SMEPol lessons learned workshop report LSrev.mar-08€¦ · SMEPol Lessons Learned Workshop Purpose...

Small and Medium Enterprise Policy Development Project (SMEPol)

SMEPol Lessons Learned Workshop Report

Grand Hyatt Hotel, Cairo

Monday, December 3rd, 2007

Revised: March 2008

Ministry of Finance (MoF)

Canadian International Development Agency (CIDA)

International Development Research Centre (IDRC)

SMEPol Lessons Learned Workshop Purpose The purpose of the workshop was to hold an informal dialogue with stakeholders who had participated in the SMEPol project to capture lessons learned and recommendations (particularly with regards to the project from 2006-2008). The workshop aimed to capture reflections on and experiences regarding the following questions:

What worked regarding the project? What didn’t work well? What could have been done differently? What could be done in the future for ongoing activities?

Role of the Facilitator The role of the facilitator was to guide and elicit the lessons learned from the project by building active participation of all attendees and encouraging open and frank input. Goals To identify lessons learned from the SMEPol Project that may contribute to:

• Sustaining the Ministry of Finance’s SME Unit work and achievements • Designing future SME policy projects • Replicating the SMEPol experience

Objectives

1. To discuss the key findings outlined in the Independent Evaluation of the SMEPol Project: Impact, Lessons and Options for Replication (2006)

2. To name key events and accomplishments in the life of the SMEPol project Agenda

I. Overview of the SMEPol Project II. Overview of the Independent Evaluations of the Independent Evaluations of

the SMEPol 2000-2006 Project III. Confirming Significant Lessons Learned IV. An Overview of the SMEPol Project Results Framework V. Identifying SMEPol Project Key Events, Accomplishments and Lessons

Learned VI. Recommendations and Prioritizing

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Attendance The workshop was attended by 27 people, including government officials, consultants, current and former SMEPol staff, researchers, business service providers, IDRC and CIDA. (see Annex 1 for list of participants). I. Overview of the SMEPol Project Presented by Mr. Mohamed Abdel Aziz (See Annex 2.1 for the full presentation) The purpose of the overview of the SMEPol Project was to explain the history and rationale of the project with particular emphasis on the Extension phase. It was followed by a question and answer (Q & A) session, the aim of which was to clarify any points regarding the project. Question & Answer Session from Presentation I Q: A key challenge for the project initially was the lack of a “single” government entity as the overall responsible party for SME policy. The Ministry of Economy, at the time, did not have a sole or primary mandate for the SME domain. A: From 1997-2000 the Ministry of Economy did have a mandate for policy for SMEs. But after 2004, there was a Presidential Decree which stated that the Social Fund for Development (SFD) would be the entity responsible for SMEs and policymaking—essentially they were given the new mandate. Q: Can you elaborate on the key performance indicators (SME) for the sector? A: Indicators include the employment size of SMEs, the number of enterprises, SME contribution to the economy, etc. Studies were performed on the responsible entities for data on SMEs and the SME sector. SMEPol conducted workshops with involved stakeholders and relevant entities in order to collect views of what needed to be done. Several MSME definitions were in use at the beginning of the SMEPol Project depending on the entity. In SME Law (law 141.2004), only definitions for “small” and “micro” were stated. Q: Since the beginning of the project until now, are there any indications to suggest that the number of SMEs have increased as well as their contribution to GDP? A: CAPMAS is the designated government body for data collection and formal SME surveys. The last Census from which data is widely available was conducted in 1996; data from the 2006 Census is still being analyzed. The last Economic Census was carried out in 2000-01. Data on enterprises and employment is available from the Egyptian Labour Market Surveys (carried out in 1988, 1998, and 2006), which the Population Council has extensively analyzed and reported on. As well the Economic Research Forum completed panel surveys of 5,000 MSEs in 2002-03 and results from those surveys have been published. Available data indicate that the number of MSMEs has been increasing over time (by about 4% a year) and that MSMEs are responsible for a large portion of employment growth, however, we do not have current data on the increased contribution of MSMEs to GDP.

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II. Overview of the Independent Evaluations of the SMEPol 2000-2006 Project: Impact, Lessons and Options for Replication Presented by Ms. Lois Stevenson (See Annex 2.2 for the full presentation) The SMEPol Project has been subject to two formal evaluations: one in 2003 by Lynch Consulting and one in 2005-06 by the Overseas Development Institute (ODI). The emphasis of this presentation was in particular on the “findings” as outlined in chapter 3 of the ODI independent evaluation report, which mirrored many of the same observations as the Lynch report. Questions & Answer Session from Presentation II Q: Regarding the methodology—was it a survey? What did evaluators use to arrive at their conclusions? A: They conducted interviews with stakeholders, reviewed researched reports, and looked at policy documentation. Their comprehensive multifaceted methodology is outlined in the ODI report. Q: Regarding clarification per the findings, the project was effective in terms of what? Is it influencing policy? The report states that the project had limited impact across government, therefore, how can an “effective” project on impacting policies have limited impact on government. Is it not inherently contradictory? A: When the project started there was little policy development capacity in terms of infrastructure (e.g. research capacity, use of evidence-based approaches, consultation process with stakeholders, the knowledge capacity of people who understood SME issues and the policy development cycle, and human capacity such as English language skills, and computer skills). All of these infrastructure and capacity-building components were included as part of the original SMEPol project. There is evidence now of the “spillover” of an “army of people” building SME policy in other parts of the government that were originally involved in the project but moved on to other projects. There have in fact been many specific policy changes during the life of the SMEPol project, although the ODI report was critical regarding government-wide implementation of SME policies. An integrated government-wide approach is still not in place. III. Confirming Significant Lessons Learned The plenary was divided into groups with the aim to discuss both what stood out and what needed to be modified based on some of the observations and conclusions in the overview of the Independent Evaluation of the SMEPol (Annex 2.2). The small groups recorded key points and then presented to the plenary. The focus was on “lessons learned” that can lead to recommendations. The facilitator made the point that indeed these lessons learned are subjective and the goal is to capture impressions about the SMEPol project and each participant’s relationship to it. Key Questions:

What stood out as principal findings? Based on your experience, what would you add or modify?

