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Entrepreneurial and innovation for SMEs in Libya


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Dr. Dia Eddin Sadek Abuhadra, Advisor to Libya Enterprise, 11 May 2016, Regional conference: Investment and inclusive growth in the midst of crisis, Beirut

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Entrepreneurial and innovation for SMEs in Libya

  1. 1. 1 Entrepreneurial and innovation for SMEs in Libya • Dr. Dia Eddin Sadek Abuhadra • Advisor to Libya Enterprise • Deputy Board of Directors Alryada SME Fund Investment and inclusive growth in the midst of crisis: lessons learned & ways forward 11 May 2016 Phoenicia Hotel Beirut, Lebanon
  2. 2. Small and Medium Enterprise and Innovation Factors hampering innovation activities in Libya Libya Enterprise’s partners in entrepreneurship and innovativeness Small and Medium Enterprises important to Economy Innovation – Entrepreneurial Constraints in the Innovation System Characteristics of innovation in developing countries Small and Medium Enterprise and Innovation Small and Medium Enterprise and Innovation in Libya Outline Conclusion and Recommendation for Innovation
  3. 3. Small and Medium Enterprise Innovation
  4. 4. Employment and job creation - The SME is about 70-95% of the total number of companies in most countries. - Employ between 50-60% of the total employment, between 40-80% in the manufacturing sector and about 80-90% In the construction and contracting sector. - Create the highest percentage of new job opportunities. Small and medium enterprises in most countries are: - • The main operator of labor • The main provider of new jobs • An important contributor to innovation • A major contributor to export *a Export, production, productivity - Contribute between 30-70% of the added value. - Contribute between 15-50% of exports. - Contribute between 25-35% of the industry's exports in the world. Innovation - Between 30-60% of small and medium enterprises can be described innovators, and contribute to the dissemination of technology. - Between 10-20% of small and medium enterprises based on technology. - Works As a pioneer in the field of technology and the development of new markets and sectors of work. The importance of small and medium enterprises to create economic wealth
  5. 5. Technical Social constrains to technological innovation in the world Economic sector: • Access to finance, the most important economic constrain . • These Innovation are cost-effective and it is not enough (universities, research centers) • Lack of information to introduce a new technological innovation to market, • High costs of the equipment which is used in the production or search Social sector : • Poor communication between the institution stakeholders. • The user accepts a new idea in production ( they see it as a threat to their Jobs). • The level of preparedness of the institution staff to do the job and embrace. • User concerns translated generally in the quality of employment contracts applied by economic institutions, . Technical sector : • High risk, both on a commercial, or financial or technical level . • Risks are considered a technical obstacles for the innovation, • A qualified technical workforce is essential,
  6. 6. In todays business Landscape entrepreneurs are required to think of ways to produce new products, service or processes for new purpose to the customers 6
  7. 7. Innovation- Entrepreneurial ? • What is Innovation - Entrepreneurial • What is not Innovation? • Types of innovations. • Source of Innovation • Degree of novelty • Advantages of Innovation • Objectives and effects of innovation • Barriers to innovation • Success of Innovation Proccess • Innovation System • The National Innovation System – industry, universities, and the government – Roles of the three players • Constraints in the National Innovation System • Components for a strategy 7
  8. 8. Creativity to Entrepreneurship 8 entrepreneurs succeed by thinking and doing new things or old things in new ways . Innovation is the ability to apply creative solutions to those problems and opportunities in order to enhance people’s lives or to enrich society Creativity is the ability to develop new ideas and to discover new ways of looking at problems and opportunities. Entrepreneurship = creativity + innovation Invention is the use of creativity to create -something new Invention
  9. 9. WHAT is innovation An innovation is the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organisational method in business practices, workplace organisation or external relations. 9
  10. 10. Characteristics of innovation in developing countries • Size and structure of markets and firms: - SMEs, Large firms (operate sub optimal production scale, higher unit cost, less efficiency) - Competitiveness (based on cheap labour, exploitation of natural resources. Not on efficiency, differentiated products)  leads to fewer R&D and innovation projects. • Instability: - wide difference in potential for innovation  limits long term innovation activity. • Informality: - rely on informal practices  lack of systematic application  not favourable for innovation • Particular economic and innovation environments: - prevalence of state-owned enterprises, para-statal enterprises  lack of competitiveness discourage innovation. Some state-owned enterprises  technological leader - S&T policies in countries with less developed economic system  more impact on innovation than strategise of private enterprises. - Innovation in agriculture sector  high economic impact. • Reduced innovation decision-making powers: - externally controlled or multinational organization. Technology transfer is a fundamental sourceof innovation. • Weak innovation systems: - fewer resources to innovation activities. - Government perform and finance R&D. - low level of resources are devoted to R&D by businesses  reduce innovation potential of enterprises. - weak linkages (Uni/R&D Inst/BE)  challenge capabilities to overcome technology related problems in BE. • Characteristics of innovation: - acquisition of embodied technology (equipment); Incremental changes; organizational changes. 10
