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.
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.
Small and Medium Enterprise
Innovation

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.
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.
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.
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.
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.
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.
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. www.uis.unesco.org
10

11.
11
Small and Medium Enterprise
in Libya
Libya Enterprise
Business Center

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.
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.
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.
Libya Enterprise’s strategic goal
Creating favourable conditions
for the development of innovative
enterprises
15

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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
• 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

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.
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.
• 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.
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.
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.
• 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.
Thank
You

35.
35

36.
36

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.
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.
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.
Innovation
• For statistical purposes, the definition of innovation is taken from the
Oslo Manual (OECD/Eurostat 2005). www.oecd.org/sti/oslomanual/
• 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.
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.
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.
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.
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.
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.
Source of Innovation
• Unexpected events.
• New-knowledge concept
• Changes of demographics
• Process needs
46

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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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
• 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
• 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
• 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.
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.
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.
• 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.
• 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.
• 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.
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