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What stood out

• The mandate versus the authority for SME policy is a key issue – just

because a Ministry or agency has a mandate, does not necessarily mean it has the actual authority. This was an inhibiting factor in the effectiveness of the SMEPol project (e.g. SFD vs. Ministry of Finance).

• The change of the Project focus from micro and small enterprises to small and

medium enterprises. This was indirectly imposed by the GoE when it gave the mandate for MSEs to the SFD in Law 141/2004.

• Constraints such as this were beyond the control of the project. In addition,

there were other higher and lower level constraints. The institutional set-up is poor. There is separate treatment for microenterprises and SMEs. The project should not be blamed if there is conflict between within government ministries that prevent good research/ policy advice from being implemented. The problem is inherent in Egyptian government policymaking.

• Not enough was done on delivering technical services for micro-enterprises,

for example Business Development Services (BDS). Technical support is needed—i.e. something similar to a one-stop shop. More should have been done to look at the OSS model for replication and scaling-up. Extension services for microenterprises are sorely lacking.

• Limited budget impacted on the effectiveness of the Project in terms of policy

and program implementation. Funding was lacking to provide technical services to SMEs and scaling-up of promising pilot initiatives.

• The project had an Influence on policy formulation (i.e. SME Competitiveness

Strategy and input on the SFD’s MSE strategy). This is particularly of high importance with regards to the policy development process.

• Studies of the legal and regulatory environment for SMEs were used as a

baseline by other organizations. For example, the IFC used SMEPol studies as a foundation for its on-going work on regulatory reform. As well, focused studies such as the leasing study that involved all key stakeholders and led to policy changes are good examples of the importance of such consultation as a “key element of success” in an effective SME policy development project with follow-up actions.

• Insufficient formalization of enterprises.

• Capacity development spillover from the Project has helped the whole country

at large. Former SMEPol staff are making a contribution to SME development in Egypt in other entities and organizations using the skills, knowledge and expertise they gained while working in the Project.

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• SFD was assigned as the umbrella for SMEs in the middle of the SMEPol Project; at times, their appeared to be two parallel structures for SME policy (although SFD was included as a member of the MoF policy committees). SFD is in need of lots of assistance and should be considered in another plan.

• Positioning of SMEPol! It passed through the authority of both the Ministry of

Economy, the Ministry of Foreign Trade, and then to the Ministry of Finance. Stakeholders witnessed a change in project priorities to match the new Ministries mandate when the project moved from one ministry to another. Feeling that the project should not have moved with the “champion Minister” when Cabinet was reshuffled because this created some policy inconsistencies in the emphasis of SMEPol’s work as it catered to the priorities of the new ministry’s mandate.

• Involvement of SME associations in consultations.

What to modify1

• Distinguish between the responsibility of the project and the responsibility of the ministry – what it can do and what is outside its scope?

• Maybe the project could have done more to involve other Ministries at an

earlier point, i.e. the inter-ministerial network could have been better solidified. • Take actions to generate more visibility of the project, giving it a higher profile.

Develop a communication plan, set from the beginning, to create more awareness of the Project within government entities and with the media, and other beneficiaries, including changes in SME policies as a result of the Project’s work. This is needed to create more visibility for among stakeholders, promote more ownership among all members as well as more active participation.

• Create more awareness of the work of the policy committees (potentially

publish reports/ minutes/outputs from meetings at the governmental level).

• Focus on policy adoption and implementation. This requires a lot of work in Egypt, paying attention to how to “get the message out” to other ministries and develop strategies to sell ideas and policy proposals at the legislative level and have them adopted.

• Maintain the focus on policy adoption and implementation, but place more

emphasis on developing policies in both financial and non-financial areas. Policies are needed to enable SMEs to play a stronger role in procurement and benefit more from taxation incentives at the local level. Policies need to be updated to achieve this.

1 Although the intent was to capture the response to “What would you modify in the report?” some participants discussed what they would modify in the SMEPol project.

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• More emphasis on formalizing the informal sector through working with direct implementers within the context of decentralization (delivery at the local district level)

• Important to have baseline indicators and documentation – that is, document

current status, develop process and system to monitor and track MSME statistics in order to show performance improvements over time. For example how did capacity and skills of MSMEs improve, how did SME development progress, etc.?

• Trace human capital training within the project and value to the economy

through statistical indicators.

• Design and streamline policies to address all stages of enterprise development. The OSSs addressed major parts of the process but what about incentives during other stages? Everything needs to be integrated and embedded together to develop a roadmap for areas to be tackled. In other words, policies need to be designed to cover all stages for the SME life cycle.

• Invite more SMEs in the Project events and activities to increase their level of

direct involvement. Create more awareness among MSMEs of the benefits of the SMEPol Project and resulting changes in MSME policies.

• The mandate for SME policy should not necessarily be linked to a certain

person or ministry. Although one ministry or body should have overall authority for MSMEs, the issue is horizontal and cross-ministerial.

