Limited access to financing and an underdeveloped regulatory, institutional and policy framework are the main challenges facing small to medium enterprises in the Arab world, industry experts said Thursday at a conference organized in Beirut by the Union of Arab Banks, according to Daily Star website.
SMEs represent between 80 percent and 90 percent of businesses in the MENA region and account for more than 30 percent of all private sector employment, but the average share of MENA bank portfolios made up of SME lending is only 7.6 percent, Arab bankers and economists said.
Limited access to lending puts the total financing gap for SMEs in the MENA region at an estimated $160 billion to $180 billion, said Lebanon’s Central Bank First Deputy Governor Raed Charafeddine, citing a study by the International Finance Corporation, the private arm of the World Bank.
According to the IFC report, nearly 63 percent of SMEs in the MENA region do not have access to finance while a recent survey by the World Bank and the Union of Arab Banks of over 130 MENA banks shows that only 8 percent of lending goes to SMEs across MENA, and 2 percent in GCC countries.
“SMEs contribute up to 33 percent of GDP in Saudi Arabia, 50 percent in Jordan and 80 percent in Egypt,” Charafeddine said at the conference, “Small and Medium Enterprises: The road to Economic Development and Social Justice.”
In Lebanon, where SMEs have better access to financing with a share of 16 percent of banks’ loan portfolios, they create more than 80 percent of jobs, head of the union of Arab banks Joseph Torbey said.
SMEs in Lebanon number around 67,000 businesses, Economy Minister Alain Hakim said, adding that the ministry was working on establishing a comprehensive framework to support existing businesses and encourage the establishment of new ones.
However, beyond the establishment of domestic regulatory frameworks, the creation of a favorable environment for SMEs requires deeper integration between Arab economies, Hakim said.
SMEs represent between 80 percent and 90 percent of businesses in the MENA region and account for more than 30 percent of all private sector employment, but the average share of MENA bank portfolios made up of SME lending is only 7.6 percent, Arab bankers and economists said.
Limited access to lending puts the total financing gap for SMEs in the MENA region at an estimated $160 billion to $180 billion, said Lebanon’s Central Bank First Deputy Governor Raed Charafeddine, citing a study by the International Finance Corporation, the private arm of the World Bank.
According to the IFC report, nearly 63 percent of SMEs in the MENA region do not have access to finance while a recent survey by the World Bank and the Union of Arab Banks of over 130 MENA banks shows that only 8 percent of lending goes to SMEs across MENA, and 2 percent in GCC countries.
“SMEs contribute up to 33 percent of GDP in Saudi Arabia, 50 percent in Jordan and 80 percent in Egypt,” Charafeddine said at the conference, “Small and Medium Enterprises: The road to Economic Development and Social Justice.”
In Lebanon, where SMEs have better access to financing with a share of 16 percent of banks’ loan portfolios, they create more than 80 percent of jobs, head of the union of Arab banks Joseph Torbey said.
SMEs in Lebanon number around 67,000 businesses, Economy Minister Alain Hakim said, adding that the ministry was working on establishing a comprehensive framework to support existing businesses and encourage the establishment of new ones.
However, beyond the establishment of domestic regulatory frameworks, the creation of a favorable environment for SMEs requires deeper integration between Arab economies, Hakim said.
Source:
Mubasher
