CHAPTER 5. CONCLUSIONS AND POLICY CONSIDERATIONS

5.1 Intra-OIC trade and SMEs

Over the last years, the trade of OIC countries has continued to grow and intra-OIC trade has been

expanding, notwithstanding the slowdown in global trade activity. Indeed, the positive trend in intra-

OIC trade that had started at the beginning of the last decade continued throughout the global crisis,

also, at least in part, as a result of some reorientation of trade induced by the crisis itself. At the same

time, growing local markets have been playing an important role in favouring commercial integration.

For instance, in the case of Sub-Saharan Africa, exports to advanced economies had increased over

2010- 2011 but decreased in 2012. This decrease was, however, compensated by a 35% an increase in

exports to emerging and developing economies, predominantly to Asia (41%) and to a lesser extent to

the MENA countries (39%) and Europe (17%).

The growth in intra-OIC trade is one relevant dimension of the overall increased role of OIC Member

Countries in world trade. Between 2010 and 2011, the trade of OIC member countries increased by

23.5%, from USD 3.2 trillion to USD 3.9 trillion. This increase is related to both expanded exports and

import demand in OIC countries, although the overall balance has improved. In fact, over 2010-2011,

export increased by 27.9% whereas import grew by 18.7%. Over the last decade export grew at a

significant rate in all the countries analysed for this report. In the case of Uganda and Egypt, for

instance, export increased by nearly five times over 2000-2010.

Governments in OIC Member States have been actively promoting trade by home businesses and,

increasingly, participation by SMEs to international activity. The proportion of intra-regional trade to

GDP has been rising sharply in the past decade, due to improved regional infrastructure, effective

implementation of free trade agreements, lesser use of origin rules and reduced non-tariff barriers.

However, with respect to international trade, SMEs still represent a minor share of exports and face

barriers to entry into international markets, which reduce the capacity of OIC economies to reap the

full benefits from globalisation. Trade Promotion Organisations represent an instrument of choice to

support SME export in the countries surveyed for this study, although TPOs’ role, responsibilities and

tools may vary significantly across countries, reflecting specific institutional frameworks, economic

conditions and SME development challenges. It is however to be noticed that, across countries at

different stages of development, the absence of detailed levels of information on SMEs is a major

barrier to their place and growth in terms of business in general and exports in particular.

5.2 Barriers to SME development and exports

i) Sub-Saharan Africa

SMEs account for 90% all private sector business in Sub-Saharan countries, but they do not appear to

be key drivers of employment dynamics, nor to participate significantly in international trade. On

average, SSA countries score poorly in terms of business enabling environment. Many of the

constraints that SMEs face in their domestic activities have a direct bearing on their capacity to be

successful exporters. These barriers are mostly external, outside the control of SMEs, and include

tariff rate quotas and export taxes, as well as domestic price regulations and infrastructure deficiencies.

Electricity and access to finance are the tow highest ranked adverse factors affecting businesses in

SSA. Uncertainty in business environment is often tied up with labour marker rigidities and the

absence of skilled labour, outdated technologies, corruption and high business operating costs.