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French Version

Bi-lateral MEDA cooperation for business

The private sector in the Mediterranean Partners is undergoing dramatic change due to globalisation, and to preparations for the Euro-Mediterranean free trade area to be established by 2010. In most Mediterranean Partners businesses in their vast majority are small or very small, and they need technical assistance and training to adapt to a new environment.

EU co-operation in favour of enterprises in the Mediterranean, so called Private Sector Development Programmes (PSDP), started with the Business Centres. There are currently 5 Business Centres in the region that provide direct support to companies and business associations. They have been established since 1995 in Egypt, Jordan, Morocco, Syria, and Tunisia for a total budget of around 100 million euros.

Two similar projects have recently started, one in Algeria (57 million euros) which is called "Support to development of SMEs', and one in Lebanon (11 million euros) under the name of "Industrial Modernisation Programme'. A further three Business Centres will soon be opened in Turkey.

Industrial Modernisation Programmes (IMPs) form the next stage of co-operation with the private sector. They are broader in scope. Their aim is to help industrial firms modernise, and beyond that to contribute to improving their legal and institutional environment, building on what the Business Centres have achieved.
IMPs have been set up in Egypt (250 million) and in Jordan (40 million) and a further one is under preparation in Tunisia.

Ingrid Schwaiger and Simona Mari are both Task Managers for Private Sector Development Projects within the Directorate for the Southern Mediterranean and Near and Middle East of the European Commission's EuropeAid Cooperation Office.
Euromed Special Feature asked them a few questions about co-operation with the private sector in the Mediterranean Partners.
___________________________________________________

Euromed Special Feature :
Co-operation with the private sectors in the Mediterranean partners broadly follows a common pattern (Business Centres, Industrial Modernisation). Is it something systematic ?


Simona Mari:
The pattern can be the same in all Partners, but it also depends on the level of development in each country, and on what is programmed in National Indicative Programmes. For example the 1st IMP was signed and identified in Egypt, and this was related to a national policy. The Egyptian government in 1997 wished to have EU support for their own industrial policy, and in fact the IMP (the 1st in the region) was decided by the European Commission in 1998. In other countries such as Algeria there is a programme to support SMEs, which is not a real IMP, but is more like a Business Centre. The idea is that if a Partner wants to give a follow-up to the Business Centre concept, the Commission does not object to have a bigger project, such as an IMP. But there is no standard. We do not want to impose anything. It all depends on the development of the various countries.

***

Can Co-operation with business be equated with activities in favour of small and medium-sized entreprises ?

Ingrid Schwaiger:
Yes absolutely. There is a focus on SMEs in all our programmes for the private sector, based on the experience within the EU that SMEs often are the engine of economic growth. If you look at the structure of the economy in the Mediterranean Partners 80% or 90% of businesses fall into that category. We normally do not give any support to large and public enterprises, unless in the context of a privatisation programme.

SM:
Within the 1st generation (the Business Centres) there is not only direct cooperation with SMEs but also some degree of institutional support. This component is especially stressed in the IMPs, which foresee technical assistance to Ministries for Industry for drafting legislation, to bring laws in the Partners closer to the ones in the EU. Institutional support is also provided to private sector institutions working in the field of SMEs such as Chambers of Commerce, employers' organisations, and industrial federations.

***

Are government policies in the various partners crucial to the success of co-operation with entreprises ?

IS:
Yes they are. The programmes funded by the European Commission should ideally complement or support national policies in that area, and this is particularly important in the context of the IMPs. If there is no clear national policy for the modernisation of industry, it is very difficult for a donor's programme to have a good impact. It is one of the criteria we apply to determine whether or not there will be an IMP within a country. For example, in Tunisia there is a strong national policy supported through the EU funded IMP, which integrates in that context. To quote another example we were requested to prepare an IMP in Syria, but at the present stage this is too early because the national policy is not yet ready to fully embark on industrial modernisation. In Lebanon, such a programme has not yet been requested by the national counterpart, so there is only a Business centre type of programme that started recently.

SM:
In Tunisia the government started a business upgrading policy back in 1995, and in fact the 1st EU intervention was the creation of the Business Centre ‘Euro-Tunisie-Entreprises' to accompany this policy. There is also a National Upgrading Office behind it all. Our project only stepped in to give support to existing national policy.
Now the Tunisian government has asked for larger support from our side, for a bigger programme, which involves not only direct diagnosis of enterprises, but also activities in other fields such as quality or industrial property rights. But we are not inventing anything. We are helping governments with their own industrial policy. In this context I have to stress that programmes such as IMPs can only be implemented over a long period of time. National policies that they are meant to accompany cannot develop in less than 2 or 3 years. This is why we have planned 5-year programmes. Actually it would normally even take 10 years to help a country restructure its industry.

IS:
Achieving an impact on enterprises is also a long-term process. If you have provided a company with technical assistance, training, and other services, and if your project has been successful you will see a real change in the company's business figures (exports, profits, and costs) only after 2 to 3 years.

