms of
increased production, increases in
workers’ salaries, improvements in product
quality, increase in sales, and decrease of
production costs. Results of these surveys
enable El Mobadara to tailor BDS services
accordingly.
Having the ability to generate new ideas
and products in response to market
demand. This has played a pivotal role in
piloting and expanding new demand-
driven services, and has resulted in the
continuous development of new BDS tools
and approaches.
G. Lessons learned
El Mobadara has faced a number of
challenges to developing the BDS market
in Egypt. The main challenge has been to
build its capacity to serve the thousands of
Egyptians who need BDS services. One
way to deal with the potential unmet
demand was the decision to charge a
small fee for the services, although
Egyptian MSEs lacked a culture of paying
for BDS services, and many of the
potential clients in rural and low-income
areas cannot afford to pay for training and
advice. Consequently, El Mobadara has
had to experiment with different models for
generating revenue from BDS services,
including finding a way to balance cost
recovery with the ability of clients to pay for
the services. Developing shorter, lower-
cost training programs (to keep the fees
low) was particularly critical to enabling
more low-income women to participate
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and thereby improve their employability
skills and ability to start and manage a
microenterprise.
El Mobadara also tries to reduce the costs of
delivering the service by working as much
as possible with groups of MSEs. Another
successful approach has been to integrate
BDS with financial services. By providing
BDS to help MSEs with their loan
applications and negotiations with lenders,
the REDECs have been able to demonstrate
that this support leads to higher success
rates in MSEs being approved for financing.
Post-loan counseling and monitoring has
also resulted in improved loan repayment.
MSEs have seen value in paying a fee for
this kind of service (as long as it is affordable)
and it is a BDS niche that has worked well
for some of the REDECs.
The lack of an entrepreneurship culture in
Egypt has also presented a challenge.
El Mobadara has had to do a lot of
promotion, distributing flyers on the
e-business planner and developing links
with the universities to spread the word.
There is also a general lack of available
information for Egyptians who are starting
a business.
Another challenge is finding fully qualified
staff to deliver BDS services, or alternatively
staff with training potential, especially in the
remote governorates. BDS provision is a
relatively new concept in Egypt at the NGO
level, and universities generally do not
provide programs related to entrepreneurship
or BDS. Thus, experience is usually gained
on the job. El Mobadara provides several
capacity-building opportunities for REDEC
staff to gain the knowledge and skills
needed to provide quality BDS. El Mobadara
does salary and benefits surveys to find
out what they have to offer to attract and
retain good staff, but even so, turnover is
high and retaining staff is a big problem.
To deal with this, El Mobadara has initiated
a trainee and internship system to ensure
that they always have a pipeline of
replacement staff.
El Mobadara has learned that BDS
services have to be adapted and tailored
to respond to the needs of women
entrepreneurs. This relates to scheduling
and location of training and assistance,
offering shorter training modules, and
modifying the fee policy so women can
afford the services. REDEC staff are also
given training on how to mainstream
gender in the BDS provision by conducting
gender-sensitive value chain analysis in the
agribusiness sector.
In addition, as an organization that works
with donors, El Mobadara has learned that
it is important to work with more than one
donor at a time in order to diversify
organizational risk, especially given the
changing landscape of donor priorities.
Overall lessons learned
El Mobadara’s experience highlights the
need to:
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• Design and deliver demand-driven
BDS. This goes well beyond delivering
advice to MSMEs in an office
environment or through classroom-
based training.
• Be flexible when providing BDS
services, broadening them to include
assisting MSEs in developing or
accessing new value chain opportunities,
linking them with other technical
centers, etc;
• Tailor programs to the specific needs
of micro and small enterprises. The
difference between the micro and small
enterprises tends to be on the
management and technical levels. The
needs of small enterprise clients tend
to be specific to the enterprise and so
require more individual responses.
These needs are mostly related to
technical production challenges, cost
reduction, project management skills,
and growth strategies. The needs of
microenterprise clients are similar so
they can often be dealt with in groups;
• Invest in building the knowledge, skills,
and professional development of BDS
advisors, counselors, and facilitators
through training programs, workshops,
international study tours and use of
best practice guides for delivering BDS
services;
• Integrate a gender approach to BDS
services by providing gender-sensitivity
training to BDS staff, setting targets for
the share of women clients, and
tailoring services to be responsive to
the needs of women MSE clients
(OECD, 2014 forthcoming);
• Select the most important sectors and
MSE clusters. In the case of Egypt, a
good example is targeting the agricultural
sector, where MSEs are dominant;
• Perform evaluations and client
satisfaction studies to provide
feedback on services, new offerings,
etc; and
• Maintain networks with other
organizations, facilitate exchanges
between BDS staff in different regions
so they can learn from each other,
and organize exchanges with other
countries to stay abreast of innovations
and good practice trends.
