Presented at the July 2012 Meeting of the OECD-MENA Initiative's Working Group on SME Policy, Entrepreneurship and Human Capital Development http://www.oecd.org/mena/investment
The Social Fund for Development: Facing Egypt's Socio-Economic Challenges
1. THE SOCIAL FUND FOR
DEVELOPMENT
FACING EGYPT'S SOCIO-ECONOMIC CHALLENGES
PRESENTED TO: MENA OECD INVESTMENT PROGRAMME
PROMOTING HIGH GROWTH ENTERPRISES IN THE MENA REGION
MEETING OF THE WORKING GROUP ON SME POLICY, ENTREPRENEURSHIP AND HUMAN
CAPITAL DEVELOPMENT - ROME JULY 17 2012
GHADA WALY , MANAGING DIRECTOR , SFD, EGYPT
2. ECONOMIC SNAPSHOT*
2012
GDP Growth: -2.2%
Private Sector’s Real Growth Rate: -0.1%
Private Sector Share in Total GDP: 63.4%
Unemployment Rate: 12.4%
Total Unemployed: 3.3 million
Real GDP Per Capita (LE)
Growth in Real GDP per
Capita (%)
Real Productivity per Unit
of Labor (LE)
Growth in Real
Productivity per unit of L
(%)
Increase in L-force (net
over preceding quarter)
New jobs created (net
new employees over
preceding quarter)
Unemployment rate (%)
Q1
11,408
Q2
11,181
(1.8)
(2.2)
9,863
9,730
1.6
2.1
322.0
120.0
267.0
38.0)
11.9
12.4
*Q2, 2012
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The Social Fund for Development
3. MSMEs SNAPSHOT
Total Number : 4.5 million
Share in Private Sector : 99.8%
Distribution of Enterprises by Number of
Workers (CAPMAS 2006)
6%
1%
0%
21%
38%
Share in Employment: 85%
Share of Micro from MSME Sector:
92.5%
Annual Average Growth Rate: 4.2%
Average Number of Employees: 2.3%
34%
1 Worker
2 Workers
3-4 Workers
5-9 Workers
10-49
50+
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The Social Fund for Development
4. CHALLENGES
Institutional
•
Overlapping ministry mandates
•
Lack of coordination.
•
Lack of entrepreneurs‘ Participation.
•
A tendency towards hypercentralization.
•
Weak capacities for policy
development.
•
Lack of comprehensive and timely
statistics and data
Structural
• “Smallness”; “missing middle” of
medium enterprises
• Skewed geographical distribution
• Concentration of activity in few
sectors and sub-sectors
• Low share of MSMEs in
manufacturing value-added
• High levels of informality
• Low representation of women as
MSE owners and employers
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5. MSME CONSTRAINTS
•
Demand-related constraints
•
Input constraints
•
Process and management constraints
•
Labor constraints
•
Legal and regulatory constraints
•
Entrepreneurship constraints
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The Social Fund for Development
6. THE SOCIAL FUND FOR DEVELOPMENT
Micro Enterprise Development
•
Established by the Government
of Egypt in 1991 as a social safety
net mechanism.
•
Focusing on job creation,
community development, and
mandated to support MSEs
Small Enterprise Development
Community Infrastructure Development
Business Services and Human Resources
Support Groups
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The Social Fund for Development
7. MICRO ENTERPRISE DEVELOPMENT
Microfinance: Mechanism
International
Development
Partners
The Social
Fund for
Development
Banks, and
NGOs (MFIs)
Beneficiaries
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The Social Fund for Development
8. MICRO ENTERPRISE DEVELOPMENT
Microfinance: Target Groups & Available Funds
EGP 260.3 million
Women Heads of Households
Funds 2011
(1/11/201130/4/2012)
•
Unemployed Youth
Funds 2012
EGP 0.661 billion
•
Crafts Entrepreneurs
•
Special Needs Entrepreneurs
55,412
•
Small Farmers
# of
Enterprises
(1/11/201130/4/2012)
•
Active Poor
•
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The Social Fund for Development
9. SMALL ENTERPRISE DEVELOPMENT
Credit: Mechanism
International
Development
Partners
The Social
Fund for
Development
Beneficiaries
Banks
Specialized
NGOs
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The Social Fund for Development
10. SMALL ENTERPRISE DEVELOPMENT
Credit: Target Groups & Available Funds
•
Small Businesses (Paid Capital:
50,000-1Million, & from 5-50
workers)
EGP 737.3 million
Funds 2012
EGP 1.24 billion
# of
Enterprises
2012
(1/11/201130/4/2012)
•
Funds 2011
(1/11/201130/4/2012)
9,282
Small business start-ups
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11. COMMUNITY & INFRASTRUCTURE DEVELOPMENT
•
Implementing integrated “Local
Area Development” projects of
“Labor Intensive” characteristics.
