Presented at the Project Steering Committee Meeting, jointly organised by the OECD-MENA Investment Programme and Libya Entreprise. Tripoli, Libya, 9 September 2013

1. SME Development Strategy in Libya
A project funded by the Deauville Partnership MENA Transition Fund
Project Steering Committee meeting
Tripoli, Libya
-9 September 2013

2. Agenda
1
Why Libya needs an SME development strategy
2
What would the strategy and the project achieve?
3
Project structure: 5 components over 3 years
4
Project milestones
5
First steps: diagnostic studies

3. I- Why Libya needs an SME Development Strategy
Enterprise development is key to economic diversification
and growth in non-oil sectors
 Libya faces an uncertain future as oil production falls behind population
growth, resulting in increasing poverty and high unemployment (13.5 % in
2010, with youth unemployment: 25%‒30%)
 Extreme dependence on oil - the oil and gas sector contribute up to:
70% to GDP
90% to
Government
revenues
95% to export
earnings
5% to employment

4. SMEs face a number of challenges to growth:
Lacking and
insufficient
hard
infrastructure
Obstacles to
trade
Limited access
to financial
services and
high cost of
finance
Challenges
facing SMEs
Lack of legal
infrastructure
(property and
intellectual rights)
Regulatory
obstacles and
uncertainties
Lack of
management and
engineering skills
Lack of access to
technology
Although 96% of enterprises in Libya are SMEs, their
contribution to GDP is only 4%

5. The private sector is dominated by trade and other, low-value added
services.
Libyan businesses, by sector (World
Bank, 2006)
16%
Trade/Commerce
14%
Services
Manufacturing
70%
 Agriculture contributes a minimal share of GDP and employment
 Many micro and small distributors and retailers: huge informal sector
 Little to no export and „comparative advantage“ developed

6. Agenda
1
Why Libya needs an SME development strategy
2
What would the strategy and the project achieve?
3
Project structure: 5 components over 3 years
4
Project milestones
5
First steps: diagnostic studies

7. The project contributes to the priorities of the Deauville Partnership
Transition Fund.
Invest in
sustainable growth
Contribute to
employment
Enhance
economic
governance
Increase
competitiveness
• Address the business climate and innovation by setting clear priorities for the
promotion of high-growth enterprises and start-ups.
• Promote foreign direct investment and linkages between SMEs and multi-national
enterprises.
• Promote innovation and sustainability.
• Contribution to employment in particular among the young
• Stimulate enterprises with high growth potential.
• Increase productivity of SMEs in services and light manufacturing by improving and
branding their products, or streamlining the production, or both
• Short term: import substitution. Long term: development of comparative advantage.
• Set clear priorities for the services and public inputs (laws, regulation, and
oversight) that the public sector should provide to SMEs – in particular through
Libya Enterprise.
• Complement Libyan plans to set up Special Economic Zones and incubators
throughout the country.
• Reinforce Libya’s integration into the rest of the region and world.
• Create net exporting sectors outside of hydrocarbons, while value-chain initiatives
would increase productivity and promote integration with multi-national
enterprises operating in the country.

8. The formal objectives of the project.
• The overall objective of the project is:
To contribute to the diversification of the Libyan economy and the
sustainability of growth.
• The project development objective (PDO) is as follows:
To develop and strengthen the overall legal and institutional framework for
promoting entrepreneurship and high-potential SME’s in Libya.

9. Agenda
1
Why Libya needs an SME development strategy
2
What would the strategy and the project achieve?
3
Project structure: 5 components over 3 years
4
Project milestones
5
First steps: diagnostic studies

10. Five components over three years ensure both analysis, strategy
development, and implementation assistance.
Component 1
Diagnostic study
Component 2
SME development strategy
Component 3
Legal framework for enterprise creation and growth
Component 4
Assistance in the implementation
Component 5
Access to finance for SMEs

11. Each component has a clear objective and a number of activities.
1.
2.
3.
4.
5.
Macro-economic study
Business Climate Study
SME Policy assessment
Sector competitiveness study
Knowledge and policy forum
C2
Development and drafting of the actual strategy,
which would be accepted by the Project steering
committee and officially adopted by the
Government of Libya.
1.
2.
3.
4.
Development of horizontal policies
Development of vertical policies
Development of an institutional framework
Preparation of the strategy to the Government of Libya
C3
Adoption of a series of complementary legal acts
aimed to facilitate the implementation of the
objectives in the strategy on the basis of existing
laws and regulations.
1.
2.
3.
Broad consultation of stakeholders and good practices
Gap analysis
Developing complementary legal acts
Achieve
considerable
progress
in
the
implementation of the strategy and target areas
that
the
Government
consider
strategic.
Institutionalise and align initiatives, such as the
Enterprise Development Centres.
1.
2.
3.
4.
5.
Establishment of the institutional structure
Development of regional business centres
Development of a network of incubators
Advisory competitiveness council
Implementation of the legal framework
Complement the planned project of the Islamic
Development Bank to set up an SME development
fund.
1.
Assessment and assistance for the establishment of venture
capital fund for SME projects and start-ups
Assessment and assistance for a debt mechanism for SME
financing
C1
Deepen the common understanding among project
stakeholders as to the priorities for SME
development in Libya.
C4
Activities
C5
Objective
2.

