MENAOECD Enterprise Financing Network

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MENA-OECD Enterprise Financing Network

• Providing Linkages for Growth
• Dr. Alexander Böhmer, Executive Programme
  Manager,
• MENA-OECD Investment Programme
• Tel [phone]
• Fax [phone]
• alexander.boehmer_at_oecd.org
• www.oecd.org/mena/investment

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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.

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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

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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).

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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
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Ministerial Declaration, Jordan 14 February 2006

• Sustaining efforts 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 aligning
  supervisory practices with global standards
• And by
• 2. developing effective frameworks and policies
  for entrepreneurship, including the promotion of
  womens entrepreneurship.

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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

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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

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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

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Recommendations

• Governments
• Provide support to governments 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

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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

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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, RD
  centers, science and technology parks, business
  incubators and entrepreneurs.

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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

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Network Access

• If you are interested in learning more about the
  MENA-OECD Enterprise Financing Network, please
  contact
• alexander.boehmer_at_oecd.org.