the social fund for development: facing egypt's socio-economic challenges

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


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)


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


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

• 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


MICRO ENTERPRISE DEVELOPMENT

25 July, 2012

International

Development

Partners

The Social

Fund for

Development

Banks, and

NGOs (MFIs) Beneficiaries

Microfinance: Mechanism


• 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


25 July, 2012

SMALL ENTERPRISE DEVELOPMENT Credit: Mechanism

International

Development

Partners

The Social

Fund for

Development Banks

Specialized

NGOs

Beneficiaries


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


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


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


Mechanism


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.


Funds 2011

(1/11/2011-

30/4/2012)

EGP 20.5 million

Funds 2012 EGP 115 million


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


BUSINESS SERVICES AND HUMAN RESOURCES

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Mechanism

SMEs

SFD Clients

Regional

Offices

Services By

Outsourcing Specialists

Services By

SFD Departments


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.


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


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.


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


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.


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.


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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