12. Agenda
1
Why Libya needs an SME development strategy
2
What would the strategy and the project achieve?
3
Project structure: 5 components over 3 years
4
Project milestones
5
First steps: diagnostic studies

13. Milestones – Components 1 - 2
Q1 79.13
Q2
1012.13
Q3 13.14
Q4 46.14
Q5 79.14
Q6
1012.14
Q7 13.15
Component 1: Diagnostic study
Macro study
Business climate
study
SME policy
assessment
Sector
competitiveness
study
Knowledge and
policy forum
Component 2: SME development strategy
Horizontal policies
Vertical policies
Institutional
framework
Presentation of the
strategy
Q8 46.15
Q9 79.15
Q10
1012.15
Q11
13.16
Q12
46.16

14. Q1 79.13
Q2
1012.13
Q3 13.14
Q4 46.14
Q5 79.14
Q6
1012.14
Q7 13.15
Q8 46.15
Component 3: Legal framework
Broad consultation of
stakeholders and good
practices
Gap analysis
Complementary legal
acts
Component 4: Assistance in the implementation
Establishment of the
institutional structure
Regional business
centers
Network of incubators
National
competitiveness council
Assistance in the
implementation of a
legal framework
Component 5: Access to finance for SMEs
Venture capital fund for
SME projects and startups
Debt mechanisms for
Q9 79.15
Q10
1012.15
Q11
1-3.16
Q12
4-6.16

15. Q1
Q2
Q3
Q4
Q5
Q6
Q7
Q8
Q9
Q10
Component 1:
Diagnostic study
Component 2:
SME development
strategy
Component 3:
Legal
framework
Component 4:
Assistance in the implementation
Component 5:
Access to finance for SMEs
Q11
Q12

16. Agenda
1
Why Libya needs an SME development strategy
2
What would the strategy and the project achieve?
3
Project structure: 5 components over 3 years
4
Project milestones
5
First steps: diagnostic studies

17. September mission: several activities kicked off.
Project steering
committee meeting
Sector competitiveness
workshop
SME Policy Index
meeting
Training on credit
guarantee schemes
• Launch the SME development strategy in Libya
• Discuss involvement of stakeholders and next steps
• Present the sector competitiveness methodology as a
tool to assess sector diversification and development in
Libya
• Present the SME Policy Index
• Discuss preliminary findings of selected dimensions
• Present how credit guarantee schemes can improve
SMEs access to finance
• Discuss previous success stories and how this could be
applied to Libya

18. December mission: several activities kicked off.
Coordination
meeting
• Launch the SME
development strategy in
Libya
• Discuss involvement of
stakeholders and next steps
SME Policy
Index
meeting
• Present the sector
competitiveness
methodology as a tool to
assess sector diversification
and development in Libya

19. For financial and logistical reasons, we would like to suggest the
following alterations in the inception report (for November)
Activities
Changes proposed
Reason
1.2 and 1.3
Merge the Business Climate
Study and the SME Policy
Index into one study
There is substantial overlap of ground
covered. The Policy Index will be done in
full, complemented with peripheral
aspects from the BCDS, such as business
integrity.
4.2-4.4 and
C2
Reallocate resources from C4
to produce sector
development plans.
Detailed plans about the identified
priority sectors would be an important
complement to the SME strategy, as our
preliminary research shows that the GoL
needs to take concerted steps to
promoting individual projects.
4.5
Reallocate 4.5 resources on
legal assistance to the
strategy development
process.
OECD contribution would be more
helpful, as OECD experts would not be
best placed to navigate suggested
changes through the legislative process.

20. Please feel free to contact us at any time!
Mr. Alexander Böhmer
Mr. Anders Jönsson
Head
MENA-OECD Investment Programme
OECD
alexander.boehmer@oecd.org
Project Co-ordinator
MENA-OECD Investment Programme
OECD
anders.jonsson@oecd.org
Mr. Fares Al Hussami
Mr. Rayann Koudaih
Junior Policy Analyst
MENA-OECD Investment Programme
OECD
fares.alhussami@oecd.org
Consultant
MENA-OECD Investment Programme
OECD
rayann.koudaih@oecd.org