• Relevant positioning of objectives vis-à-vis expected results.

• Maintain focused activities involving key stakeholders with follow up.

IV. An Overview of the SMEPol Project Results Framework Presented by Ms. Heba Helmy (see Annex 2.3 for the full presentation) This presentation focused on illustrating the Project Results Framework for the 2006-2008 Extension Phase. V. Identifying SMEPol Project Key Events, Accomplishment and Lessons Learned In this session, participants were asked to identify activities (e.g. research, conference, training, workshops) that may have contributed to results, whether they were considered successes or failures. Key questions posed:

Name the key SMEPol Project activities (that they are aware of) that contributed to the Extension Phase outputs.

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What principal lessons have been learned from this activity that might positively impact SME policy development and implementation?

What are the things that worked well, did not work well?

Participants recorded key events/activities and principal lessons learned on index cards and then presented to the plenary. Key points stressed by participants included: 1. Activity Development of policy framework and strategies:

• Competitiveness strategy (Ministry of Finance) • National MSE strategy coordinated by the SFD in collaboration with line

ministries

* Lessons Learned • The current National Micro and Small Enterprise Strategy formulation is

utilizing “lesson learned” from the SMEPol approach in developing the SME Competitiveness Strategy, i.e. the importance of broad-based consultation in strategy development, use of a technically-sound evidence-base, broad consultative mechanisms involving many ministries, leading to a GoE-adopted strategy. Specific good practice was outlined as:

o Process oriented approach o Extensive stakeholder consultation o Evidence-based research inputs, i.e. well-researched strategy o Importance of getting buy-in from stakeholders at an early stage o Importance of implementing mechanism; the product is not the

strategy, but rather the process o Focus on implementation (development of an Action Plan)

2. Activity MoF policy committees * Lessons Learned

• Positive - Beneficial to have participants of senior decision makers from ministries and agencies to review policy recommendations from studies; and make use of small working groups to work on specific policy implementation

• Positive – SMEPol presence helped other Ministries in thinking about MSME issues (e.g. Ministry of Investment, GAFI)

• Establishment of these inter-ministerial policy committees to advance policy implementation based on action plans developed as part of studies was good thing.

• Important to build small efficient committees • Would have been useful to appoint a liaison officer in the SMEPol project to

work with a group of peers in all ministries/agencies to discuss SME policies and issues on a regular basis and thus provide more support to the senior members of the Policy Committees

• Engaging stakeholders from the beginning • Having to know what it takes to implement an action plan and how to

influence other government ministries (besides MoF).

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• It was difficult to assess the direct effect of the work of the policy committees – to what extent could policy changes be attributed to the Project’s efforts versus other external factors. Better tracking of this could have been part of the project’s work.

3. Activity Studying the OSS model and its adoption in Beni Suef and Alexandria, one-stop shop and promotion/replication of this experience * Lessons learned

• Positive – Led to more awareness of the benefits of simplifying and facilitating registration and licensing procedures for SME owners by reducing the cost, minimizing the time and maximizing the speed of procedures

• Negative - Objective could not be fully achieved because there were several representatives of governmental bodies resident in the OSSs had no authority to make decisions and had to consult their superiors first. Therefore, it was constantly necessary to seek clearance from a higher level/head office which caused some delays.

• Suggestion: a responsible government official from each relevant ministry/ agency should be appointed with full authority to make decisions.

4. Activity Coordination with GAFI and early involvement of Head of GAFI with the leasing & OSS studies * Lessons Learned

• Early involvement of stakeholders is important 5. Activity Study on implementation of a Regulatory Impact Assessment (RIA) regime, studies on streamlining regulations and procedures affecting the registration and licensing of new and existing MSMEs, leasing and taxation, etc. * Lessons Learned

• Positive - Good studies – helped reduce regulations for MSMEs and indirectly helped reduce MSME burden

• Negative - Lack of commitment from higher level (political will) and clear communication at the operational level to implement regulatory changes

• Negative - Many delays in producing timely reports for consideration by policy committees. Lesson learned is that it takes a long time to work through the process of doing research studies (e.g. developing the terms of reference, competitive bidding process to select contractor, time to provide feedback to consultants on draft reports, revisions, redrafting, final approval)

6. Activity Leasing study and roundtable * Lessons Learned

• The research study added much value as a baseline for identifying problems and issues.

• The approach to outreach contributed to awareness of leasing issues, the state of development of the leasing industry, and enhancement of GAFI’s knowledge

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• Leasing study did not give enough thought to how leasing companies could offer appropriate services to MSEs. One solution might have been to allocate SFD funds to defray leasing costs to MSEs.

7. Activity Production of studies and research on SMEs’ Access to Finance * Lessons Learned

• Positive - Good studies on new mechanisms to finance SMEs such as leasing and venture capital – advanced work on theses issues among stakeholders; effective in covering needed actions.

• Negative – But not all recommendations were implemented. Private equity investors are not attracted to these mechanisms because there is no encouragement for the owners of capital to take the extra risk and transaction costs in dealing with SMEs. Financial and non-financial incentives need to be provided to leasing and venture capital companies to encourage them to serve the SME market.

