56
Figure 3.6: SME Loans as a proportion of all Loans in MENA Countries
Source: World Bank and Union of Arab Banks, 2010
Although new initiatives are in place to boost entrepreneurship and SME growth in the country these are
localised activities. The dependency on the oil and gas industry continues to restrict the possible
development of SMEs in that the latter do not form part of the key producer stakeholder group of
businesses involved in the sector. SMEs are of course involved in services, but it is the production and
export of crude oil which has generated significant revenues to date and which are increasingly vulnerable
to fluctuating prices and environmental concerns associated with fossil fuel use. This problem, together
with a reliance on the public sector for employment, compounds the shortage of entrepreneurial capacity.
However, it has to be acknowledged that the availability of such revenue is also contributing to the
development of new initiatives aimed at SMEs in other sectors.
In a relatively poor country such as Yemen SMEs are severely constrained in terms of size, lack of
information, relatively low levels of skills, and poor marketing facilities. There is almost an exclusive
reliance on personal sources – family and/or work in other (often also small) enterprises for the
development of their technical and business skills. There is virtually no formal system of technical or
vocational training. The nature of their operations means that SMEs often locate their premises on a busy
road, in markets, or where many other similar SMEs operate. An SME Baseline Survey carried out in
2000 found that 90% of SMEs sell their output mainly to final consumers, which reflects underdeveloped
marketing systems, strategies or tactics. Despite their share of GDP, very few enterprise sell to export
markets. Problems arising because of the absence of support services are compounded by weak local
chambers of commerce. Very few SMEs belong to Chambers of Commerce or sectoral business
associations.
Despite the fact there is a welcome level of economic diversity in Egypt, SME representation is heavily
skewed at both the geographical level and at the sectoral level. Where they do have a presence, the
smallness of their size and relatively low levels of technological capabilities, as evinced in the nature of
manufacturing, for instance, prevents them from being serious contenders in the international market
place. The recent spurt of growth in ICT might help the country to diversify in the future and enable
Egyptian SMEs to engage in the technologically (ICT) driven global production networks of advanced
manufacturing.
Relatively low levels of skills, inadequate access to finance, and the absence of institutional support
structures are some of the important factors affecting the development and scaling up of alternative
industries. The lack of capacity hinders the capability of SMEs to participate fully in export markets.