Finally, MSE clients are willing to pay some
of the costs of BDS if the services are
demand-driven and will result in value-
added to their activity. However, a high
level of commitment is needed from all
stakeholders, including the government,
other NGOs, and donors, to properly build
the BDS market and offer demand-driven
services.
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Globally, interest in women’s
entrepreneurship development has
been escalating over the past decade,
during which time the international financial
institutions (IFIs) and international organizations
have made significant efforts to advance
policy and program efforts in favor of
women’s entrepreneurship development.
This includes noteworthy efforts by the
Organisation for Economic Co-operation
and Development (OECD), the European
Union, the World Bank Group, and the
regional development banks.
The significant gender gap in the level of
entrepreneurial self-employment activity in
Middle East and North Africa (MENA)
countries has been increasingly focusing
attention from researchers, international
organizations, and policymakers on
the issue of women’s entrepreneurship
development in the region. Across the
Deauville Partnership countries (excluding
Libya), women constitute an average of
about 10% of self-employed persons
(Stevenson, 2011). Women represent
fewer than 5% of the self-employed
in Jordan; about 5% in Yemen; 10%–11%
in Morocco; 13% in Egypt; and 16%
in Tunisia. Although women are
underrepresented among business owners
in most countries around the world,
their representation in self-employment in
MENA countries is the lowest of any
region.
The policy case for women’s entrepreneurship
development is based on two premises:
(i) the gender gap in entrepreneurial
activity levels between women and men
points to inequality in opportunities;
and (ii) the underdevelopment of women’s
entrepreneurship represents unexploited
potential for poverty reduction, growth,
and prosperity (OECD, 2012). Starting a
business is a way for women to create
jobs for themselves, produce income to
improve the livelihoods of their families,
meet marketplace needs, and generate
employment for others. Women’s
participation in entrepreneurial activity
can help economies expand, reduce social
inequalities, and enhance women’s
economic empowerment (IFC, 2011).
However, women-owned enterprises
generally perform at a lower level than
enterprises owned by men. They start
smaller, are less likely to be employers,
grow more slowly (if at all beyond the
microenterprise stage), operate with lower
levels of capitalization, and are less likely to
export. Although the extent of these
differences in performance varies across
countries, within countries, the relative
story remains similar.
5. Development of Women Entrepreneurs/Women-Owned MSMEs
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As a result of systemic and market failures,
women entrepreneurs in general tend to
face disproportionately larger obstacles
than men in accessing financial and non-
financial support services, information,
business networks, and market opportunities,
and can also experience gender barriers
in the legal and policy framework. This
is particularly the case in developing
countries, including in the MENA region
(OECD, 2012). On the other hand, studies
in MENA reveal that the productivity of
formal (registered) women-owned enterprises
compares favorably with those owned by
men, including being as likely as to employ
educated and skilled workers and engage
in export activity (Chamlou, 2008). Women-
owned enterprises are also more likely to
hire women workers, which contributes to
the goal of integrating more women into
the labor force. This is an important
outcome in Deauville Partnership countries,
where rates of women’s labor force
participation are low compared with
international benchmarks, and women
face many challenges in securing paid jobs
in the formal private sector.
One of the pillars in the Deauville
Partnership Small and Medium Enterprise
(SME) Action Plans also references
women’s entrepreneurship within the
context of improving entrepreneurship
policies, with emphasis on equality of
education and training opportunities,
career orientation towards entrepreneurship,
and more widespread access to
mentoring, coaching, incubation, and
other forms of business development
support (including financing). This has
guided the Deauville Partnership countries
to at least consider policy actions to
address the entrepreneurial gender gap.
Furthermore, the Deauville Partnership
countries have been rated against an
indicator for women’s entrepreneurship as
part of the 2014 SME Policy Index
assessment of progress towards
implementation of the European Union’s
Small Business Act for Europe in the
Mediterranean MENA countries (under the
education and training for entrepreneurship
policy dimension). Although the focus on
entrepreneurship education and training
for women is critically important, the issue
of women’s entrepreneurship development
is broader.
Also essential is ensuring that women
entrepreneurs are participating on an
equitable basis with men entrepreneurs as
clients of financial institutions and of
organizations providing business
development support (BDS) and have
access to the full range of financing,
advisory, counseling, management
development, incubation, upgrading and
modernization, supply chain development,
and export orientation services to fully
develop their enterprises.
