Enterprise Growth and Expansion Phase: UNIDO technical assistance tools to support successful entrepreneurs in the MENA Region Beyond the crisis: policies to support young enterprises OECD-MENA Investment Program and MoDIC Tunis 29-30 March 2010
To increase the impact of private sector development on poverty reduction UNIDO supports the efforts of developing countries to improve the business environment and lay the policy and institutional foundations for the development of a vibrant private sector, promotes domestic entrepreneurship and development of the entrepreneurial skills of disadvantaged groups, link domestic enterprises to international investment and technology flows, and facilitate access to resources and support services that small and medium enterprises (SMEs) require to become more competitive. Innovation, entrepreneurship and competition are important sources of productivity growth that, with appropriate policy and incentive structures, can bring about pro-poor market outcomes in the form of more sustainable jobs and incomes as well as affordable goods and services. 2
Outline of presentation UNIDO programs to support entrepreneurs in their early stage of development The Enterprise Development Program Some Stories Key success factors 3
UNIDO Enterprise Ddevelopment and Investment Program Dynamic entrepreneurship is an essential for creating wealth, employment and income through growth-oriented micro-, small- and medium-scale enterprises. The Enterprise Development and Investment Promotion Program (EDIP) launched in Bahrain in 1999, aims at helping potential entrepreneurs (micro, small & medium) translate their ideas into commercial ventures in manufacturing/ service sectors and assisting SMEs expand and grow. Domestic investment will in turn leverage the flow of foreign direct investments. 4
Tunisia Morocco Algeria Lebanon Jordan Egypt Sudan Syria China Kuwait Bahrain United Arab Emirates Saudi Arabia Laos Yemen Thailand Bahrain Model Enterprise Development Mozambique Uruguay
Bahrain Model - Enterprise Development & Investment Promotion Program GROWTH In-Wall or Virtual Incubation Financial Linkages Counseling / Technology Tie-up & JV Capacity Building Pre-Investment Phase Pre Incubation Operational Phase Incubation
Bahrain Model Enterprise Development Entrepreneurship development is a process that requires collective joint efforts of various institutions on each level of the entrepreneur s development cycle. Accordingly, the Enterprise Development & Investment Promotion Program targets three categories of potential entrepreneurs: Innovators, Entrepreneurs, Growth entrepreneurs
Bahrain Model Enterprise Development Human Development Special EDIP program focusing on confidence building to assist them in moving from the informal to the formal sector Innovators (Micro Entrepreneurs) Technical Support/Administrative Access to markets: through export consortia, collective local marketing campaigns and clustering Technical assistance programs introducing modern know-how and quality issues Legal Support Simple Book Keeping / Accounting Financial Support Micro and small Finance Infrastructure Incubators
Bahrain Model Enterprise Development Entrepreneurs & Growth Entrepreneurs ( technopreneurs) Human Development Technical Support/Administrative Financial Support Infrastructure EDIP at the same time conducting Entrepreneur SWOT Analysis Developing growth business plans Business Counseling, Co-entrepreneurship & Angels Program Access to new Markets: Identify new markets and assist companies expand; through Franchising, Clusters, export consortia and Subcontracting exchanges Technology upgrading: Raw materials sourcing, sourcing of technology Quality management & upgrading to ensure adherence to international markets Legal support Match making aimed at Forming partnerships for Joint ventures and collaboration Medium to large financing, Seed capital and Venture Capital Funds Incubators, Technology Parks and research & development facilities
Results of model 2007 vs 2009 2007 2009 Entrepreneurs Assisted 181 250 Enterprises undergoing growth established 115 174 Estimated Investment $112 million $200 million Jobs Created 1944 2463 10
Some stories Ms Amina, electrical engineer. Start up. Oil seeds production (Black cumin, Jojoba, Anise, Almonds etc.) Amina started with initial inv. Of 10.000 $ in 2004 to buy the extraction machine from Germany. She was the only employee. Gradually she invested in other machine like, filling, filter and than she bought a second extractin machine. Ms Ramadneh sold around 2000$ worth oil in the year 2005 and 18.000 $ in 2007. Her clients were local shops selling herbal medicine than started the export to the Gulf Countries.. She strated alone and than she hires local workers on a job order basis. She underwent training and counselling on entreprenerurial competences, business skills, personality development skills, accounting, linkages with buyers and equipment suppliers 11
Some other stories Mr. Jeries started his company (supply of hospitality items as another activity in 1999)One employee 50.000$. Training on management systems, business skills and marketing. Linkages. In 2007 reached a turnover of 350.000 $. Ms Rania. Civil engineer. 8 years in private firms. In 2004 started a company to take the dealership for UAE Trading company fro bab furniture but she failed. She moved on and diversified. Supply and installement of Steel structurals. In 2006 she reached a turnover of half million $, in 2007 800.000 $ and has 5 employees. Counselling on marketing and financial plans. Linkages with suppliers. 12