  11. 11. 11 Small and Medium Enterprise in Libya Libya Enterprise Business Center
  12. 12. SME - LIBYA • 1960 Agriculture Bank • Demolish of the private sector ( Green book, Laws 87/1975,4/1978) • 1980 Development Bank • 1984 Government – Public sector companies, lack of true economy vision ========= • 1989 Industrial Organization Law • 2000 Production & Transfer fund • 2002 Rural bank ========= • 2006 Employment Fund - First Incubator Committee • 2009 SME development department created under NEDB. • 2010 - Incubator for start-up companies in ICT. – independent SME Authority established under ministry of Economy – Establish different incubators and business centers. – cooperation partnership with Singapore ========= • 2012 Libya Enterprise • 2013 Establish five SME Fund . >>> 12
  13. 13. SME LIBYA • the domestic situation prevents Libyan business of – access to experts, – technology, – know-how and resources. • the exact size of the SME sector is unknown. • While 180,000 private enterprises are officially registered with the Libyan tax authorities, what is more?, • senior Libyan government officials believe- informal sector, – where it is inefficient, risky and difficult to achieve scale. • Most small enterprises have conducted their business outside the formal economy to avoid taxation and other fiscal and regulatory considerations. 13
  14. 14. There are • 5 Incubator( ICT, Women, Agriculture, people in Need, ) • 4 Business centers in University of (Tripoli, Benghazi, Sabah, Misrata ========= • 5 Business Centers under establishment ( Alzawia, Zentan, Toubrek, Derna, and Ajdabia) • Conducting feasibility studies for: Marine Technology Cluster. • Conducting the Entrepreneurship Training Program: - Training Courses for Qualifying of Entrepreneurship and Business Development Instructors. - Training Courses for SME’s Financing. ========= • Conferences ( Entrepreneurship – government ..) • Established a five regional funds Libya Enterprise On-going Tasks 14
  15. 15. Libya Enterprise’s strategic goal Creating favourable conditions for the development of innovative enterprises 15
  16. 16. Libyan SMEs - SWOT Analysis Strengths Weaknesses  Libya’s strategic location.  Young generation.  Educated young people.  Financial resources.  Historical aspects.  Natural resources.  Social stability.  Lack of entrepreneurship culture.  Poor SMEs business environment.  Not enough access for SMEs finance.  Weak education system output for SMEs.  Lack of innovation support system.  Lack of experience.  Weak women contribution.  Poor SME’s infrastructure.  Investment infrastructure >>> Opportunities Threats  Social development (increase of women participation)  Regional development.  International Investment Interests  Instability of legislation & administration  Negative attitude towards entrepreneurship.  Foreign competition. Libyan SME’s SWOT Analysis 16
  17. 17. Challenges faced by small and medium enterprises in Libya Access to finance • Banks are reluctant to lend to these institutions. • The institutions are weak to provide the required documents to get loans. • Limited lending due to lack of good accounting systems. • Investment infrastructure • Weak knowledge of planning and management. • Limited use of modern technologies (Internet and information systems). • Avoiding the risk. • Challenges in procuriment pf raw materials, Business Management The start of the project • Few institutions that provide financing for new projects. • Government actions required to complete the license to build the project. Government bureaucracy • The difficulty of the establishment of SME . • The difficulty in obtaining the information to create projects. • The challenges posed by legislation and laws • Few institutions that can provide financing for new projects. • Government actions required to complete the license to build the project. The challenges of the new century • Rapid technological development • Information revolution • Global communication • Global trade • Global quality • Global pollution reduction R & D and innovation • Lack of spending on R & D and innovation activities. • Labor-intensive and do not use the technology. Labor market • Non-compliance with the requirements of the labor law. • Libyans prefer to work in the public sector rather than the private sector . • Libyan skilled labor. Career Level • The low performance of administrative staff • Weakness in the transfer of expertise and benefit from the experiences of developed countries • The absence of advantages • Lack of awareness Hidden trade Companies registered in the name Libby real operator entrant, competing for small and medium enterprises in the market. Foreign markets • The vulnerability of small and medium enterprises possibilities limit their ability to take advantage of foreign markets. • Lack of support for them to export their products. Access to skilled labor • The difficulty in obtaining skilled labor impair their ability to pay high salaries, as well as the weakness of its ability to provide job security. The competition • Inability to compete with the big companies. • Inability to compete with foreign companies entering the local market.