On the other hand, the recent study
conducted for the OECD-MENA Women’s
Business Forum across 17 MENA
countries reveals that fewer than half of the
responding BDS organizations make
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special efforts to promote their services to
women-owned enterprises (OECD, 2014
forthcoming). While these organizations
reported that their service provision is open
to all enterprises regardless of gender, the
share of women among their clients/
beneficiaries indicates that women are
participating at a much lower level than
men, although women entrepreneurs
make up a higher share of the beneficiaries
in entrepreneurship training programs than
in other more intensive BDS services, such
as mentoring and coaching, incubation,
and management consultancy. The
implication seems to be that either the
women entrepreneurs/ enterprises do not
meet the criteria for access to these more
sophisticated forms of BDS (e.g. do not
have the technology profile, have not been
in operation long enough, are not in the
right sectors, etc.) or they are less likely to
be aware of their existence and value
(OECD, 2014 forthcoming).
To address the gap in women’s access to
BDS services, a number of organizations
in the region (and other parts of the world)
have been formed to deal exclusively with
serving their needs. In MENA countries,
the driving entity is often a women
entrepreneurs’ association which provides
a range of training, coaching, incubation,
and networking services to women
entrepreneurs, such as the Egyptian
Business Women Association, the Jordan
Forum for Business and Professional
Women, and the Association of Women
Entrepreneurs of Morocco (AFEM).
At the political level, the governments in
MENA countries have agreed on the
importance of fostering women’s
entrepreneurship. In 2009, they signed a
declaration reinforcing their support for
actions to increase the role and participation
of women entrepreneurs in the economy
(OECD, 2009a). At the present time,
Morocco may be advancing more
quickly on the women’s entrepreneurship
development agenda than the other
Deauville Partnership countries. Provisions
of the new constitution make it clear that all
public support must target women on a
basis of equality. The Moroccan government
is encouraging all of its MSME support
programs to adopt a gender approach,
with the aim of attaining a higher
percentage of women-owned enterprises
among beneficiaries.
The decision to include an initiative focused
on developing women’s entrepreneurship
in this good practice publication was
based on interest among stakeholders in
Deauville Partnership countries, particularly
Egypt and Jordan, for an example of
an effective gender approach to MSME
support. The EntreElles en Régions
Program in Morocco was selected as the
profile because it is driven by the National
Agency for the Promotion of Small and
Medium Enterprises (ANPME) and can
thus serve as a model for other government
entities in the region to follow. Further, it
has achieved demonstrable results in
terms of upgrading the management
skills of women entrepreneurs, improving
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the performance of their early-stage
enterprises, and increasing the share of
women among clients of ANPME’s main
SME assistance programs.
EntreElles en Régions Program,Morocco
Overview: ANPME is the operational arm
of the government for the development of
SMEs. Established in 2002, the agency
focuses primarily on offering grant
schemes to support SMEs in the process
of upgrading and modernization to
improve their competitiveness. It also
promotes the provision of national
consultancy services to SMEs; provides
assistance in the establishment, operation
and strengthening of associations and
support structures for SMEs; contributes
to the promotion and facilitation of SMEs’
access to public procurement; develops,
collects, and disseminates information
required by SMEs (regulation, legislation,
industry information, role and contribution
of SMEs to the national economy); and
assesses the impact of state policy to
promote SMEs. The focus of this profile
is their successful efforts to increase
the share of women-owned enterprises
among applicants and beneficiaries of its
competitive SME support programs, with
a specific emphasis on the EntreElles en
Régions project.
A. Background and institutional history
ANPME was created in 2002 to implement
state policy in support of SMEs, as well as
the evaluation of its impact. It offers
companies a range of products to assist
them in their efforts to modernize and
strengthen their competitiveness. In the
design, deployment, and promotion of
SME development support programs, the
Quick facts
Start date of ANPME 2002
Number of ANPME employees 74
Start date of EntreElles en Régions 2009
Beneficiaries of EntreEllesWomen entrepreneurs with businesses that have been in operation for atleast one year who meet select criteria, including promising growth potential
Program partnersANPME, the regional investment centers (CRIs), and the German Agencyfor International Cooperation (GIZ)
Number of women-owned enter-prises participating
80 in phase 1 (2009/10); 40 in phase II (2011/12), 40 in phase III (launchedand ended in 2013)
Impact
Improvements in the managerial capacity of participating women entrepreneurs and the performance of their enterprises
Increase in the percentage of women-owned enterprises in ANPME’s mainSME assistance programs from 2% in 2008 to 10%-12% in 2013
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agency aims to facilitate SMEs’ access to
expertise, funding, support, and information
related to economic, sectoral, regulatory,
and legislative issues. ANPME establishes
partnerships with agencies and SME
support structures at the national and
international levels. In addition, it encourages
the development of a network of
interconnected partnerships between very
small enterprises (VSEs), defined in
Morocco as enterprises with annual
turnover of less than MAD 3 million, and
SMEs, and between SMEs and large
companies.