•
Assisting in poverty alleviation
and achieving human, economic
and social development
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The Social Fund for Development
12. COMMUNITY & INFRASTRUCTURE DEVELOPMENT
Mechanism
Selection guided
by Egypt’s poverty
map.
SFD
SFD’s Regional
Offices
SFD’s regional
offices will oversee
the implementation of
sub-projects and
provide assistance
as may be required
to sponsoring
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agencies.
Eligible SubProjects
Community
Services
contracted out to
NGOs
Project Proposals,
based on SFD’s
Operations
Manual.
Small-scale
infrastructure
works
contracted out to
private contractors
Sponsoring
Agencies
Central Ministry /Local
government offices/ or
NGO with an
established track record
of successful
intervention and a
demonstrated capacity
to implement the
proposed sub-project
The Social Fund for Development
13. COMMUNITY & INFRASTRUCTURE DEVELOPMENT
•
Examples of community development
activities
•
•
•
illiteracy alleviation,
primary
health
services,
environmental protection,
• health & environmental awareness.
Examples of public works projects:
•
•
•
•
•
Funds 2011
(1/11/201130/4/2012)
EGP 20.5 million
Funds 2012
EGP 115 million
potable water pipes,
sewerage,
covering canals,
River Nile pitching,
rural roads.
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The Social Fund for Development
14. BUSINESS SERVICES AND HUMAN RESOURCES
Services Provided by BDS
•
•
•
•
•
•
•
•
•
•
•
OSS (Registering Business)
Business Incubation
Entrepreneurship Programs
Standards for Labour Skills
Training for Skilled Labour
Technical Support
Business Matchmaking
Marketing
Export
Exhibitions and E-Market
Footwear Leather Center
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15. BUSINESS SERVICES AND HUMAN RESOURCES
Mechanism
Services By
Outsourcing Specialists
SMEs
SFD Clients
Regional
Offices
Services By
SFD Departments
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The Social Fund for Development
16. PRIORITY POLICY DIRECTIONS
1.
Creating a conducive legal and
regulatory business
environment.
2.
Promoting entrepreneurship
culture.
3.
Enhancing BDS for start-ups.
4.
Facilitate access to finance.
The Social Fund for Development
17. MAIN STRATEGIC AREAS FOR INTERVENTION
1- Entrepreneurship &
Culture Awareness
2- Domestic Markets &
Socio-economic
development
3- Investment & Area
Development
4- Business –
Entrepreneurial
Society development
5- Data & Information
Bases and
Networking
6- Access to finance
7- Business Environment
& Regulatory Barriers
8- Employment In Small
Enterprises & SelfEmployment
9- Competitiveness &
Export Promotion
10- Training & Skills
Development
11- Clusters Development &
Modernization
12- Development of Informal
Sector & Business
Services
13- Development Priority
Economic Sectors
14- National Support &
Implementation of
Small Enterprises
Development Law
15- International cooperation
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18. AREAS FOR COOPERATION
Institutional Capacity Building
Identification of Immediate
Financing for the Support of
Employment Generation Projects.
Economic Growth, Employment,
and Human Recourses
Development.
Entrepreneurship Centers and
MSMEs Industrial Clusters.
The Social Fund for Development
19. INSTITUTIONAL CAPACITY BUILDING
Technical support to the decision making, and policy formulation
processes.
Assistance in the creation of a coordination mechanism that ensures
quick response to the MSME needs on the ground
The Social Fund for Development
20. EMPLOYMENT GENERATION PROJECTS
Support the Intensive Public Works Program in order to create jobs in
the short-run for displaced workers, with a special focus on women,
and to be carried out in all Governorates of Egypt and in accordance
with the poverty map.
The Social Fund for Development
21. ECONOMIC GROWTH, EMPLOYMENT,
AND HUMAN RECOURSES DEVELOPMENT
Vocational and technical training programs for workers entering
the labour market to match the required demands of the private
sector.
The Social Fund for Development
22. ENTREPRENEURSHIP CENTERS AND SMES INDUSTRIAL
CLUSTERS
Increasing the number of start-up businesses, by assisting potential
entrepreneurs in the establishment phase through professional
entrepreneurship centers
Developing of the organic industrial clusters in Egypt
Providing an efficient, timely and sustainable supply of feedstock for
large-scale industries.
Increasing exports from intermediate products produced by SMEs.
Encouraging the targeted segment (youth) to join this successful
industrial environment created by the cluster.
The Social Fund for Development