  18. 18. Factors hampering innovation activities in Libya  Knowledge factors: • Innovation potential (R&D, design, etc.) insufficient • Lack of qualified personnel: Within the enterprise / In the labour market • Lack of information on technology / markets • Deficiencies in the availability of external services • Difficulty in finding co-operation partners for: Product or process development / Marketing partnerships • Organisational rigidities within the enterprise: Attitude of personnel/ managers towards change, Managerial structure of enterprise • Inability to devote staff to innovation activity due to production requirements  Institutional factors: • Lack of infrastructure • Weakness of property rights • Legislation, regulations, standards, taxation • Intellectual Property Rights (IPR)  Cost factors: • Excessive perceived risks • Cost too high • Lack of funds within the enterprise • Lack of finance from sources outside the enterprise: Venture capital / Public sources of funding  Market factors: • Uncertain demand for innovative goods or services • Potential market dominated by established enterprises  Other reasons for not innovating: • No need to innovate due to earlier innovations • No need because of lack of demand for innovations • individual behavior 18
  19. 19. Libya Enterprise’s partners in entrepreneurship and innovativeness development  Social-economic institutions and organisations,  i. e. Consulting Board – discussion forum on present and future actions toward the SMEs and business environment organisations;  Ministries – policies’ implementation as well as expertise on strategic documents and legal acts projects; such as  Ministry of Economy (MoE)  Ministry of Higher Education (MoHE)  Ministry of Industry (MoI)  Ministry of Planning (MoP)  Government Institutions .  National Planning Council (NPC)  Industrial Research centre (IRC)  National Board for Technical and Vocational Education (NBTVE)  Libyan Authority for Research , Science and Technology (LARST)  National Economic Development Board ( NEDB) 19
  20. 20. National Planning Council (NPC) Established a national committee “National Strategy for Science, Technology and Innovation “ The final strategy was submitted to the National Planning Council (NPC) on March 2014 20
  21. 21. Ministry of Industry (MoI) Industrial Research Center (IRC) (IRC) was established in 1953 in order to provide – professional services to industries, governments, institutions and individuals. – It was also aimed at being one of the driving engines of the industrial sector growth in Libya, by introducing technology to the industrial institutions and developing its export capacity. – Providing special industrial consultancies, – supporting new industrial start ups (SME) and promoting capital investment in local industries. – Hosts most major Industry laboratories concern with Industry. – four main Laboratory are accredit by DAP in 2010 for most of their tests. – IPR office for Registration of the industrial patient in Libya and conducting all the procedures for the registration such as patent applications and fees, • MoI established a SME department to deal with SME sector and the innovation system ( but nothing done yet) 21
  22. 22. Ministry of Higher Education (MHE) the related authorities to Innovation 1. The universities Authority 2. Libyan Authority for Research , Science and Technology (LARST) 3. National Board for Technical and Vocational Education (NBTVE) 22
  23. 23. National Board for Technical & Vocational Education (NBTVE) aims to promote and disseminate the culture of entrepreneurship and private sector among the students in the Libyan NBTVE system • the first round started in 2012-2013 Established The Libyan entrepreneurship Award with the British council support – EU funded project 23
  24. 24. In spite of the presence of a 33 Research Center in all scientific fields, the Libyan scientific research until the year 2012 has suffered from – lack of vision and – absence of national policy and strategy for science, technology – absence of national policy and strategy for innovation, – lack of clear objectives and priorities and – lack of indicators. • A weak relationship between scientific research centers, higher education institutions and the business sector. • knowledge production in Libya such as patents, number of publications, articles, scientific, technology licensing fees and royalties very low, and even non-existent 24 Libyan Authority for Research , Science and Technology
  25. 25. Established a national committee for building the Libyan national innovation system, in December 2012 The significant results: (outlines not implemented) 1) Libyan national innovation system frame work, 2) Libyan national innovation policy, 3) national science, technology and innovation strategy 4) Libyan innovation prize 5) Libyan entrepreneurship prize 6) science & technology parks. 7) Libyan university and research centers prize , 8) Libyan indicators of science, technology and innovation toolbox. 25 Libyan Authority for Research , Science and Technology
  26. 26. • Libyan innovation prize started its first round in the academic year 2013-2014 ( BSC and MSC ) 26 Libyan Authority for Research , Science and Technology
  27. 27. 27
  28. 28. Canada-Libya Education and Innovation Centre • a memorandum of understanding (MOU) was signed between the Royal College and the Libyan Ministry of Health • To establish the Canada-Libya Education and Innovation Centre • The goal of this MOU is restoring and modernizing the health education system in Libya through • collaboratively working towards a self-sustainable and independent health education system. • designing needs-based education programs and • curricula for the standardization of knowledge and healthcare delivery, • fast-tracking programs for capacity building, and developing educational standards, processes and competencies into formalized credentialing, licensing and accreditation programs. 28