Initially, ANPME delivered SME upgrading
programs funded by the European Union,
but gradually decreased its dependence
on donor funds for its activities. It now
offers a variety of grant programs under its
annual budget allocation from the State.
The key BDS program is Moussanada,
which aims to improve the competitiveness
of up to 700 SMEs annually by subsidizing
consultancy services to help solve their
technical and operational challenges
and enhance their growth potential. This
program has achieved significant results in
enabling assisted SMEs to improve their
overall performance. However, women
entrepreneurs were not availing themselves
of the program. In fact, in 2008, ANPME
observed that only 2% of its SME program
clients were women-owned enterprises.
Even if a woman-owned enterprise applied
to one of ANPME’s programs (through the
competitive process), it often did not meet
the criteria for acceptance.
This could occur because the woman
entrepreneur was not able to cover the
unsubsidized portion of the consultancy
work, her business had not reached the
point where it would benefit from the
professional consultancy, or she did not
have an adequate proposal for future
development and improvement.
To improve its performance in attracting
women-owned SMEs to its programs,
ANPME started to implement remedial
actions. One of its initial efforts to increase
the share of women clients in the
Moussanada programs was to implement
Moussanada for Women. Under this
project, consultants were contracted to
proactively identify women entrepreneurs
with the potential to be Moussanada
clients and then to assist them in meeting
the eligibility criteria for this and other
ANPME programs. This was an important
response on the part of the ANPME, since
a large share of women entrepreneurs
in Morocco (and other MENA countries)
tend to be concentrated in (informal)
microenterprises and are in need of
pre-program counseling interventions to
build up their managerial, organizational,
and operational capacities to the standard
required to benefit from many government
support programs.
Until 2014, when it was given responsibility
for implementing the National Strategy for
the Promotion of Very Small Enterprises,
ANPME did not have a mandate to
support VSEs. However, in the past, and
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with donor support, ANPME had partnered
with AFEM and the Espace Point de
Départ: Association pour la Promotion de
l’Entreprise Féminine (ESPOD) to run
training programs for women in the early
stages of developing a business idea. A
challenge encountered was that, after
receiving training, women entrepreneurs
were often held back by their inability to
access financing. A main barrier was their
lack of know-how in developing bankable
proposals and presenting these to banks.
ANPME responded by aiding women
entrepreneurs to form networks of
groups of women, and providing them with
training and coaching on how to approach
banks. In partnership with the German
Agency for Technical Cooperation (GTZ)
(now GIZ) and AFEM, the agency also
produced a “Toolkit for Women
Entrepreneurship” (GTZ and ANPME,
2010), and short videos profiling women
entrepreneurs’ success stories, which
served to share information on how to
support women entrepreneurs and promote
positive role-model examples to others.
With the experience gained in developing
tools to advance women’s entrepreneurship
through previous projects supported by
GIZ, ANPME was eager to move ahead
with GIZ on a more comprehensive and
integrated approach to supporting the
development of women’s enterprises that
would both recognize the important role of
women in the socioeconomic development
of Morocco’s regions, and improve the
gender representation among its own
program participants – hence, the inception
of the EntreElles en Régions program.
Objectives: The program’s main goal is to
improve the technical and managerial
skills of women entrepreneurs in order to
positively influence the sustainability and
growth performance of their enterprises. Its
specific objectives are to:
• Strengthen the managerial capacities
of women entrepreneurs through
training and coaching;
• Improve the development possibilities
of women-owned VSEs in the critical
post-creation phase; and
• Stimulate the formation of networks for
women entrepreneurs in order to
augment their development opportunities
though self-help and mutual support
groups.
Once women entrepreneurs have
completed the EntreElles program, they
are better equipped to meet the eligibility
criteria for ANPME’s mainstream support
programs, and thus able to further improve
the performance and competitiveness of
their enterprises.
Beneficiaries: The program’s target is
women entrepreneurs in the post-creation
phase, whose VSEs show promising
growth potential.
The three cycles of the program supported
a total of 160 women-owned enterprises.
Four regions were targeted in the first and
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second cycles: Agadir, Kénitra, Meknès,
and Safi, with an expansion in the third
cycle to Tangier, Oriental, and Casablanca.
Information on women entrepreneurs
accepted into the program’s second cycle
indicates that the majority had at least one
university degree; almost 70% had a
business that was at least one year old;
more than three-quarters had at least two
years of previous experience in a field
related to the business; 60% had at least
three permanent employees; 57% had
revenue of more than MAD 50,000, and
half had an ambitious plan for developing
and diversifying the business. Their
businesses spanned a range of sectors.
