MENA-OECD Enterprise Financing Network

1. MENA-OECD Enterprise Financing Network “Providing Linkages for Growth” Dr. Alexander Böhmer, Executive Programme Manager, MENA-OECD Investment Programme Tel: +33 1 45 24 1912 Fax: +33 1 44 30 6135 alexander.boehmer@oecd.org www.oecd.org/mena/investment MENA-OECD Investment Programme

2. MENA-OECD Investment Programme • The MENA-OECD Investment Programme is a regional effort, initiated and led by countries in the Middle East and North Africa (MENA). • It promotes broad reforms to enhance the investment climate and sustainable economic growth throughout the MENA region. • It facilitates policy dialogue and sharing of experience on investment policies among policy makers from MENA countries and their OECD counterparts. “Mobilise private investment – foreign, regional and domestic – as driving force for economic growth and employment throughout the MENA region.” MENA-OECD Investment Programme

3. MENA-OECD Enterprise Financing Network • The MENA-OECD Enterprise Financing Network aims to improve the regulatory conditions for financing entrepreneurship using the MENA-OECD Investment Programme as a forum for exchange of good practice between MENA and OECD business and government representatives • The Network aims to foster entrepreneurship in the region by: • Creating a platform to connect entrepreneurs, financiers and government regulators • Providing avenues for private sector participants to effectively input into key investment policy reforms relevant to financing of entrepreneurship MENA-OECD Investment Programme

4. MENA-OECD Enterprise Financing Network • The Network is wide: 18 MENA countries and OECD member countries are supporting the MENA-OECD Investment Programme • The Network is deep: it provides a business and policy network for actors including: • Private Equity • Venture Capital • Business Angels • Associations • Business Incubators • Entrepreneurs • Government regulators (MENA and OECD countries) • Investment Promotion Agencies (MENA). MENA-OECD Investment Programme

5. Actions going forward • Continue enlarging the Enterprise Financing Network • Develop recommendations and action plans to address innovative technology and regulatory issues • Launch a report to determine the enterprise financing gap in the MENA region • Develop a blueprint for enterprise funds why? To support efforts of MENA entrepreneurs to effectively participate in development of their economies MENA-OECD Investment Programme

6. Ministerial Declaration, Jordan 14 February 2006 Sustainingefforts towards modernisation of financial systems to meet the challenge of employment creation and technological advance by 1. “broadening the range of financial services and products that are available and aligningsupervisory practices with global standards”; And by: 2. “developing effective frameworks and policies for entrepreneurship, including the promotion of women’s entrepreneurship”. MENA-OECD Investment Programme

7. Existing Models to Close the Financing Gap Selected Regional examples • Public guarantee instruments: introduced in Egypt, Israel, Jordan, Lebanon, Morocco and Tunisia in cooperation with their banking sectors • SME banks: Banque de Financement de Petites and Moyennes Enteprises (BFPME) created in 2005 in Tunisia to provide loans to local SMEs. Fondation Bank Populaire of Morocco and Bank of Cairo in Egypt began to outsource this customers segment set up microfinance departments within the bank. • Venture capital initiatives: In Morocco, a law regulating the venture capital sector was introduced in 2006 in order to provide incentives for funds to invest in SMEs International initiatives • A number of regional initiatives established (EU Working Party on access to finance for SMEs, IFC-PEP MENA Programme, etc.) to address the issue • EIB co-investing via specialised local intermediaries, direct equity participations in local investment funds, or even in local companies. • Enterprise Financing Network which aims to close the financing gap by studying the exact demands for financing in each country and gather entrepreneurs and financiers MENA-OECD Investment Programme

8. Gap Study: Context and Content • Extent of the financing gap in the MENA region is unknown due to data limitations • EFN to undertake quantitative study on financing gap in MENA region • Financing instruments to be considered • Obstacles in the regulatory environment in relation to creation of start up financing mechanisms and in general conditions for entrepreneurship will be highlighted. • Outcome: quantification of gaps (stage, sector, etc.) per country MENA-OECD Investment Programme

9. Recommendations General • Address the shared responsibility for public and private sectors and facilitate information exchange between government action and private sector initiatives on innovative entrepreneurship and enhancement of financing conditions; • Improve the collection and disseminate data related to enterprise financing through various instruments (bank credit, fixed income instruments, capital markets, venture capital, private equity, etc.); • Establish linkages between financiers, namely venture capital and private equity, business angels and science and technology associations, entrepreneurs, and other actors in the entrepreneurship value chain in order to bridge the financing gap; MENA-OECD Investment Programme

10. Recommendations Governments • Provide support togovernments in the MENA region wishing to develop instruments to bridge specific gaps to innovative enterprises, particularly in knowledge intensive industries; • Encourage governments to further develop capital markets in order to facilitate Initial Public Offerings and securities issuance; • Encourage governments to consider supporting SMEs with fiscal and non-fiscal incentive schemes, finance guarantee programmes, and equity participation and other financing instruments; • Encourage governments to further develop the fixed income instruments market in order to facilitate corporate borrowing; MENA-OECD Investment Programme

11. Recommendations • Recommend the establishment of private and public credit bureaus in order to establish credit history and thus facilitate borrowing; • Encourage governments to evaluate their insolvency frameworks in order to facilitate corporate borrowing as well as issuance of debt and equity instruments; • Review the legal framework with respect to innovation and financing, in particular takeover and joint venture legislation and regulation of intellectual property with a view to facilitate domestic and foreign investment in the financial industry; MENA-OECD Investment Programme

12. Recommendations Private sector/incubators • Make efforts to increase the entrepreneurs’ awareness of financing tools available to them; • Provide training to entrepreneurs on how to formulate business plans and present their activities to potential financiers; • Develop a blueprint for successful enterprise funds drawing on best practice from MENA and OECD countries; • Consider the specific difficulties in obtaining financing which may be faced by women entrepreneurs in the MENA region; • Support the establishment and use of business incubators in order to assist the commercialisation of early-stage enterprises; • Foster linkages between universities, R&D centers, science and technology parks, business incubators and entrepreneurs. MENA-OECD Investment Programme

13. Recommendations Enterprise Financing Network • Support analysis undertaking by the MENA-OECD Enterprise Financing Network on how to address the financing gap/innovation challenges in the MENA region; • Survey framework conditions relating to the operation of private equity and venture capital in the MENA countries and develop recommendations; • Participate and support the Enterprise Financing Network as a key initiative to reduce the financing gap in the Middle East and North Africa region. • Encourage the establishment of a regional institute for entrepreneurial finance to conduct research, education and professional training and provide advice on the regulatory environment and the development of financing instruments MENA-OECD Investment Programme

14. Network Access If you are interested in learning more about the MENA-OECD Enterprise Financing Network, please contact alexander.boehmer@oecd.org. MENA-OECD Investment Programme