  29. 29. Conclusion • SME Law without any tax or insurance to small businesses advantages. • Small enterprise sector is the most important sector in responding to the crisis of unemployment in Libya in the next phase, which requires the government support this sector. • The main obstacles to entrepreneurs is obtaining funding • One of the problem facing the SME the low performance of the administrative staff. • There is weakness in the transfer of expertise and the experiences of developed and emerging countries, which have adopted and developed an SME strategic vision. • The government should introduce and offer a wide range of initiatives and incentives for small and medium-sized companies such as increasing access to financing, consulting and advisory services for SME 29
  30. 30. • Establishing National Strategy for SME’s. • Innovation Strategy. • Youth Entrepreneurship Strategy. • Women Entrepreneurship Strategy. • passing of Legislations for implementing the SME’s Programme. • Knowledge & Technology Business Parks • Creation of a National Alliance for SME’s Funding and Technical Support • Launching of SME’s Marketing Campaign • Starting of Building PPP. • Adapting the Curriculum of innovation and Entrepreneurship Education Recommendation for governemnt 30
  31. 31. Invest Motivate Innovate Higher Education High School Grade School 31 GIZ (2009), Libya – Building the Future with Youth: Challenges for Education and Employability recommended
  32. 32. Recommendation - SME • Encourage banks to provide loans and support needed to finance working capital and the development of equipment and capital assets or the expansion of existing projects • Training Small entrepreneurs Staff on different soft skill courses. • Issuing periodic bulletins to shed light on the successful experiences in small projects, and guiding young people to choose how their small businesses • Organizing specialized exhibitions to promote and market products for small projects and dissemination of marketing information necessary to help them market their products inside and outside Libya. • Engaging young people - as much as possible given the leadership and management of small projects, leading to training on management and increase their expertise and raise productivity. • Need to work on early detection of obstacles to the success of small businesses, and to overcome these obstacles and barriers. 32
  33. 33. • Conducting awareness of the importance of innovation activity on all the small and medium enterprise levels. • Activate and encourage cooperation between incubators and SMEs; • The development of financing mechanisms to conduct studies and research; • enhance links between scientific research and industrial sector; • Maximum benefit from the support and accompaniment provided by government programs, and international organizations; • Support from the central government and local and regional administrations, • Encourage Business and financing bodies and banks cooperation in assisting for the availability of basic infrastructure for the establishment of the advanced productivity and industrial projects, and the availability of centers for research and innovative capabilities and apprentice workers at the highest level 33 Recommendation - Innovation
  34. 34. Thank You
  35. 35. 35
  36. 36. 36
  37. 37. Creativity, innovation and entrepreneurs Creativity is thinking new things, and innovation is doing new things  Creativity is the ability to develop new ideas and to discover new ways of looking at problems and opportunities.  Innovation is the ability to apply creative solutions to those problems and opportunities in order to enhance people’s lives or to enrich society Researchers believe that entrepreneurs succeed by thinking and doing new things or old things in new ways . Entrepreneurship = creativity + innovation 37
  38. 38. Creativity, innovation and entrepreneurs  Entrepreneurship is the result of a disciplined, systematic process of applying creativity and innovation to needs and opportunities in the marketplace.  New ideas are much more than just random, disjointed tinkerings with a new gadget.  Entrepreneurs are those who marry their creative ideas with the purposeful action and structure of a business. 38
  39. 39. Innovation Schumpeter (1934) was first to point out the importance of new value created by entrepreneurs. More recently, Carland, Hoy, Boulton and Carland (1984) extended and specified Schumpeter’s idea, saying that entrepreneurs:  introduce new goods  introduce new services  introduce new methods of production  open new markets  open new sources of supply  re-organise industry. 39
  40. 40. Innovation • For statistical purposes, the definition of innovation is taken from the Oslo Manual (OECD/Eurostat 2005). • An innovation is the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations (OECD/Eurostat 2005, para. 146). • A common feature of an innovation is that it must have been implemented. A new or improved product is implemented when it is introduced on the market. New processes, marketing methods or organizational methods are implemented when they are brought into actual use in the firm’s operations (OECD/Eurostat 2005, para. 150). 40
  41. 41. What is Innovation • adoption of these ideas within the organizations ( Zeltman et al. 1973, Damanpour, 19991) and • successful applications of the resulting novelties (Pries and Janzsen 1995) • A process of turning opportunities into new ideas (Drucker, 1993, Tidd et al., 1997), such that they provide value to the organization. • “ ….. finding ways to deliver new or better goods or services.” ( Kinicki and Williams, 2003) 41
  42. 42. What is not Innovation?  Innovation vs. Invention: • Invention is a detailed design or model of a process or product that can be distinguished as noval compared to existing ones. Innovation is the actual use of a nontrivial change and improvement in a process, product or system that is novel to the institution developing the change. • Invention is the conversion of cash into ideas. Innovation is the conversion of ideas into cash. • For invention to become an innovation, the organization needs to be introduced to the invention and invention should add value to the organization in some way. Innovation (Commercialized) Invention (Not commercialized) 42
  43. 43. There are four distinct types of innovation, these are as follows:  Invention - described as the creation of a new product, service or process  Extension - the expansion of a product, service or process  Duplication - defined as replication of an already existing product, service or process  Synthesis - the combination of existing concepts and factors into a new formulation Types of innovation 43
