80
ii) MENA
SMEs in MENA countries have experienced a rapid growth since 2005: by 2011 the number of start-
ups had increased by 8, compared to 2005 levels. However, there is a “missing middle” (existing
SMEs), which still struggles to obtain financing in order to expand their business. SMEs in MENA
countries are characterised by a large structural diversity. In this regard, three main groups of countries
can be identified: oil importers, oil exporters and countries bucking the trend. The main barrier oil
importer countries face in international trade is low competitiveness, especially related to human
capital and openness to trade. Oil exporter countries rely on oil for fiscal and foreign exchange
revenues, which however also suggests vulnerability to changes in the prices in this commodity
market. Amongst these countries, Saudi Arabia has made improvements in its budgetary institutions,
trying to reduce the connection between oil price and the level of fiscal spending, with the objective of
diversifying the economy, including by fostering SME exporting activity. 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. Yemen has also tried
to diversify its exports through a reform programme. SMEs account for 96% of GDP and constitute
one of the main focus of policy action. In Yemen, SMEs are severely constrained by lack of
information, low levels of skills and poor marketing facilities. In countries that are bucking the trends,
such as Egypt, a leading negotiator in the Doha Round of the WTO, SMEs still account for a minor
share of exports, largely constrained by lack of adequate human capital and ‘soft infrastructures’.
Nevertheless, a diversification trends has been observed over the last years and the recent spurt of
growth in ICT might help Egyptian SMEs to engage in ICT-driven global production networks.
iii) Asia
Asian OIC countries have experienced high growth rates over the last decade, and have had
considerable influence on trade in the region and across the world. In Malaysia and Indonesia, SMEs’
participation in trade has been favoured by specific policies directed towards: reducing red tape, easing
credit flows and offering a range of support services (in training and access to information).
Bangladesh has also made important strides during the last decade. While Malaysia and Indonesia
have sought economic diversification through high levels of investment in technology and skills, along
with FDI, Bangladesh’s exports remain highly concentrated both in terms of products and destinations,
with readymade-garment exports to the EU and the US being the current mainstay. In Bangladesh,
important barriers to SME exports include access to financing and poor infrastructure. These are
common problems across the region, but some differences can be noticed and related to the stage of
export development and markets. In Malaysia, for instance, SME exporters especially perceive certain
procedural and foreign competition barriers, such as obtaining reliable foreign representation,
accessing distribution channels, identifying foreign business opportunities, accessing information on
international markets and facing high levels of competition in key industries. Also, access to
innovation and technology represents a key obstacle for competing effectively in international
markets. Similar barriers are faced by SMEs in Indonesia, which however also rank high such as
access to finance and social problems.
5.3 Policy Recommendations
The wide variety of economies, the structural diversity within specific regions, the nature and scope of
industries in each of the countries challenge assumptions about universal policy development and
instruments. The commonalities that do prevail tend to centre around excessive dependency on one or
two sectors of the economy, namely commodities. The other set of common elements are essentially
negative features of low skills levels, poor infrastructure, uncertain business environment, inadequate
access to finance and other support structures and an excessive reliance on the public sector. Where
there is growth in the new added value industries of services or new technology based sectors, the
Asian OICs dominate the scene. In other regions where attempts have been made to attract or grow