• Suggestion: provide incentives for the leasing and venture capital companies to work with SMEs (both financial and non-financial) and raise awareness of the SMEs owners to take advantage of this service

8. Activity SMEs and taxation study influenced inclusion of special treatment of SMEs in new tax law and offering a tax payment exemption for small enterprises receiving loans from the SFD * Lessons Learned

• Positive - Encouraged youth to start enterprises with support from the SFD • Influenced the MoF project to develop accounting standards for SMEs, and

thereby capitalizing on existing initiatives • Negative - Still struggling to achieve fairness in taxation when comparing

those who are able to access the SFD incentive and those who start businesses on their own (i.e. creates distortion and inequality in the market)

9. Activity Studies reviewing and updating government procurement practices and procedures * Lessons Learned

• Positive – Influenced the 10% procurement to MSEs clause in the MSE Law (141/2004)

• Positive - Led to change in clauses of the procurement law to give SMEs a more competitive advantage in tendering processes (for example, SMEs can register without costs for local procurement)

• Negative - no differentiation was made in the Law between medium, small, and micro-enterprises.

• Negative – not very many MSEs are aware of procurement opportunities and the benefits offered to them in the government procurement procedures – more needs to be done to outreach to SMEs with information.

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10. Activity Environment workshop * Lessons Learned

• The study on Environment and SMEs was informative but recommendations have to be precise and lead to an actionable action plan.

• Awareness of issues makes implementation easier (e.g. permits & inspection) 11. Activity Conducting seminars, workshops and conferences in different governorates with SME owners and representatives * Lessons Learned

• Positive – It was beneficial to hear from MSMEs regarding their problems, obstacles and suggested solutions

• Positive - Raised awareness about laws and regulations supporting SMEs • Positive - Raised awareness among concerned parties of SMEPol initiatives

and activities • Negative – Limited effective follow-up to deal with problems and constraints

at the regional level and to implement suggestions coming out of the regional workshops

• Negative – Insufficient representation from local authorities at regional workshops; weaknesses of municipalities in supporting SMEs

12. Activity Raising awareness of gender issues in MSMEs * Lessons Learned

• Discussion Forum on Women’s Entrepreneurship was useful mechanism for bringing relevant stakeholders together to focus on efforts to increase the representation of women as entrepreneurs

• Led to partnerships with other agencies (e.g. March 2006 event on International Women’s Day with SME and Gender Donors Sub-groups, Ministry of Investment, Ministry of Finance)

• Studies and roundtables influenced discussions and initiatives to address SME gender issues

13. Activity Training investment: people who accessed training and gained experience from the SMEPol project * Lessons Learned

• Considerable training, knowledge and capacity development of consultants, heads of government agencies, SMEPol Unit staff

• Indirect capacity building of officials who were involved with project activities in general

• Employees who left the project brought the SMEPol experience/ expertise to their work with new employers

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Question to plenary after activity/lessons learned presentations: What stands out as being critical to the overall success of the SMEPol Project?

• Research matters – without all the research studies produced by the project, there would not have been an evidence-base to focus policy priorities and advance convincing arguments for policy changes

• Coordination and buy-in matters – it is important to obtain stakeholder input in order to achieve better results

• Transparency matters – it is important to have lots of consultation with stakeholders and to widely disseminate information through roundtables, workshops and other dissemination activities; this is critical to creating “an environment of trust”.

• Timing matters – it is important to act on timely strategic opportunities to advance policy issues in changing context of reform

VI Recommendations and Prioritizing Based on presentations from the morning and the lessons learned exercise, participants developed recommendations to be considered in any effort to replicate the SMEPol project. The exercise also served to explore opportunities that might exist for other SME projects within the CIDA program to sustain the work and accomplishments of the SMEPol Project. The question posed was: In everything that was heard and produced today…

What recommendations would you have for replication of a SMEPol-type project?

What opportunities exist within the SME sector of the CIDA program to sustain the work of the SMEPol project?

Recommendations for replication of SMEPol Project:

• Focus on lessons learned and guiding principles of the SMEPol Project, e.g. having a GoE-wide vision, broad communication activities, but would not recommend replication of the same structure as the SMEPol Project

• Important to work on the institutional set-up for a new SME Policy project.

Suggestions were to establish a multi-ministerial “governing body/ council” approach for such an SME policy project. Limitations to tying an SME policy project to one Ministry as policy issues are horizontal. Suggestion that there should be a Ministry of SME Development/ Affairs to which a policy project could be attached.

• Make sure that sufficient resources and funding exist to support a sizeable

team, research studies, and consultation and awareness creating activities. The SMEPol Project managed to produce a significant volume of work with a very small team (especially small during the Extension phase) but there were

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many more opportunities for work to be done if there had been a larger and better resourced team.

Recommendations for sustaining the work of the SMEPol Project:

• The MoF should attempt to maintain the caliber of the SME Unit staff (in-house) by offering benefits, training, etc., and continue the work of the SMEPol Project., for example, implementing the recommendations of the SME Competitiveness Strategy.

• Existing CIDA SME Programs should look at opportunities to pick up on

outstanding initiatives post-SMEPol Project.

• In new CIDA projects, CIDA should build on the achievements of SMEPol Project.

• Ensure that SMEPol project policy issues are linked to the emerging National

Micro and Small Enterprise Strategy.

• Develop a good set of indicators/ tracers to track the real impacts of the SMEPol Project to convince CIDA to continue supporting a policy project.

• Continue to implement the SME data/ indicators initiative, data collection, and

dissemination of all information related to MSMEs. Final recommendation summary:

• Any future policy project should not be tied to one ministry but rather a multi-ministerial committee.

• Planning/supervision of SME Affairs should be at the ministerial level (one

ministry).

• Development of the financial and non-financial policies to support SMEs are both essential.

• Law 141/2004 for SMEs development should be updated and revised.