  44. 44. Types of innovation according to its content There are different classification for types of innovation within literature: • Technical-Non technical • Product- Process-Market- Organization-Resource Technical Product Process Resource Non Technical Market Organization 44
  45. 45. Types of innovations • Product innovation: Introduction of change in end product/service or their quality This includes significant improvements in technical specifications, components and materials, incorporated software, user friendliness or other functional characteristics. • Process innovation: Introduction of change in products/services delivery methods. This includes significant changes in techniques, equipment and/or software. • Resource Innovation: Change in sources of raw material supply • Marketing innovation: Opening of a new market involving significant changes in product design or packaging, product placement, product promotion or pricing. • Organisational innovation:Change in characteristics of organization structure in the firm’s business practices, workplace organisation or external relations. 45
  46. 46. Source of Innovation • Unexpected events. • New-knowledge concept • Changes of demographics • Process needs 46
  47. 47. Degree of novelty • Diffusion • New to the firm • New to the market • New to the world • Disruptive innovations » For more information see 47
  48. 48. Innovation Characteristics Strategic Advantages Novelty Offering something no one has done before Complexity Keeping entry barriers high Robustness Improving the basic model by extending its life and reducing overall cost Radical Nature Carrying competitiveness into a new dimension Continuous Incremental Innovation Continuous improvement in performance Advantages of Innovation However, the effect of innovation on competitiveness is dependent on the “nature of the market” and “client characteristics” Tidd et al. (1997) 48
  49. 49. Objectives and effects of innovation Competition, demand and markets • Replace products being phased out • Increase range of goods and services • Develop environment-friendly products • Increase or maintain market share • Enter new markets • Increase visibility or exposure for products • Reduced time to respond to customer needs Workplace organisation • Improve communication and interaction among different business activities • Increase sharing or transferring of knowledge with other organisations • Increase the ability to adapt to different client demands • Develop stronger relationships with customers • Improve working conditions Production and delivery • Improve quality of goods and services • Improve flexibility of production or service provision • Increase capacity of production or service provision • Reduce unit labour costs • Reduce consumption of materials and energy • Reduce product design costs • Achieve industry technical standards • Reduce production lead times • Reduce operating costs for service provision • Increase efficiency or speed of supplying and/or delivering goods or services • Improve IT capabilities Other requirements • Reduce environmental impacts or improve health and safety • Meet regulatory 49
  50. 50. Barriers to innovation • Organization does not encourage innovation • Insufficient sources • Traditional management behavior • Also can be derived from individual behavior – Fear of trying – Fear of making mistakes. – Improper motivation – Fear of change. – Fear of failure – Self-image block 50
  51. 51. Success of Innovation Proccess Fundemantal components of innovation success  Technical Resources  Organizational Capabilities  Good communication environment  Strong customer orientation  Good technical support  Dynamic, open minded, supportive management  Flexible structure  Risk taking ability  Strategic Integration
  52. 52. Innovation Systems • A systems approach is implicit in Innovation Policy and the Oslo Manual • Actors – Governments, education, health and research institutions, business, foreign institutions, … • Activities – R&D, invention, diffusion of technologies and practices, design, HR development, … • Linkages – Contracts, collaborations, co-publication, grants, monitoring, … • Outcomes – short term – Jobs, growth, inclusion, greater equity, … • Impacts – longer term – Wellbeing, culture change, global influence and leverage, … • The activity of innovation is dynamic, complex, non-linear and global 52
  53. 53. The National Innovation System – Business does not stand alone, government and universities are integral part of innovation system – Research and development (R&D) is investment spent both to develop new ideas and science and to transform them into commercial innovations – “The national innovation system essentially consists of three sectors: industry, universities, and the government, with each sector interacting with the others, while at the same time playing its own role 53
  54. 54. Roles of the three players • Universities – undertake basic science and technology research – educate scientists and technologists needed by business and government • Governments – design IPR system for business and universities – commission science research – finance universities, subsidise business R&D • Business – conduct R&D to develop commercial products – launch innovative products – start up new firms to exploit new science 54
  55. 55. Framework conditions - 1 • Longer term – Education • results of reform take decades • Long term commitment from successive governments – Culture • May influence research, industrial products, or trade • Willingness to take risk and be entrepreneurs – Health • Sick people are not as productive as healthy people – Wealth distribution • People with resources make markets and have a stake in the society 55
  56. 56. Framework conditions - 2 • Shorter term – Business • Regulation and goals, venture capital markets, spin-offs, … – Trade • Regulation and goals • What about knowledge transfer and capacity building? – Intellectual property • Strong IP? What about open innovation? – Physical infrastructure • Roads, ports, transportation and telecommunications systems – Social infrastructure • Openness to collaboration, social networks, trust, mobility, collective problem solving… 56