UNITED NATIONS Key factors for successful entrepreneurs Entreprenerus can be enleashed if proper support is provided. A successful entrepreneur will move from informal to the informal sector to meet their aspiration Some ingredients. Training yes. Couselling, Mentoring more important. Institutional Framework. Linkages. Role of intermediaries in promoting direct support. Project financing. Equity Venture Capital. Involvement of private sector. Peer to peer training. Supply-demand. Business opportunities. Linkages Coaching: I will teach you to do it. I will not do it for you I will understand your needs. I will not tell you what to do I will Encourage you and Expose you to experiences and share knowledge 13
unleashing the domestic resources in an economy both financial and entrepreneurial is likely to create a more stable and sustainable pattern of growth. UN Secretary General, 2004 14
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UNIDO Export Consortia Development Program Mexique Maroc Sénégal Tunisia Pérou Pérou Côte d Ivoire Uruguay Argentine Egypt Arménia Jordanie Inde Bleu: projets en cours Bleu clair: activités préparatoires Rouge: projets conclus
Technical Services SPL/Cluster Program Cluster Mapping Awareness building and training SMEs Network Development Study Tours Cluster Twinning Institutional Framework Corportae Social Responsibility Monitoring and evaluation
Cluster Development L organisation au sein de la filière productive cible : animation des synergies entre acteurs, construction d un climat de confiance, promotion de réseaux de coopération interentreprises. La formulation de stratégies collectives : élaboration d un diagnostic participatif, d une stratégie de développement et d un plan d actions concertées. L exécution de projets collectifs structurants : confection des plans d affaires, recherche de financement, mise en œuvre, suivi et évaluation.
Systèmes Productif Locaux (SPL) et Pôles de compétitivité
UN Secretary General in March 2004 by the Commission on Private sector & Development entitled Unleashing Entrepreneurship: making business work for the poor the report states the following: We focus here on the domestic private sector for three main reasons. First, domestic resources are much larger than actual or potential external resources. Domestic private investment averaged 10 12% of GDP in the 1990s, compared with 7% for domestic public investment and 2 5% for foreign direct investment (FDI). Second, when informal resources are examined, such as the potential value of land, the domestic assets that can be tapped are significantly larger than the cumulative FDI or private portfolio flows.
UNIDO s Investment Programme Provide means to: Measure impact of investment on growth and development Distinguish between different types of investment and their relative impact Design policy based on empirical evidence Test policy efficacy Craft investment promotion strategies based on consensus Identify and promote investment opportunities Compare country investment environment to competitors Identify and address major impediments to attracting FDI and generating DI
Approach to achieving strategic objectives Generate a comprehensive database on foreign investors and domestic enterprises through regular surveys Unique public good for governments and agencies to use for strategy formulation and services design A resource for development partners to design and monitor TC Global forum (publish rankings, indicators, etc.) Can expand to include special issues (energy and environment) Replicate into a global database Build capacity in national and regional institutions to utilize the database for policy making, strategy design, investor targeting, etc. Develop a mechanism for linking FDI to DI through backward linkages to enhance the impact of FDI
Market conditions Local resources Operational and regulatory impediments Output growth Investor satisfaction Productivity Growth Employment Investment Local supply chain Training Technology diffusion Export Political will Political will Policy Intervention INVESTMENT CLIMATE PERFORMANCE IMPACT INVESTOR PERCEPTIONS Priority issues to be addressed Investor support services Management of FDI-Local economy Intermediary Agencies 23
Programme Components 1. Survey Data collection, analysis, report 2. Monitoring Platform Public web-based platform hosting the data 3. IPA capacity building Using the data for evidence based policy advocacy, consensus building, strategy formulation, targeted promotion, design of investor services 4. PS organization capacity building (SPX) Supplier benchmarking and development, matchmaking, subcontracting and partnership exchange
Planned Outputs Survey dataset of foreign and domestic investors Investor profile, performance, employed labor and capital Energy consumption and co-production Business linkages and regional trade issues Perceptions on support services Technology impact Report Web-based Monitoring Platform Facilitating on-line research Linking users Platform for B2B partnerships Supplier Development and Partnership exchanges Supplier benchmarking and mapping and dataset Linking suppliers and sub-contractors to major buyers Network of national exchanges 25