• Advantages mentioned/stated in the executive regulation of Law 89/1998

concerning government procurement to MSEs and other related instructions should be fully activated.

• Lessons learned from the SMEPol Project should be taken into consideration

in any efforts to replicate the project (e.g. structures and resources).

• Link SMEPol policy priorities with the National MSE Strategy.

• Build SME policy development support into new CIDA policy project.

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• Opportunities should be offered to SME owners to attend training programs to know their rights and obligations.

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Annex 1: List of Participants

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List of Participants

# Name Title Organization E-mail 1 Mr. Ahmed Yakout Finance &

Banking Consultants International (FinBi)

2 Mr. Amr Hegazy Bank of Alexandria

3 Mr. Darren Brown Workshop Facilitator

Centre for Intercultural Learning

[email protected]

4 Ms. Deena Nasser Administrative Assistant

SMEPol/MoF [email protected]

5 Ms. Eman Ahmed Said

Economic Researcher

General Authority for Investment and Free Zones (GAFI)

[email protected]

6 Ms. Eman Omran SME Program Team Leader


[email protected]

7 Ms. Heba El-Serafy Research and Markets Development Director (Venture Capital Committee member)

Cairo and Alexandria Stock Exchanges

[email protected]

8 Dr. Heba Handoussa

Research Director

[email protected]

9 Ms. Heba Helmy SME Development Specialist


10 Ms. Lois Stevenson SMEPol Project Coordinator

SMEPol/IDRC [email protected] [email protected]

11 Ms. Magda Seleit Undersecretary, The SME Export Development Sector

Ministry of Trade and Industry

12 Mr. Mohamed Abdel Aziz

SME Unit Manager

SMEPol/MoF [email protected] [email protected]

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# Name Title Organization E-mail 13 Dr. Mohamed Abul

Magd Advisor Canadian

International Development Agency (CIDA)

[email protected]

14 Mr. Mohamed Atta Kout

First Procurement Researcher

General Authority for Government Services (GAGS), MoF

15 Mr. Mohamed Ibrahim

Head of the Central Department for Enhancing SME Competitiveness Programs

Ministry of Trade and Industry

[email protected] [email protected]

16 Dr. Mohamed Soroor

Advisor to the Deputy Minister of Tax Policy

Ministry of Finance (MoF)

17 Ms. Mona El-Gammal

Strategic Planning and Management Consultant

MegaCom [email protected]

18 Ms. Nagla Bahr Development Director

Finance & Banking Consultants International (FinBi)

[email protected]

19 Ms. Nerveen Osman SME Development Specialist


20 Mr. Peter Paproski Head of Aid Canadian International Development Agency (CIDA)

[email protected]

21 Ms. Riham Khalifa Senior Project Specialist

Finance & Banking Consultants International (FinBi)

[email protected]

22 Dr. Salama Fahmy Project Field Manager

Business Development Services Support Project (BDSSP)

[email protected]

23 Mr. Samer Sayed IT Specialist SMEPol/MoF [email protected]

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# Name Title Organization E-mail 24 Ms. Susan Joekes Program

Officer, Globalization, Growth, and Poverty

International Development Research Centre (IDRC)

[email protected]

25 Mr. Tamer El-Meehy

SME Policy Advisor


[email protected]

26 Mr. Tarek Thabet Managing Director

MegaCom [email protected]

27 Ms. Valerie Kirk Workshop Rapporteur

[email protected]

28 Mr. Waley El Din Azmy

Advisor to the Chairman on SMEs

General Authority for Investment and Free Zones (GAFI)

[email protected]

29 Mr. Yehia Khedr Project Analyst, Business Enabling Environment

International Finance Corporation (IFC)

[email protected]

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Annex 2: Presentations

Annex 2.1

Overview of the SMEPol Project

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The Small and Medium Enterprise Policy Development Project (SMEPol)

Overview

Canadian International Development Agency (CIDA)International Development Research Centre (IDRC)

Outline

• SMEPol Timeline & Facts• Original design & Policies• 2006 Design & Policies

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Extension PlanDuration= 18 Months (Aug. 06- Jan.

08)

April2000

Jan. 200820022001 20042003 20062005 2007

Original Project (PIP)Duration= 5 years

1st Ext. to 31/03/06

2nd Ext. to 31/05/06

3rd Ext. to 31/07/06

4th Ext. to 31/01/08

MOFMOEFTMOE MOFMOFT

Provisional Ext. Work planRevised Ext. Work plan

Timeline & Facts

Impact

An improved policy environment resulting in

reduced financial, & non-financial constraints

& increased opportunities for MSME

development

Policy Component

Research Component

Capacity Building

Component

Networking Component

SMEPol’s Original Design

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Priority Policies (year 2000)

• Updating draft national policy (competitiveness)• Definition• Access to finance• Procurement• Legal and regulatory environment• MSMEs Exports

Competitiveness Strategy• Policies:

• Export Promotion• Innovation and Technology• Access to finance• Organic Clusters• Legal and regulatory environment• FDI and inter-firm linkages• Business Development Services

• Implementation mechanism:• SME Policy Committees

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Priority Policies (2006-2008)

• Access to finance (VC, Leasing, Microfinance)• Procurement (Training facility, bidding

documents, tracking systems)• Legal and regulatory environment (formalization,

taxes, RIA)• Opportunity policies based on competitiveness

recommendations (e.g. SME indicators, entrepreneurship, gender, environment, national MSE strategy)