  57. 57. Components for a strategy - 1 • Innovation activities – Technology and practices – Open, user and demand-driven innovation – Supply-driven innovation • International engagement – Big science – International co-operation and development – Global challenges • Public Sector?  Next 57 • Markets – Brand recognition – Lead market – Competitive engagement – Financial services • People – Labour force • Both highly skilled and not – Demographics and demand for innovation – Migration
  58. 58. Components for a strategy - 2 • Public Institutions – Infrastructure – Procurement – Priority setting – Standard setting – Public finance • Development banks, trade support, … – Government departments • Including granting councils • Knowledge and technology transfer – Education • All levels • Training and life-long learning • Research – HQP production – Health • Nutrition • Wellness • Disease control – Monitoring and evaluation • Policy learning and change 58
  59. 59. First period 1969 - 1984 • The majority of private sector companies are very small in size, each of which employ less than 20 workers. • Private sector development stopped after Gaddafi regime on power as a society governed by a socialist state, • Law No. 87 of 1975, "on the organization of operations by commercial entities," from commercial activities, is limited to be the only state-owned companies. • In 1978, Gaddafi's second volume of "The Green Book" which declared opposition of business practiced by the private sector activities, wages, rents, are all considered forms of exploitation issued. • After the issuance of this book, it has been approved laws aimed at the abolition of the ownership of the private sector in the field of industry, • Law No. 4 of 1978 determine the property, and by which confiscation of all private property with the exception of private property for home and one for the purposes of personal use, or to a piece of land to build a house for private use. • Law issued in 1983 invalidated trade between individuals, but led instead to systematize trade through popular markets. • Law No. 4 of 1984 also canceled all kinds of professional activities and special craft activities. • These measures mainly have led to the closure of any formal activity continued for the private sector in the economy. With control of the public sector on economic activity, all Libyans were forced to move to work in the public sector
  60. 60. Second period 1984 - 2004 • There were not any organization or party honorable and follow- up activities, which was founded in that period (small and medium enterprises) and that is why most activities did not success for several reasons, including :- • Executive authority interested in the public sector companies, particularly during the period of the siege. • Lack of true economic visibility study for the majority of the projects that have been established. • Flooding the market with one product, causing the failure of such projects. • Increased costs for the Machinery, equipment and production supplies and spare parts and the difficulty of obtaining them sometimes.
  61. 61. Second period 1984 - 2004 • Administrative and financial problems:- • The multiplicity of approvals required for the establishment of activity and difficult to obtain. • The absence of guidance programs for young people to define the advantages of small and medium enterprises. • The lack of a sponsor that would follow up and evaluate the continuous processing administrative, financial and technical errors. • Failure to provide sufficient encouragement, such as exemption from taxes and customs duties and the reduction of interest on loans and banking facilities. • The difficulty in obtaining loans and occasional failure adequacy. • Technical difficulties:- • The failure of the training centers and research institutions of its training and upgrading the skills of workers of the SME • Failure to instruct the initiators to select the best projects and the technology used. • The difficulty of marketing production due to limited human and financial potential. • Despite these difficulties, however it founded successful projects in various fields (industrial - agricultural - animal and marine - different), services, and wealth.
  62. 62. Third Period 2004- 2010 • 2007 a study was conducted "Preliminary vision of the national workforce employment " • Formed a committee of experts and specialists in the field of small and medium enterprises and the Committee concluded that the duties and responsibilities of the public sectors in terms of simplifying the procedures for obtaining loans and reduced the fees, taxes and to conduct training courses for the entrepreneurs and the SME employees in addition to providing technical and financial support. • Ministry of Manpower, Training and Employment issued a decree No. (50) for the year 2005 on the definition of economic activity Included (97) productive activity and (38) a service activity and (24) Activity craftsman • seminar for small and medium-sized enterprises in cooperation with the ILO and with the participation of the Arab Labor Organization during the period from 25-27/ 7/2005 • Engage in Arab Project (Start your own good), supervised by the Arab Labor Organization. • Participation in seminars and workshops organized by the regional and international organizations on small and medium enterprises. • Establish a business incubators • 2009 Small and Medium Enterprise Development Department in The National Council for Economic Development NEDB • 2010 first incubator for start-up companies in the information and communications technology. • 2010Small and Medium Enterprises Authority was established under the Ministry of Economy - National Program for projects
  63. 63. Fourth period 2011 • 2012 Establish "Libya Enterprise" under the supervision of the Ministry of Economy, currently runs 13 centers businessman and 8 Business Incubators (4 works - 4 has not started yet). • Decree 519 in 09/03/2013 - converting Libya Enterprise to five regional investment Fund • There is no formal strategy for the development of small and medium enterprises • the "Libya project" Supervised by boards of directors chaired by Second Deputy Prime Minister and including ministers of Economy Planning, Labour, Industry, and Finance. • 2014 establish small and medium enterprises Policy Unit in The Ministry of Economy. Its mission to create policies and monitoring and international relations.