Anticipated Outcomes Upgraded capacities of IPAs Research and monitoring of investment flows and impact of different investor types Empirical evidence based policy advocacy Measuring impact of policy and other interventions Guiding and informing investors Aftercare Develop national investment strategies Consensus building among national stakeholders Build linkages between domestic and foreign investment Supplier development Investment project articulation and promotion for supplier development Domestic investment promotion 26
Expected Development Increased transparency Measurement of impact of investor categories Better and more informed business decisions by private sector Stimulating public-private partnerships Empirical evidence to support debate between civil society and private sector Enhanced investment governance Evidence-based policy interventions in response to developmental priorities and private sector needs Improved efficiency in investment promotion Strategies for investor targeting Regional integration process moved forward 27
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Investment Monitoring Platform Case studies Transparency TA Prog s Development organizations Country specific information National institutions MONITORIN MONITORING PLATFORM G PLATFORM Identify Development gaps Monitor TA Programmes and progress in diversification Policy Strategy Services Analysis of trends Assessment of impact Measurement of responses Comparison of sites Sectoral analysis Inv. Opportun ities Perception, performance, impact data Trend analyses Identification of inv. opp. PPPs Financial institutions Private sector Monitor projects Investment promotion Investment projects 29
Key users of the information platform Countries Measure response to change in investment climate parameters Empirical documentation for policy advocacy Spot trends Customize targeting strategies to design after care programs Private sector (private and foreign) Benchmarking with other companies Host country structure and comparison with other countries Supply chain and distribution opportunities through matchmaking mechanism Equity funds: Investment opportunities Academia Raw data Country and sector analyses Development organizations Indicators: Indexes, rankings, forecasts, etc. 30
Where we can work with PE Monitoring Platform to assess environments and link companies with funds Funds that link into the SPX programme Invest in companies participating in supplier development programmes Post investment support to projects through SPX (SME) Link supply chain of existing investments into SPX (Large) Develop institutional linkages between funds and IPAs How IPAs can play a role in supporting PE funds How funds can enhance the effectiveness of IPAs Link to EDIP programme with start-up funds 31
Sub-contracting exchange and supplier development Objective: Leverage large investors and public procurement (especially state owned enterprises) to become drivers of SME development UNIDO Sub-contracting and Partnership Exchange (SPX) programme Traditional UNIDO programme covering over 45 countries Matching potential sellers with major buyer In 2007 new SPX programme designed taking lessons of past 20 years experience New SPX programme brings three new elements: Benchmarking of potential suppliers to assess their level of maturity Strategic partnerships with large buyers Supplier development 32
BUYERS S(B)PX Local companies Other database Shell Oil Companies Facilitated selfassessment Database BHP Billiton Angola Eskom Transnet Unilever Nestle Mining Companies Power Companies Transport Companies Agriculture Companies Need analysis Benchmarking Gap analysis Supplier mapping COMFAR Financing ITPOs Others Upgrading plans Investment projects 33
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Building Blocks Output Areas Financial Performance Cost management Productivity Financial Stability Customer Performance Product Quality Service Quality Customer responsiveness Below Expectations Exceed buyer Expectations expectations Internal Processes Operations Management Supply Chain Management Information Management Corporate Governance Learning and Growth Leadership Human Capital Management Safety and Health Environmental Management Detailed view of how the company rates against buyer requirements and the means to address performance gaps 35
Cooperation partners OECD African Union/NEPAD RECs CIPS Union of African Chambers of Commerce and Industry Vale Institute (Columbia University) AVCA IFC MicroSoft MIGA/FIAS WB WAIPA
Data sets Survey Investment project ideas of companies surveyed (CPP) SPX supplier profile SPX supplier benchmark results Companies provided improvement assistance based on benchmark results Investment project proposals emanating from supplier development 37
Using the data sets TC design for capacity building (IPA, Ministries, PSO, NSO) Investment projects for promotion (ITPO) Green projects Upgrading projects Linkages to PE (EGM) E-learning platform Research (Publications) Business portal Evaluation of TA impact (RBM) Policy recommendations, sector analyses VC Mapping