Impact

To support the Government of Egypt, through the

Ministry of Finance and other partners, in the development

of improved collaborative implementation mechanisms for policies, legislation, and

regulations supporting MSME development

Policy Component

Research Component

Networking Component

2006 Design

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Annex 2.2 Overview of the Independent

Evaluations of the SMEPol 2000-2006 Project: Impact, Lessons and Options

for Replication

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Lessons Learned from SMEPol Lessons Learned from SMEPol EvaluationsEvaluations

Assessing the SMEPOL Project in EgyptAssessing the SMEPOL Project in Egypt

From the 2006 Independent Evaluation for IDRC by ODIFrom the 2006 Independent Evaluation for IDRC by ODI

Presented at SMEPol Lessons Learned WorkshopPresented at SMEPol Lessons Learned WorkshopDecember 3, 2007December 3, 2007Grand Hyatt Hotel, CairoGrand Hyatt Hotel, Cairo

Purpose of ODI StudyPurpose of ODI Study

Assessing:Assessing:The SMEPOL project (implementation & The SMEPOL project (implementation & impacts)impacts)Lessons learned Lessons learned –– What worked and why? What worked and why? What is unique to Egypt? What is unique to Egypt? Options for replicating SMEPOLOptions for replicating SMEPOL--type type projects in other MENA countries (Where projects in other MENA countries (Where & How) & How)

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Outline of PresentationOutline of Presentation

FindingsFindings–– Relevance: has SMEPol done the right things?Relevance: has SMEPol done the right things?–– Implementation Efficiency: has SMEPol done things in Implementation Efficiency: has SMEPol done things in

the right way?the right way?–– Impact: positive/negative changes produced by the Impact: positive/negative changes produced by the

intervention?intervention?–– Sustainability: are benefits of the project likely to Sustainability: are benefits of the project likely to

continue?continue?

Lessons learned for the futureLessons learned for the future

Findings: RelevanceFindings: RelevanceProject was highly relevant when conceived; issue Project was highly relevant when conceived; issue remains importantremains important

–– MSMEs important to economyMSMEs important to economy–– Incoherent SME policy context (GoE) and donor fragmentationIncoherent SME policy context (GoE) and donor fragmentation

»» development of coherent framework was neededdevelopment of coherent framework was needed–– Limited research baseLimited research base

Good process for initial project assessment and needs Good process for initial project assessment and needs analysisanalysis

–– Focused on key constraints facing MSMEs Focused on key constraints facing MSMEs –– Responded to necessary rationale for coordinationResponded to necessary rationale for coordination–– Addressed perceived lack of capacity within GoEAddressed perceived lack of capacity within GoE

Emphasised good practice in policy development Emphasised good practice in policy development processes (research, capacityprocesses (research, capacity--building, networks)building, networks)

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Findings: RelevanceFindings: Relevance

But But ‘‘micromicro’’ emphasis waned over time due to emphasis waned over time due to moves from one Ministry to another, in favor of moves from one Ministry to another, in favor of ‘‘competitivenesscompetitiveness’’Project did not directly address issue of Project did not directly address issue of informality and the challenge of formalizing informality and the challenge of formalizing informal MSMEsinformal MSMEsOriginal project did not give enough Original project did not give enough consideration to policy implementationconsideration to policy implementation

Implementation and Efficiency (1)Implementation and Efficiency (1)

Resource intensive Resource intensive but efficient but efficient

–– bottom line: project was good value to achieve its bottom line: project was good value to achieve its impactimpact

Canadian expat added value; necessary for Canadian expat added value; necessary for project success (phase down over time?)project success (phase down over time?)Division between the DU and GDMA reduced Division between the DU and GDMA reduced efficiency (reduced over time). efficiency (reduced over time).

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Implementation and Efficiency (2)Implementation and Efficiency (2)High level of stakeholder satisfaction re policy documents, High level of stakeholder satisfaction re policy documents, esp. Competitiveness strategyesp. Competitiveness strategyTraining investment resulted in professional and competent Training investment resulted in professional and competent staffstaffResearch produced deemed as high quality and policyResearch produced deemed as high quality and policy--relevantrelevantProcesses of research and use of evidenceProcesses of research and use of evidence--base more base more established in government practicesestablished in government practicesSubstantial learning about researchSubstantial learning about research--policy links policy links High level of stakeholder satisfaction with High level of stakeholder satisfaction with consultationconsultation(except among MSMEs)(except among MSMEs)But inadequate support for crossBut inadequate support for cross--cutting themes in project cutting themes in project designdesign

–– Limited technical support on how to undertake work on these issuLimited technical support on how to undertake work on these issues; es; limited mandate on partner ministrylimited mandate on partner ministry

Impacts (1)Impacts (1)1.1. AgendaAgenda--settingsetting

–– Instrumental in raising awareness regarding MSMEs and keeping isInstrumental in raising awareness regarding MSMEs and keeping issue sue on policy agendaon policy agenda

–– SMEPol deepened and broadened significance given to MSME issues SMEPol deepened and broadened significance given to MSME issues (research, workshops, private briefings, open channels of (research, workshops, private briefings, open channels of communication)communication)

–– Research led to specific policy actions (e.g., OSSs)Research led to specific policy actions (e.g., OSSs)2.2. Formal Policy Documents:Formal Policy Documents:

–– Clear positive influence on formal government policies at MinisClear positive influence on formal government policies at Ministerial terial level level –– e.g., e.g., ““Enhancing CompetitivenessEnhancing Competitiveness”” document. document.

