Paris, France, April 14, 2003—
Today’s first donor board meeting of North Africa Enterprise Development (NAED) marked the formal launch of IFC’s newest multidonor small and medium enterprise facility. NAED will offer an integrated package of technical assistance and capacity-building services to support small and medium business growth in Morocco, Algeria, and Egypt.
In September 2002, IFC announced its partnership with the Swiss government to form NAED, with the parties contributing $5 million and $3.5 million respectively. Since then additional funding from France ($3 million), Italy ($1.5 million), and Belgium ($500,000) has generated an initial total of some $13.5 in donor support for the new facility, which will be managed by the SME Department. NAED is now beginning formal operations, leveraging IFC’s investment program in the region and coordinating closely with the World Bank.
SMEs comprise more than 90 percent of the firms in the private sector of Morocco, Egypt, and Algeria. But their performance is severely limited by inadequate financing; few affordable sources of training, consulting and other needed services; and a difficult business environment whose complex and inefficient regulatory framework raises the costs of doing business. Donors at the Paris meeting expressed pleasure with the initial start-up phase and endorsed NAED’s new operational strategy, which aims to ease some of these difficulties with several specific goals:
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Improving SME Access to Finance
: Helping local banks improve the quality and quantity of their SME portfolio by developing their information and credit management systems and new financial products and by providing targeted training in SME finance.
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Improving Access to Business Development Services:
Assisting training institutions and consulting firms in introducing new performance-enhancing commercial products and services for SMEs. NAED will also help business associations in Morocco and Algeria develop new member services (information about business opportunities, information technology services, and others) that will increase revenue generation.
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Supply Chain Management:
Forging new links between large firms and SMEs, both by training SMEs to meet the higher quality standards of large firms to qualify for contracts and by working with large firms to create more business opportunities for potential SME suppliers.
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Improving the Business Enabling Environment:
Advising and assisting the government on SME-related policies, reducing costs of licensing and registering a businesses, easing regulatory burdens, and facilitating public-private dialogue.
NAED has offices in Cairo (the coordinating office), Algiers, and Rabat and a full-time staff of twenty five. Current projects include:
Morocco—Microfinance:
NAED will help Al Amana, a leading Moroccan microfinance institution, develop new financial products , namely the individual loan product, aimed at financing microentrepreneurs.
Algeria—Business Associations:
After completing a demand survey of 23 business associations in Algeria, NAED has begun helping a women entrepreneurs group improve its member services and gain stronger policy reform advocacy skills.
Egypt—Business Development Services:
Sensing strong demand from private Egyptian training institutes for the “teach-yourself” management and marketing workbooks IFC has developed for SMEs in other regions, NAED has partnered with a leading e-learning company to commercialize seven marketing training modules for SME managers, aiming to reach 1,000 participants per year.
“NAED is the eighth SME facility IFC has created with our donor partners, and we are looking forward to bringing the lessons of our experience to this region,” said SME Department Manager Thomas Davenport, who chaired the meeting on behalf of IFC. “By working closely with many of the local private sector, governments, the World Bank Group, and some of the world’s leading small business development organizations, we hope to add some important missing ingredients that will help more local SMEs reach their potential.”
As part of the World Bank mission to reduce poverty, NAED’s core mandate is to improve the lives of people in North Africa by creating higher incomes, jobs, and opportunities through a flourishing SME sector. Like other IFC-managed facilities around the world, it will have an underlying requirement of generating solid, measurable results that do not rely on continued external subsidies. NAED has a commercial orientation, tailoring its products in response to local demand and seeking to recover costs by charging appropriate fees to clients.
IFC’s mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. Since its founding in 1956, IFC has committed more than $34 billion for its own account and arranged $21 billion in syndications for 2,825 companies in 140 developing countries. IFC’s committed portfolio at the end of FY02 was $15.1 billion, with an additional $6.5 billion held for participants in loan syndications. For more information on IFC, please visit www.ifc.org.