B. Organizational model
The program is a tripartite agreement
between ANPME, the CRIs, and GIZ, and
managed by a committee represented by
officials from each of these organizations.
Local committees were established in
each of the four regions to promote
the program, pre-select women-owned
enterprises for participation, coordinate the
coaching interventions, and assist in the
formation of EntreElles networks.
Staffing: An external consultant was
contracted to manage the program on
behalf of ANPME and GIZ, including the
hiring of local consultants to provide the
training and coaching components.
Although ANPME played a coordination
role and the participating CRIs assigned a
program manager at the local level, no
additional staff was hired by either
organization. External trainers, consultants,
and coaches retained to deliver the
program components were drawn from
ANPME’s database of qualified suppliers.
To deliver the EntreElles program, they
were required to participate in a training-
of-trainers workshop geared to honing
their knowledge of the GIZ approach to
entrepreneurship training, and making
them more sensitive to the nuances of
coaching women entrepreneurs.
C. Operational model
Products and services: To implement
the EntreElles program, starting in 2009,
ANPME approached the regional one-
stop shops at the CRIs and offered to
make its tools and training methodologies
available to help them better respond to
the needs of women entrepreneurs. Four
CRIs responded (from Agadir, Kénitra,
Meknès, and Safi), each of which assisted
in identifying the first group of 20 women
entrepreneurs (80 in total) from those who
had benefited from CRI services.
These 80 women (mostly with VSEs) were
then given up to ten months of EntreElles
post-creation training and coaching. The
second phase of the program, including
40 women, was completed at the end
of 2012. The third phase, which also
benefited 40 women entrepreneurs but
in more regions (Casablanca, Tangier,
Oriental), ended in 2013.
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The EntreElles process included six
stages: (i) program preparation; (ii) pre-
selection of participants; (iii) pre-diagnosis
of the problems, challenges and
opportunities of each selected enterprise;
(iv) business management training; (v)
individual coaching and mentoring; and (vi)
development of EntreElles networks in
each region. To promote the program,
ANPME partnered with AFEM to conduct
roadshows in the regions, and with
CRIs to help in identifying candidates.
The criteria for selecting the women
entrepreneurs were, first, their professional
qualifications (e.g. level of education, years
of experience prior to starting the
business, and years of previous related
experience to her business); and, second,
aspects of their business (e.g. age,
number of permanent employees, sector,
type of business premises, amount of
invested capital, and potential for
development). Meetings were held with
candidates who received a score of at
least 80% on these criteria. The program
then assigned consultants to carry out an
initial diagnosis of each business to identify
its major strengths and weaknesses, and
specific areas where coaching would be
beneficial. The final selection of candidates
was based on this diagnosis. Any
businesses not judged as being at an
adequate level of development to benefit
from the full impact of the EntreElles
intervention were eliminated. The diagnosis
also served to establish a professional
relationship between each woman
entrepreneur and the program, and a
baseline for the eventual evaluation of the
impact of the EntreElles interventions.
Once selected, the women entrepreneurs
were brought together for an initial two-day
briefing and awareness session and then
started the program of instruction and
coaching. The instructional part of the
program included four modules of training
requiring a commitment of one day a
month. The training drew on materials
previously developed by GIZ, AFEM, and
ESPOD.
These modules cover marketing and
sales, management and organization (time
management, fundamentals of productivity
and quality, resources management,
negotiation skills), personnel development,
accounting and taxation (e.g. cash
management, the relationship with the
banks, tax, and social legislation), and IT use.
As a follow-up to the training modules, a
coach was assigned to each entrepreneur
to help her assimilate and apply the
techniques covered in the training. Half-
day coaching meetings were held every six
weeks, either at the woman’s business or
other mutually agreeable location, during
which the coach offered advice and
assistance in addressing problems related
to managerial, technical or marketing
challenges. This use of individual coaching
was one of the unique aspects of the
program.
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Another unique feature was encouraging
the participating women entrepreneurs in
each region to form a regional EntreElles
Association to provide a networking forum
for mutual learning and exchange. The
program consultant created awareness
among the women of the advantages of
working in a network, and the CRIs
provided training on how to organize and
operate these associations. Through these
networks, the women are able to discuss
their common challenges, benefit from
sharing different approaches and strategies
for dealing with problems, and provide
peer support to each other on management,
operational, and personal issues.
At the end of each program cycle, the
women entrepreneurs participated in a
graduation and awards ceremony in each
of the regions where those who achieved
the most improvement (based on a post-
diagnostic) received awards. One award
was for the woman entrepreneur with the
greatest improvement in business and
management acumen; the other was
for the business with the greatest
improvement in performance.
