Presented at the July 2012 Meeting of the OECD-MENA Initiative's Working Group on SME Policy, Entrepreneurship and Human Capital Development http://www.oecd.org/mena/investment

1. NEW ENTREPRENEURS AND HIGH GROWTH
ENTERPRISES IN THE MENA REGION
Presentation by Professor David Storey at the 6th Meeting of
the MENA-OECD Working Group on SME Policy,
Entrepreneurship and Human Capital Development
Rome, 17 July, 2012

2. The importance of high performance enterprises
High performance enterprises are crucial
for direct job creation, competition and
economic growth.
• These firms have been analysed in OECD and
some emerging economies.
• But research on this topic in MENA is very scant.
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3. Making the case for high performance firms
• Two thirds of new firms fail within 5 years
• Of those that survive, a tiny minority make
a major economic contribution to job and
wealth creation
• 4% of new starts create 50% of new jobs
within a decade
• 4 enterprises, started less than 20 years
previously, generated 13% of US GDP
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4. Enterprise creation and performance in MENA compared
with other economies
Comparing MENA with other groups of
countries:
•Nascent
•Infant
•Young
•Mature
4

5. Asia;Hi Inc
Europe
N Amer, Oceania
MENA
Asia: Lo Inc
Latin America
Africa
Asia;Hi Inc
Europe
N Amer, Oceania
MENA
Asia: Lo Inc
Latin America
Africa
Asia;Hi Inc
Europe
N Amer, Oceania
MENA
Asia: Lo Inc
Latin America
Africa
Asia;Hi Inc
Europe
N Amer, Oceania
MENA
Asia: Lo Inc
Latin America
Africa
Number of Firms per 100 Persons 18-64
Years Old
Enterprise count in MENA is generally lower than in other emerging
economies and is skewed towards nascent and mature firms
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
Nascent, Infant, Young, and Mature Firms
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6. Nascent, Infant, Young, and Mature Firms
Asia;Hi Inc
Europe
N Amer, Oceania
MENA
Asia: Lo Inc
Latin America
Asia;Hi Inc
Europe
N Amer, Oceania
MENA
Asia: Lo Inc
Latin America
Asia;Hi Inc
Europe
N Amer, Oceania
MENA
Asia: Lo Inc
Latin America
Asia;Hi Inc
Europe
N Amer, Oceania
MENA
Asia: Lo Inc
Latin America
Proportion of Firms
Share of firms expecting growth in employment and by
stage of business life course
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
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7. The gender gap
• One in three entrepreneurs in MENA
heading a nascent and infant enterprise is
a woman, one less than in other
emerging economies.
• This proportion drops to one in five
when looking at more established
enterprises.
• The root of this gap is in the limited
participation of women in the labour
market.
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8. The case studies
20 high performance young enterprises,
established by highly educated
entrepreneurs in:
Egypt,
Jordan,
Morocco,
Tunisia
UAE.
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9. This study
• One of these enterprises in each country was
identified as a fast grower – but all may be
considered as high potential;
• All these enterprises were (by chance) owned by
graduates ;
• Interviews were conducted in 2011.

10. The businesses I
• All started after 2005 and, in aggregate, currently
have > 1000 workers.
 Six have > 50 workers and 3 >100 workers
 The largest firm currently has 490 full time
employees.
 Five are valued at > 1 million Euros.
 In two years time five firms will have more than
100 full-time workers but 5 will still have less
than 10 workers.
 Total employment is expected to be > 2000.

11. The businesses II
 The businesses are in a huge diversity of
sectors.
 3 are in manufacturing 3 in restaurants and
retailing –others are in construction, personal and
business services.
 Only one was clearly high tech, whereas
about half made no claim whatever to be
high tech.
 However most embraced new technologies in
differing aspects of their business.
 Less than half belong to any form of business
or trade association.

12. The owners
• All are graduates
• 15 males and 5 females
• The oldest founder was 56 years of age and
the youngest was 27
• The vast bulk are in the 30-50 age range
• Apart from the UAE founders, almost all
were born in the country where they
started the business

13. Prior business ownership
• One quarter currently owns another
business, but three quarters do not.
• One quarter owned a business before they
began this one, but three quarters did not.
• Of those that had prior business
ownership experience, only one continues
to trade. The others closed the business
before this business began.

14. Getting started
All founders experienced multiple problems
at start-up and in their early days.
•Virtually two thirds of new firms reported
experiencing problems with access to
finance and the recruitment of skilled
labour.
• Problems over government regulations,
combined with corruption, also had to be
addressed.

15. Today’s problem areas
• Today the firms have taken steps to address
these problems and so they are mentioned by
fewer firms.
• However access to finance continues to be a
problem for a number of firms, together with the
recruitment of skilled labour.
• The competition faced by the firm in its
marketplace is also an important current
problem.

16. The access to finance issue I
• There is a strong and widely-held view that the
financial sector is providing inadequate access to
finance for new and small enterprises.
• Only one firm said that banks went out of their
way to assist enterprises.
• At face-value this might imply that few of these
firms received bank funding, but this is not
the case.

17. The access to finance issue II
IN FACT
• 80% of those firms that sought bank funding
received it.
• Of the one third that never sought bank funding,
most were “discouraged”.
• This is a marketplace where information is
highly imperfect.
• The need for a considerably better dialogue
between the finance and the enterprise
community is clear.

18. The role of government I
• There is less hostility to government than
towards the financial sector.
• Although the nature and intensity of that
hostility varied between countries....there
is no clear consensus on what
governments need to do to help new
enterprises with growth potential.

19. The role of government II
Some (fairly) consistent themes are:
• Reducing regulations and the associated
corruption
• Review the tax system –its fairness and
coverage
• Improve basic reliable public services such
as water, electricity and transport
• Improve access to skilled labour
• Provide a legal structure in which operates
speedily and at low cost

20. Thank you for your attention.
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