–– Included effective development plans and mechanisms for Included effective development plans and mechanisms for implementationimplementationBut, influence primarily at Ministerial rather than GoE levelBut, influence primarily at Ministerial rather than GoE levelMost formal documents produced under MoF bannerMost formal documents produced under MoF bannerLimited influence over other ministriesLimited influence over other ministriesLittle impact on formulation and shape of SME Law, despite Little impact on formulation and shape of SME Law, despite effortseffortsLimited implementation of Competitiveness strategyLimited implementation of Competitiveness strategy

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Impacts (2)Impacts (2)3.3. Influencing the Practice in Other Government Influencing the Practice in Other Government

Ministries:Ministries:

–– Successful development of a more systematic Successful development of a more systematic ‘‘Policy Policy Development ProcessDevelopment Process’’, including embedded research and more , including embedded research and more mainstreamed stakeholder consultationmainstreamed stakeholder consultation

»» Weaker SME stakeholder level early onWeaker SME stakeholder level early on

–– Seen as Seen as ““revolutionaryrevolutionary”” (in a positive way)(in a positive way)

–– But, project moves reduced influence of the project in But, project moves reduced influence of the project in ‘‘regularizingregularizing’’ processes in ministriesprocesses in ministries

»» Although project moves and staff moves informed other Although project moves and staff moves informed other Ministries / AgenciesMinistries / Agencies

–– ‘‘CompetitionCompetition’’ influenced practice changes in SFD influenced practice changes in SFD

Impacts (3)Impacts (3)4.4. Improvement in the Policy Environment for MSMEs (overall Improvement in the Policy Environment for MSMEs (overall

goal)goal)–– Too early to say (policy changes take time to filter through to Too early to say (policy changes take time to filter through to measurable measurable

impact) impact) –– Improvement in policy environment evident but SMEPol role deemedImprovement in policy environment evident but SMEPol role deemed as as

having minimal impact on operating environment for MSMEs having minimal impact on operating environment for MSMEs –– Likelihood of impact greater if MSE mandate was not so clearly wLikelihood of impact greater if MSE mandate was not so clearly with SFDith SFD–– Impact more limited to areas where MoF has clear mandate Impact more limited to areas where MoF has clear mandate –– e.g., taxation, e.g., taxation,

procurement, financingprocurement, financing–– More policy coherence would have been desirableMore policy coherence would have been desirable

5.5. Others:Others:–– Awareness Awareness –– SMEs high on the agendaSMEs high on the agenda–– Project outcomes:Project outcomes:

»» Research Research –– good quality, policygood quality, policy--relevantrelevant»» Training Training –– helped develop capacityhelped develop capacity»» Consultation Consultation –– widely appreciatedwidely appreciated

–– Many see SMEPol as first place to look for policy direction regaMany see SMEPol as first place to look for policy direction regarding rding SMEsSMEs

–– Cross Cutting Themes Cross Cutting Themes –– limited successlimited success““SMEPOL has had a much greater impact than many projects 10 timesSMEPOL has had a much greater impact than many projects 10 times its size.its size.””

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What if there had been What if there had been ‘‘nono””SMEPol?SMEPol?

Capacity of Ministries would not be as developedCapacity of Ministries would not be as developedWould be less awareness of better approaches to policy Would be less awareness of better approaches to policy developmentdevelopmentIssue of MSMEs would not be as high on political agendaIssue of MSMEs would not be as high on political agendaThere would be less policy developmentThere would be less policy developmentAny formal MSME policies would be less informed by Any formal MSME policies would be less informed by stakeholder views and policystakeholder views and policy--relevant analysisrelevant analysisLevel of debate on MSMEs would be lowerLevel of debate on MSMEs would be lower

‘‘Due to SMEPol, there is an improvement in understanding in Due to SMEPol, there is an improvement in understanding in Egypt about what needs to be done regarding SMEs.Egypt about what needs to be done regarding SMEs.’’

SustainabilitySustainability‘‘ChampionChampion’’ less focused on MSMEs than in the past (broader less focused on MSMEs than in the past (broader set of issues) but need for SME policy still highset of issues) but need for SME policy still highPolicy committees address areas where MoF has Policy committees address areas where MoF has responsibilitiesresponsibilitiesSustainability depends on GoE (esp. SFD) adoption (esp. Sustainability depends on GoE (esp. SFD) adoption (esp. National MSE Strategy)National MSE Strategy)–– Extent to which strategy contains issues and approach Extent to which strategy contains issues and approach

identified by SMEPolidentified by SMEPol–– Strength of systemic processes for continuing Strength of systemic processes for continuing ‘‘goodgood’’ policy policy

development processesdevelopment processes–– Unlikely to continue in resource intensive way without external Unlikely to continue in resource intensive way without external

government fundinggovernment fundingSustainability of policies reduced with project located in GoE Sustainability of policies reduced with project located in GoE entity with limited mandate for MSME developmententity with limited mandate for MSME development

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Contextual LessonsContextual LessonsContext of Reform: policymakers are interested in Context of Reform: policymakers are interested in reform with clear demand for the project (+)reform with clear demand for the project (+)Relevance / Need: for policy development (in the Relevance / Need: for policy development (in the MSME sector) (+)MSME sector) (+)Government entity with mandate / authority to Government entity with mandate / authority to coordinate the MSME sector as crosscoordinate the MSME sector as cross--cutting issue of cutting issue of relevance to range of government entities (relevance to range of government entities (--))Champion(s): powerful official willing to lead Champion(s): powerful official willing to lead MSME policy reform (+)MSME policy reform (+)Country Presence: of donor agency willing to offer Country Presence: of donor agency willing to offer human capital investment (+)human capital investment (+)Research capacity: reasonable level of domestic Research capacity: reasonable level of domestic research capacity (+)research capacity (+)