D. Financial model
ANPME’s operating and SME support
funding comes from a central government
budget allocation. Its annual workplan
is covered by an agreement with the
government that allocates funding to
deliver ANPME programs to a specified
number of beneficiary SMEs. However, the
past public funding model did not cover
development projects targeting VSEs or
start-ups. To support special initiatives for
women starting enterprises or to build their
capacity to meet the criteria of its flagship
SME support programs, ANPME has been
reliant on donor partnership funding.
Funding for the EntreElles en Régions
Program came from GIZ.
The total program cost for the three cycles,
involving 160 women entrepreneurs,
was EUR 480,000. This was based on
a projected cost of EUR 3,000 per
participating enterprise for the diagnostic,
training, and coaching components. The
women entrepreneurs were not required to
contribute towards the cost of the services.
With a broadened mandate to implement
the National Strategy for the Promotion
of Very Small Enterprises (as of 2014),
ANPME has more flexibility for including
programs such as EntreElles in its annual
publicly funded workplan; however, the
long-term sustainability of the program is
under consideration. For example, cost
reductions may be possible if ANPME
builds its internal capacity to assume
responsibility for program management
(instead of contracting this to an external
consultant). Also, for future editions of
EntreElles, a subsidy model could be
applied whereby the participating women
entrepreneurs contribute a percentage
towards the costs of the training and
coaching services (or pay a small monthly
fee), and more use is made of the
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EntreElles networks to facilitate the
coaching aspects.
E. Results and impact
From 2009 through 2013, the program
benefited 160 women entrepreneurs.
Based on the intended impacts of
improving the performance and
competitiveness of women’s enterprises,
the program has been effective in attaining
its objectives and has reaped positive
outcomes.
Most of the women entrepreneurs
participating in the program had not
previously considered their management of
the enterprise in a structured way and
expressed keen interest in the themes
covered by the training. Over 90% of
participants rated the training useful and
the training materials practical and easily
applied.
To evaluate the impact of the program
interventions, coaches performed regular
monitoring of the progress of the women
entrepreneurs in improving the performance
of their enterprise and their own
managerial capacity. At the end of the each
program cycle, comparisons were made
with the pre-program diagnostic results
and each enterprise given two
performance ratings, one linked to the
performance of the business and the other
to improvements in the entrepreneurial
and managerial skills of the woman
entrepreneur. Post-program evaluations of
improved performance in the beneficiary
enterprises indicate that they had acquired
new materials, upgraded or moved into
new premises, developed subcontracting
relationships with large firms, expanded
their sales channels, better defined their
products and services and diversified their
offerings, hired more staff, achieved
greater efficiency in their operations,
improved their financial situation, and were
better prepared to access financing. In
addition, the women were helped to
formalize their enterprises, and the
presence of the program increased
awareness in the regions of the importance
of women’s enterprise development and
the profile of women entrepreneurs. The
program also had a positive impact in
terms of promoting networking among
participating women entrepreneurs in the
regions through the creation of EntreElles
associations.
At a broader level, the program, along
with ANPME’s other developmental
and promotional efforts, contributed to
bringing more women entrepreneurs into
ANPME’s conventional SME assistance
programs. As a result of the preliminary
preparation women entrepreneurs
received in the program, the share of
women among ANPME’s mainstream
SME clients increased from 2% in 2008
to closer to 10% to 12% in 2013.
Cumulative data for the percentage of
women-owned SMEs benefiting from
ANPME’s main programs to the end of
2012 indicate variations by program: from
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close to 10% in the Moussanada program
to less than 5% in the Inmaa lean
production program (Table 10). However,
the overall increase in representation of
women clients illustrates the impact of
making efforts to scale up the
management skills and performance
of women-owned enterprises so they can
meet the criteria for other government-
support programs.
F. Success factors
Several factors have accounted for the
success of the EntreElles Program:
• Partnering with the CRIs, which
provided a local presence for program
management (and venues for training
and other meetings), and better
oriented the CRIs to the benefits
derived from special efforts to upgrade
women’s enterprises;
• Use of a personalized (hands-on)
approach tailored to the needs of
Table 10: Cumulative share of women-owned enterprises among ANPME programparticipants, 2013
Program Total number of SME
beneficiaries
Number of women-owned
enterprises participating
Women’s share of program beneficiaries
Moussanada (to July 2013) Program subsiding the cost ofconsultancy to address technicaland operational challenges to improve the competitiveness ofSMEs.
913 90 9.8%
Infitah IT (to December 2012)Program targeting the accelerationof digital technology usageamong VSEs.
Issued 2,602 numericpermits and 425 digital IT packs
195
6.5% of permits and6.1% of IT packs(target to raise shareof women amongbeneficiaries to 20%)
Imtiaz (to July 2013) Access to financing for SMEs with highgrowth potential that do not needconsultancy assistance but require equity to enable furthergrowth.
