SME Policy Index: The Mediterranean Middle East and North Africa 2014

Implementation of the Small Business Act for Europe

image of SME Policy Index: The Mediterranean Middle East and North Africa 2014

This report assesses the elaboration and implementation of SME policy in eight Middle East and North African economies of the southern Mediterranean shore. The assessment is structured according to the ten policy principles covered in the Small Business Act for Europe (the SBA). One of the main findings is that over the last five years there has been progress in SME policy elaboration and implementation in spite of the political and economic turmoil. However, that progress has been modest, incremental and uneven across economies and dimensions. Political and economic stability, as well as institutional development, had a major impact on policy performance.

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Access to finance for SMEs

SBA principle: Facilitate SME access to finance and develop a legal and business environment supportive to timely payments in commercial transactions

This chapter focuses on policies and instruments to facilitate access to finance for SMEs. It analyses sources of external finance and the legal and regulatory framework that supports their development. Policies to support general financial literacy, which affect both the demand for credit by SMEs and supply of finance by financial institutions, are also considered.

Bank loans are the main source of external finance for SMEs, yet access to bank credit remains limited in the MED region. Furthermore, alternative sources of finance (leasing, factoring, equity capital) are still marginal and the political and economic instability of recent years have further reduced the availability of external finance for the private sector, particularly in transition countries.

Some of the most prominent actions yet to be undertaken in access to finance are strengthen legislation on secured transactions and creditor rights; improving the reliability and access to cadastres and registries of movable assets; strengthening bank competition; fostering the development of alternative financial facilities; and enhancing financial literacy.

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