Specific ProjectSpecific Project--related Lessons related Lessons Explicit policy focus: more likely to result in policy Explicit policy focus: more likely to result in policy change change –– ensure greater policy outputsensure greater policy outputsPartnership approach: working together to develop and Partnership approach: working together to develop and implement the project (project embedded in GoE)implement the project (project embedded in GoE)Risk management: structures to ensure the project Risk management: structures to ensure the project remains on track (PSC, PMC, Cdn Project director, remains on track (PSC, PMC, Cdn Project director, IDRC control of funds, formal input from IDRC control of funds, formal input from CIDA/IDRC)CIDA/IDRC)Flexibility: build towards longFlexibility: build towards long--term goals, while term goals, while responding to shortresponding to short--term opportunitiesterm opportunitiesAdequate resources (training, research), consultative Adequate resources (training, research), consultative approach, ensuring research quality, and being flexibleapproach, ensuring research quality, and being flexible

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Current assessment (2006)Current assessment (2006)

Political environment for MSME policy is mixedPolitical environment for MSME policy is mixed–– High level of political support for MSME policy High level of political support for MSME policy

development, butdevelopment, but……–– Continued lack of coordination and communication Continued lack of coordination and communication

between government agenciesbetween government agencies–– Overlapping and competing policy initiativesOverlapping and competing policy initiatives

Coherent MSME policy requires coordinated and Coherent MSME policy requires coordinated and crosscross--cutting interventions across a range of cutting interventions across a range of ministriesministries

Future direction (2006)Future direction (2006)

Networks, expertise, political capital generated by Networks, expertise, political capital generated by SMEPol provide sound base for developing future SMEPol provide sound base for developing future activitiesactivitiesKey now is implementing policy measuresKey now is implementing policy measuresShould move from shortShould move from short--term localized initiatives term localized initiatives to comprehensive widespread reformto comprehensive widespread reformDonors should scale up implementation activities Donors should scale up implementation activities building on policy suggestions in SME building on policy suggestions in SME Competitiveness strategyCompetitiveness strategy

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Annex 2.3 An Overview of the SMEPol Project

Results Framework

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An Overview of the SMEPol Project Results Framework

SMEPol Lessons Learned Workshop

December 3, 2007

ImpactAn improved and gender-sensitive policy environment for

M/SME Development.

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ImpactAn improved and gender-

sensitive policy

environment for M/SME

Development.

Outcome 1The Ministry of Finance and its partners have supported the

implementation of gender sensitive

policies, legislation and regulations that

facilitate M/SME development

Outcome 2Improved gender-

sensitive knowledge and information

available to stakeholders on M/SME

development issues

Outcome 3More participatory and inclusive measures of

consultation established to refine and implement specific M/SME policies,

regulations, and legislation

Output 1.1Barriers preventing leasing and equity finance providers from reaching SMEs prioritized & removed

Output 1.2: Capacity to implement M/SME procurement allocation system in place

Output 1.3: Support to other policy areas conducive to M/SME development on an opportunity basis

3.2 More effective stakeholder participation and engagement

3.1 Wider base of stakeholders identified

2.3 Results of research & other information on M/SME activities shared with stakeholder groups & the public

2.2 Protocol signed with CAPMAS to provide regular updates of SME activity using key indicators

2.1 Completed research and analysis supporting specific policy areas and implementation mechanisms

Output 1.2Capacity to implement M/SME procurement

allocation system in place

Output 1.3Support to other policy

areas conducive to M/SME development on an opportunity basis

Outcome 1The Ministry of Finance and its partners have supported the implementation of gender sensitive policies, legislation and regulations that facilitate M/SME

development

Output 1.1Barriers preventing leasing

and equity finance providers from reaching SMEs

prioritized and removed

-PM’s approval on Establishment of a Private Equity Fund of Funds-Assessment of the VC Committee functioning

-Assessment of GAGS Training Center -Assessment of the Procurement Committee Functioning

-Assessment of the Policy and Formalization Committees Functioning-National Microfinance Impact Assessment-Training on Microfinance & Leadership-SME taxation-Participation at Microfinance Policy Forum

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Output 2.2 Protocol with CAPMAS to provide an update of SME

activity to stakeholders

Output 2.1 Completed research and

analysis supporting specific policy areas and

implementation mechanisms

Outcome 2Improved gender-sensitive knowledge and information

available to stakeholders on M/SME development issues

Output 2.3Results of research and

other information on MOF M/SME activities

shared with stakeholder groups and the public

-Legal framework update-RIA-Environment -Entrepreneurship Centers-Gender lens-Establishment of a Private Equity Fund-SME Procurement Tracking System-Simplification of bidding documents and processes

-Updated mapping of SME data sources and information-Roundtable on SME data and indicators

-Environment-Financing Opportunities for SMEs Conference-Women Entrepreneurs Forum-Governorates and Sadat Academy-SME Service Guide-Researchers workshop-Website

Output 3.1Identify wider base

of stakeholders

Output 3.2 More effective stakeholder

engagement and participation

Outcome 3More participatory and inclusive measures of consultation established

to refine and implement specific M/SME policies, regulations, and legislation

-Stakeholders Mapping -Consultation workshop on the National MSE Strategy -Workshops on “How to start your business”-Women Entrepreneurship Forum-Focus Groups at Suez, Red Sea & Sadat Academy

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