  64. 64. The GIZ report recommended 1/2 • Introduce entrepreneurship education and start-up training in all educational institutions, including subjects related to market analysis, management skills, and business plan writing; • Develop practical entrepreneurial subjects as electives for secondary school and vocational centre students; • Introduce entrepreneurship modules in bachelor and masters degree programmes at universities; • Improve linkages between the education sector and the labour market; • Improve the practical business and labour market orientation of teachers, instructors and professors (through training, professional development courses, and company internships);64
  65. 65. The GIZ report recommended 2/2 • Modernise and transform the education system to include the development of “methodological competencies” (e.g. foreign languages, computer sciences, administrative and communication skills, data interpretation), and “entrepreneurial competencies”, such as problem-solving, analytical thinking, proactivity, innovative thinking, performance and achievement orientation; • Improve co-operation between private sector companies and educational institutions through regular dialogue, joint business/education projects, internships programmes for students and graduates, and teaming with entrepreneurs to assist in teaching practical businesses processes; • Include private sector representation in the design and implementation of reforms in the vocational training system to ensure a future orientation towards the needs of the private and SME sectors. 65
  66. 66. Some Related References for Innovation: Marasin, R., Dean, J. and Dawood, N. (2007) “APPLICATION OF VISUALISATION TOOLS IN PROJECT MANAGEMENT IN CONSTRUCTION INDUSTRY: INNOVATION AND CHALLENGES” Computing in Civil Engineering, 12(261): 91-102. Bossink, B.A.G. (2004) “Managing Drivers of Innovation in Construction Networks” JOURNAL OF CONSTRUCTION ENGINEERING AND MANAGEMENT, 130(3): 337–345. Manley, K., McFallan, S. and Kajewski, S. (2009) “Relationship between Construction Firm Strategies and Innovation Outcomes” JOURNAL OF CONSTRUCTION ENGINEERING AND MANAGEMENT, 135(8): 764–771. Manley, K. (2005) “BRITE Innovation Survey” Icon.Net Pty Ltd. Dikmen, I., Birgonul, M.T. and Artuk, U. S., (2005), “Integrated framework to investigate value innovations”, ASCE Journal of Management in Engineering, 21(2005): 81-90. Dikmen, I., Birgonul M. T. and Artuk U. S., (2003), “Innovation in construction: Evidence from Turkey”, Proceedings of the Joint Int. Symposium of CIB Working Commissions W55,W65 and W107, 2(2003): 396-407.
  67. 67. 67 • Acs, Z., and D. Audretsch (1993) Small Firms and Entrepreneurship: An East–West Perspective. Cambridge: Cambridge University Press. • Acs, Z., and D. Storey (2004) ‘Introduction: Entrepreneurship and Economic Development’, Regional Studies, 38 (8): 871–7. • Amsden, A. H. (2001) The Rise of ‘the Rest’: Challenges to the West from Late- Industrialising Economies. New York: Oxford University Press. • Aubert, J.-E. (2004) ‘Promoting Innovation in Developing Countries: A Conceptual Framework’, Working Paper. Washington, DC: World Bank Institute. • Fagerberg, J. (2005) ‘Innovation: A Guide to the Literature’. In J. Fagerberg, D. C. • Mowery, and R. R. Nelson (eds), The Oxford Handbook of Innovation. Oxford: Oxford University Press. • Fagerberg, J., D. C. Mowery, and R. R. Nelson (eds) (2005) The Oxford Handbook of Innovation. Oxford: Oxford University Press. • Goedhuys, M., N. Janz, P. Mohnen, and J. Mairesse (2008) ‘Micro Evidence on Innovation and Development (MEIDE): An Introduction’, European Journal of Development Research, 20: 167–71. • Goedhuys, M., and L. Sleuwaegen (2010) ‘High-growth Entrepreneurial Firms in Africa: A Quantile Regression Approach’, Small Business Economics Journal, 34: 31–51. • Gries, T., and W. A. Naudé (2010) ‘Entrepreneurship and Structural Economic Transformation’,Small Business Economics Journal, 34 (1): 13–29. • Lazonick, W. (2008) ‘Entrepreneurial Ventures and the Developmental State: Lessons from the Advanced Economies’, Discussion Paper 2008/01. UNU-WIDER: Helsinki References
  68. 68. 68 • Li, D. D., J. Feng, and H. Jiang (2006) ‘Institutional Entrepreneurs’, American Economic Review, 96 (2): 358–62. • Mytelka, L. K. (ed.) (1999) Competition, Innovation and Competitiveness in Developing Countries. Paris: OECD. • Naudé, W. A. (2010a) ‘Entrepreneurship, Developing Countries and Development Economics: New Approaches and Insights’, Small Business Economics Journal, 34 (1): 1–12. • Naudé, W. A. (2010c) ‘Entrepreneurship, Global Development, and the Policy Challenge’, Harvard College Economic Review, 4 (2), forthcoming. • Nelson, R. (ed.) (1993). National Innovation Systems. A Comparative Analysis. Oxford: Oxford University Press. • OECD/EUROSTAT (2005) Oslo Manual, Guidelines for Collecting and Interpreting Innovation Data, 3rd edn. Paris: OECD. • Rooks, G., A. Szirmai, and A. Sserwanga (2010) ‘The Interplay of Human and Social Capital in Entrepreneurship in Developing Countries. The Case of Uganda’. In W. A. Naudé (ed.), Entrepreneurship and Economic Development. Basingstoke: Palgrave Macmillan. • UNU-INTECH (2005) ‘Measuring Innovation: Making Innovation Surveys work for Developing Countries’, Technology Policy Brief, 4 (1). Maastricht: UNU-MERIT. • Van Dijk, M. P., and H. Sandee (2002) ‘Innovation and Small Enterprise Developmentin Developing Countries’. InM. P. van Dijk and H. Sandee (eds), Innovation and Small Enterprises in the Third World. Cheltenham: Edward Elgar. References
