the social fund for development: facing egypt's socio-economic challenges
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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
The Social Fund for Development
ECONOMIC SNAPSHOT*
25 July, 2012
2012
Q1 Q2
Real GDP Per Capita (LE) 11,408 11,181
Growth in Real GDP per
Capita (%)
(1.8) (2.2)
Real Productivity per Unit
of Labor (LE)
9,863 9,730
Growth in Real
Productivity per unit of L
(%)
1.6 2.1
Increase in L-force (net
over preceding quarter)
322.0 120.0
New jobs created (net
new employees over
preceding quarter)
267.0 38.0)
Unemployment rate (%) 11.9 12.4
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
*Q2, 2012
The Social Fund for Development
25 July, 2012
MSMEs SNAPSHOT
Total Number : 4.5 million Share in Private Sector : 99.8%
Share in Employment: 85% Share of Micro from MSME Sector:
92.5% Annual Average Growth Rate: 4.2%
Average Number of Employees: 2.3%
38%
34%
21% 6% 1% 0%
1 Worker 2 Workers 3-4 Workers
5-9 Workers 10-49 50+
Distribution of Enterprises by Number of Workers (CAPMAS 2006)
The Social Fund for Development
CHALLENGES
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
25 July, 2012
Institutional
• Overlapping ministry mandates
• Lack of coordination.
• Lack of entrepreneurs‘ Participation.
• A tendency towards hyper-centralization.
• Weak capacities for policy development.
• Lack of comprehensive and timely statistics and data
The Social Fund for Development
MSME CONSTRAINTS
• Demand-related constraints
• Input constraints
• Process and management constraints
• Labor constraints
• Legal and regulatory constraints
• Entrepreneurship constraints
25 July, 2012
The Social Fund for Development
THE SOCIAL FUND FOR 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
25 July, 2012
Small Enterprise Development
Micro Enterprise Development
Community Infrastructure Development
Support Groups
Business Services and Human Resources
The Social Fund for Development
MICRO ENTERPRISE DEVELOPMENT
25 July, 2012
International
Development
Partners
The Social
Fund for
Development
Banks, and
NGOs (MFIs) Beneficiaries
Microfinance: Mechanism
The Social Fund for Development
• Active Poor
• Women Heads of Households
• Unemployed Youth
• Crafts Entrepreneurs
• Special Needs Entrepreneurs
• Small Farmers
25 July, 2012
MICRO ENTERPRISE DEVELOPMENT Microfinance: Target Groups & Available Funds
Funds 2011
(1/11/2011-
30/4/2012)
EGP 260.3 million
Funds 2012 EGP 0.661 billion
# of
Enterprises
(1/11/2011-
30/4/2012)
55,412
The Social Fund for Development
25 July, 2012
SMALL ENTERPRISE DEVELOPMENT Credit: Mechanism
International
Development
Partners
The Social
Fund for
Development Banks
Specialized
NGOs
Beneficiaries
The Social Fund for Development
25 July, 2012
SMALL ENTERPRISE DEVELOPMENT Credit: Target Groups & Available Funds
• Small Businesses (Paid Capital: 50,000-1Million, & from 5-50 workers)
• Small business start-ups
Funds 2011
(1/11/2011-
30/4/2012)
EGP 737.3 million
Funds 2012 EGP 1.24 billion
# of
Enterprises
2012
(1/11/2011-
30/4/2012)
9,282
The Social Fund for Development
COMMUNITY & INFRASTRUCTURE DEVELOPMENT
25 July, 2012
• Implementing integrated “Local Area Development” projects of “Labor Intensive” characteristics.
• Assisting in poverty alleviation and achieving human, economic and social development
The Social Fund for Development
25 July, 2012
SFD
SFD’s Regional
Offices
Selection guided
by Egypt’s poverty
map.
SFD’s regional
offices will oversee
the implementation of
sub-projects and
provide assistance
as may be required
to sponsoring
agencies.
Eligible Sub-
Projects
Sponsoring
Agencies
Project Proposals,
based on SFD’s
Operations
Manual.
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
Small-scale
infrastructure
works
Community
Services
contracted out to
private contractors contracted out to
NGOs
COMMUNITY & INFRASTRUCTURE DEVELOPMENT
Mechanism
The Social Fund for Development
25 July, 2012
• Examples of community development activities
• illiteracy alleviation,
• primary health services, environmental protection,
• health & environmental awareness.
• Examples of public works projects:
• potable water pipes,
• sewerage,
• covering canals,
• River Nile pitching,
• rural roads.
COMMUNITY & INFRASTRUCTURE DEVELOPMENT
Funds 2011
(1/11/2011-
30/4/2012)
EGP 20.5 million
Funds 2012 EGP 115 million
The Social Fund for Development
25 July, 2012
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
BUSINESS SERVICES AND HUMAN RESOURCES
The Social Fund for Development
BUSINESS SERVICES AND HUMAN RESOURCES
25 July, 2012
Mechanism
SMEs
SFD Clients
Regional
Offices
Services By
Outsourcing Specialists
Services By
SFD Departments
The Social Fund for Development
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
MAIN STRATEGIC AREAS FOR INTERVENTION
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
6- Access to finance
7- Business Environment
& Regulatory Barriers
8- Employment In Small
Enterprises & Self-
Employment
9- Competitiveness &
Export Promotion
10- Training & Skills
Development
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
The Social Fund for Development
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
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
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
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
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.
THANK YOU
25 July, 2012
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