116 10 8.8%
Inmaa clients (to mid-December2012) Program to assist SMEswith at least 50 workers in thetransformation to lean productionsystems and more efficient workorganizations.
86 4 4.6%
Source: Information supplied by ANPME
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women entrepreneurs, with the aim of
detecting obstacles and problems
inherent in the daily and strategic
management of their enterprises (e.g.
marketing, human resource management,
production, financial issues), and
proposing remedies;
• Providing gender training to all trainers
and coaches in order to refine their
ability to support the needs of women
entrepreneurs according to their
personal and professional specificities;
• Facilitating networking for the women
entrepreneurs as a source of inspiration,
exchange of experiences, and pooling
of means and resources;
• Collecting views of the participants
about the program components and
ongoing monitoring of changes in the
performance of the enterprises and the
management ability and acumen of the
women entrepreneurs, which has
allowed ANPME to measure outcomes
and make adjustments to program
activities; and
• Holding awards ceremonies at the end
of each program cycle to recognize
improved performance of an enterprise
and of the woman entrepreneur
herself. This created more public
awareness of the role and achievements
of women-owned enterprises as
economic contributors and served to
promote successful role models to
other women entrepreneurs.
G. Lessons learned
Based on its experience, underpinned by
studies and analysis, ANPE has concluded
that offering special support programs
for women entrepreneurs can make a
substantial difference in their managerial
and business performance. However,
these programs alone cannot address the
challenges faced by women entrepreneurs.
Aspects of the socio-cultural environment
hinder women entrepreneurs in ways that
limit their opportunities for networking and
pose difficulties in accessing financing.
In many cases, their ability to secure
financing is also linked to the small size of
their enterprises, their lack of skills in
preparing business plans, and lack of
experience in negotiating with lenders. In
addition, entrepreneurship in Morocco is
generally viewed as a male domain,
involving skills considered masculine, such
as risk-taking, aggressive spirit, and
independence. Thus, women’s skills are
frequently called into question by staff,
customers, suppliers and partners.
Reconciling the time demands of both
business and family life is another major
problem faced by women entrepreneurs.
One of the major obstacles in delivering
the EntreElles en Régions program was
ensuring that the women entrepreneurs
were able to engage fully in all
components. In the program’s second
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edition, the average attendance in the
training sessions was only 76%, and some
of the women were not able to take full
advantage of the coaching component.
Lack of time, due to conflicting demands
of domestic responsibilities, partly
accounted for this, but also difficulties in
certain cases in finding appropriate
premises/ locations for the coaching
sessions. Corrective actions were taken in
the third edition of the program, such as
more strictly following the selection criteria
in the choice of candidates, replacing
women entrepreneurs who were absent
from training sessions or showed lack of
interest, and carefully monitoring the
coaching component to ensure that
scheduled sessions took place.
ANPME also encountered a problem
during the expansion of the EntreElles
program into new regions for its third
edition, particularly in identifying local
organizational partners capable of mobilizing
promotional support and helping to identify
suitable candidates from their area. This
suggests that for a kingdom-wide roll-out
of the program, capacity building of
potential local partners needs to be taken
into consideration at an early stage.
In addition to specific programs targeting
women entrepreneurs, ANPME recognizes
the need for complementary actions to
improve their general access to business
development support and the overall
environment for women’s entrepreneurship
development in Morocco. In this respect,
it recommends that:
• Public policies related to women-
owned enterprises and their incubation
be developed, building on existing
structures (such as the AFEM business
incubators) and then be scaled up
kingdom-wide;
• Mechanisms enabling women to
access financing (e.g. loan guarantees,
financial training, mentoring, coaching,
and seed capital) be strengthened;
• Custom-tailored training specifically
addressing the barriers faced by
women entrepreneurs be implemented
and solutions proposed;
• The formation of networking groups
among women entrepreneurs be
encouraged;
• A system for collecting sex-
disaggregated data and statistics be
implemented in the context of the
establishment of an SME observatory;
• Labor flexibility be enabled to provide
more opportunities for women;
• Initiatives be promoted that seek to
rebalance responsibilities within the
family to provide women with more
autonomy to develop their enterprises;
• A system of national dialogue be
created on the issue of women
entrepreneurship, to include the public
and private sectors and civil society, for
the purpose of sharing strategies on
how to respond more appropriately to
the needs of women entrepreneurs;
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• A national structure and framework for
monitoring support policies for women’s
entrepreneurship be established; and
• A dedicated fund be created that
would enable the deployment of
more support programs for women
entrepreneurs in all regions of
Morocco, including further roll-out of
the EntreElles program.