  69. 69. 69 • Andersson, Thomas, Abdelkader Djeflat, and Sara Johansson de Silva. 2006. "The innovation system and related policy issues in Morocco." Research report, International Organisation for Knowledge Economy and Enterprise Development (IKED), Malmö, Sweden. • Aubert, Jean-Eric. 2005. "Promoting Innovation in Developing Countries: A Conceptual Framework." Policy Research Working Paper 3534, World Bank, Washington, DC. • Balzat, M. and Hanusch, H. (2004), "Recent trends in the research on national innovation systems", Journal of Evolutionary Economics, Vol. 14, pp. 197-210. • Eltaweel, M. (2011), "Financing of small businesses in the Libyan economic environment", Unpublished PhD thesis, University of Gloucestershire, UK. • Intarakamnerd, P., Chairatana, P. and Tangchitiboon, T. (2002), "National innovation system in less successful developing countries: The case of Thailand", Research Policy, Vol. 31, pp. 1445-1457. • Porter, M. and Yergin, D. (2006), "National economic strategy, an assessment of the competitiveness of Libya", The Monitor Group Report, Cambridge Energy Research Associates (CERA), UK. References
  70. 70. Small and Medium Enterprise in Libya • The focus of the Libyan government ( after 2011) has been on securing the country and not so much on creating an encouraging business environment, – which must be the next main concern • The improvement of the private sector has been more problematic than anticipated, that is because of the – underdeveloped financial system, – insufficient infrastructure, – ineffective public administration and – the lack of supply of educated employees and workers. – One of the main problems faced by private companies is the uncertainty created by different and shifting interpretations of the law, in particular • the legislation on taxation, and • Other related Law investment law, PR, IPR… – All of these circumstances keep out foreign ventures 70
  71. 71. Libya Enterprise • launched in 2012 to – promote entrepreneurial culture and – provides business support for start-ups in Libya. • Libya’s enterprise mission is to – develop entrepreneurship and – innovation culture throughout Libya, and – creating a supportive environment for small and medium enterprises. • Libya Enterprise currently runs 13 entrepreneur centers and 8 business Incubators. – Only 4 business incubator are working at the moment and the others some of them in hold ( 4) and the rest did not starts) – Incubators and Enterprise centers are the central component of Libya Enterprise due to their role in decreasing the failure rate of start-ups in their early stages and providing business support services. 71
  72. 72. • Well-equipped laboratories, • extensive libraries, • powerful computer systems, • technology expertise, • a well-educated workforce and experts from involved faculties, • access to external funding sources, • community/local government economic development agencies, • other entrepreneurial support organizations For entrepreneurs from outside of the University 72
  73. 73. • Part-time job opportunities, • real-world examples for case studies or class projects (like testing laboratories), • opportunities to apply knowledge to real business problems and • an introduction to entrepreneurship early in their professional careers For students as would-be entrepreneurs: 73
  74. 74. • Opportunities to strengthen ties between the educational institution and the local business community, • a system for bringing technological advances and products to the market, • an opportunity to fulfil and enhance the research academic missions For University staff: 74
  75. 75. LESSONS FOR LIBYA The Libyan Government has to 1. Effectiveness and commitment of the top management in the Libyan government to support the SMEs is the first factor on the road to success in the development of SMEs. 2. The successful public and private efforts to support SMEs is to establishing an effective central committee engaged in policy making, planning, management and coordination. 3. Strengthen the business infrastructure and enhance the capacities and capabilities of SMEs to progress locally and internationally and become more competitive. 4. offer wide range of initiatives and incentives for SMEs such as increasing access to financing, advisory and consultancy, access to information and ICT adoption, infrastructure, access to markets, training in management and planning, networking and business linkages. 5. should deliver incentives through a few non profit agencies, and disassemble the bureaucratic procedures that may cause ineffectiveness in government initiatives and projects. 6. should instill in the SMEs not to rely on government support only, but they should seek to find their own pathway of growth by relying on strategies which allow them to access new markets, expand their customer base and increase their incomes. 7. should establish consultancy centers to provide expert services to SMEs, and engage more experts in different areas. Also the government should ensure that SMEs are able to access these incentives in an effective way. 8. should support the entrepreneurship philosophy and encourage SMEs to find more opportunities that increase their chance to growth locally and globally. 75