Overall lessons learned
The ANPME example may be a good
model for improving the gender
inclusiveness of SME upgrading and
modernization programs of other
government SME agencies in the Deauville
Partnership countries. Insights from
lessons learned include the following:
• It is important that governments
collect sex-disaggregated data on the
beneficiaries of their MSME support
programs to enable tracking of their
gender-inclusion performance. This
information can form the basis for
remedial actions to increase the
participation of women-owned
enterprises.
• Implementing developmental programs
specifically targeting women entrepreneurs
can be effective in improving their rate
of participation in the mainstream
program offerings.
• An approach that offers both capacity-
building training for women entrepreneurs
and coaching over a designated period
of time is effective in upgrading
women’s enterprises, but needs to be
monitored carefully to ensure that the
women entrepreneurs can participate
fully in all components.
• Networks of women entrepreneurs
are effective vehicles for promoting
experience exchange, enabling women
to learn from each other by contrasting
and comparing approaches to solving
problems and providing mutual
support.
• Infusing a gender approach throughout
the SME ministry or agency, including
by providing the appropriate gender
training, is critical for sensitizing senior
managers and program officers to the
particular needs of women entrepreneurs
and how best to respond to these
needs.
• External trainers and coaches involved
in delivering support programs to
women entrepreneurs can also benefit
from specific orientation.
• To deliver programs for women
entrepreneurs in local regions, it is
important to identify local organizations
both able and willing to partner with the
program and support its promotional
activities. In more rural areas, this will
likely require attention to reinforcing
the capacity and resources of
local organizations to support
the development of women’s
entrepreneurship.
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Development of micro, small and
medium enterprises (MSMEs) is
increasingly becoming a high priority for
policymakers in the Deauville Partnership
transition countries, given that the MSME
sector constitutes the backbone of their
economies and is the major source of
employment in these countries. Structural
deficiencies, both on the supply and
demand side, need to be resolved in order
to create both the quantity and quality
of jobs needed, and put the countries
on a pathway to an innovation-driven
knowledge economy.
Learning from and adapting good
practices of institutions and projects with
a track record from within the region,
which spark a stronger entrepreneurship
culture, support the business creation
process (with a particular emphasis on
targeting young entrepreneurs), improve
access to bank and lease financing for
MSMEs, strengthen business development
support (BDS) services, and enhance the
development of women’s entrepreneurship,
is of increased interest for policymakers
and affiliated agencies.
With transition countries making MSME
development a priority area since 2011, a
number of new initiatives have emerged,
some supported by international financial
institutions and donors, and others by
Deauville Partnership governments and the
private sector. These include projects to
increase the availability of early-stage
venture capital and angel investment to
address the equity gap faced by promising
new and growth-oriented enterprises,
strengthen the capacity of BDS providers,
foster entrepreneurship and business
creation among young people and
women, promote equality of economic
opportunity in disparate regions, and assist
governments in improving the business
environment for private sector growth.
Particularly noteworthy is the new
dynamism in entrepreneurship among
young people. There has been a significant
rise in the number of initiatives geared to
promoting entrepreneurship, such as
through Global Entrepreneurship Week
activities, the emergence of Start-up
Weekends, and the launch of start-up
accelerators to foster more innovative and
growth-potential enterprises. At the present
time, a great deal of experimentation is
taking place to determine the most
effective approaches to stimulating and
strengthening entrepreneurial capacity
in Deauville Partnership countries. some
emerging good practice models have been
featured in this volume. Efforts should be
made to monitor these developments in
6. Concluding Remarks
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order to identify the good practice models
from which all Deauville Partnership
countries and partners can benefit. This
also holds true for other new initiatives,
such as those of the Endeavor
organization, to increase the growth
and innovation potential of existing
MSMEs.
Conducting formal impact evaluations has
not been a standard practice for many of
the initiatives in Deauville Partnership
countries. To advance learning about what
works best, more focus be placed on
performing impact evaluations and sharing
the results broadly among Deauville
Partnership partners.
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AfDB (African Development Bank) (2011), “Financial Sector Development Support
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AfDB (2012), “Souk At-Tanmia Partnership”, Tunis: AfDB.
AfDB (2014a), “Catalyzing Job Creation and Growth through MSME Development in the
Deauville Partnership Countries: A Gap Analysis of Policy and Program Support in Morocco
and Tunisia”, Tunis, AfDB.
AfDB (2014b), “Souk At-Tanmia Mid-Term Evaluation Report”, Tunis: AfDB.
Al-Sugheyer, B., and M. Sultanov (2010), “Leasing in the Middle East and Northern Africa
(MENA) Region: A Preliminary Assessment”, October, Washington, DC: World Bank and
International Finance Corporation.
Aziz, T.A. (2013), “Supporting access to finance for micro, small and medium enterprises
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