***

How can co-operate activities with the private and public sectors be co-ordinated and how important is such co-ordination ?

IS:
If we talk about the private sector, we have to keep in mind that we talk at the level of companies. The programmes themselves are of course also in touch with the public sector. We already mentioned the Ministries of Industry and the policy dialogue which is established with them. In that sense the IMPs deal with the public sector, but at the level of companies direct support is usually given to privately owned SMEs, and not to publicly owned large companies.

SM:
in the Tunisian IMP we have foreseen actions in favour of strengthening the dialogue between the public and private sectors. It is a new thing which was not foreseen in Egypt's IMP, but quite recently we have thought that this area also should be supported through our usual instruments (advice, technical assistance, information and so on).

***

In what way do the Eurediterranean Business Centres form a network and what are their links with similar organizations in the UE, notably the Euro Info Centres ?

IS:
There are links and contacts between the Business Centres. The Business Centres exist in every Mediterranean Partner where there is a co-operation development programme with financial support except in the Palestinian Territories where at the moment for obvious reasons such a project is not possible. In the beginning Business Centres met on a regular basis. Once a year there was a Business Centre Conference organised either in Brussels or in a Mediterranean Partner. Last year, however, due to the restructuring of the Commission's external relations services there was no Conference but one is foreseen for later this year in Brussels. A Conference of this kind is a 2-day meeting where project teams can exchange experiences among themselves. Projects operate according to the country's context, so there are differences and participants can discuss these differences. They can also discuss with Commission services how the strategy may develop in the future. Beyond that there is another linkage: many of the Business Centres and IMPs include an information component called ‘Euro Information Centre'. The Centres are linked to the EU-wide Euro Info Centre network, which provides very practical business information on European legislation in that area, on European standards, on the European business context, and makes this information available to companies in the Mediterranean.

***

Is there any co-operation between Business Centres in Mediterranean in looking for Partners, setting up joint ventures or that sort of thing that exists within the EU ? Can this network be an instrument for South-South co-operation ?

SM:
Actions of this type to help Mediterranean SMEs get in touch with European ones are foreseen in the Business Centres Projects. But they were not the main thrust of the projects. We are now trying to strengthen this component, for example in Tunisia, but also in Egypt to establish a real partnership. Programme Management Units managing the Programmes should foster industrial collaboration between local and European SMEs in the framework of the IMPs. I should add that the Business Centres and the IMPs are demand-driven, which means their activities depend on the existing market demand in the Partners. In the past co-operation among Mediterranean countries, especially in the business sector, was quite limited. So there was more interest from local companies in establishing partnership agreements with Europeans for exporting to the EU than in seeking business partners in other Mediterranean countries. But this is something I see changing progressively. There are for example bilateral agreements between the business sectors in Syria and Jordan, which will affect companies on the ground. But these are all rather recent developments. It may thus be something for the future, and again it's demand driven.
The Business Centres can accompany that process.

***

To what extent are activities for the private sector country-specific ?

IS:
They are and they are not. Support to the private sector through the Business Centres follows the same objectives in every country. That is there should be direct services for companies which face the same situation across the region (a more liberalised context within the framework of the free-trade area being established between the EU and the country in question). So the challenges are the same for all the countries in the region, since with the progressive reduction of tariff barriers companies will face tougher competition and they need to be prepared for this. The type of services offered is similar in all Partners. It includes upgrading, training, and information. But the way it is done on the ground is quite country-specific. We have projects in Syria for example where we took the approach of working a lot with local expertise. It is a very localised approach. The Business Centre in Syria is also the only one with 2 locations in 2 cities: Damascus and Aleppo.

SM:
There are fixed components, namely to assist local enterprises directly, but there are other components which depend on the development of the country. For example quality issues are not always present in the IMPs. The results of discussions with the country's authorities are taken into account. There is an identification phase which gives us guidelines on what kind of components to include in the project. But normally there is the Business Centre component made up of technical assistance to enterprises plus policy advice, as well as assistance to public institutions in order to modernise their organisation, to review legislation, and to further dialogue with the private sector. Let me give you two specific examples. First in Tunisia's IMP the focus is on innovative SMEs so you get a more specific group of companies which you do not get much in other countries. As another example in Jordan we have integrated a financial component into the IMP. That was a clear need in a country like Jordan where you have a well-developed banking system, and a well-developed loanguarantee institution, but where the banking sector does not lend to SMEs. Some outside stimulus was needed for the existing framework to be used for the benefit of SMEs. Therefore in Jordan and also in Tunisia we are planning to help set up a national guarantee fund to facilitate access to credits for SMEs.

***

How can the Commission make sure that local people, local consultants for instance, are sufficiently involved in that type of co-operation ?

IS:
One way to ensure this is to have local staff and local expertise within the project management units (PMU) implementing the projects. This approach has been very much taken into account in countries such as Jordan, Syria, and Tunisia, where for each international staff there is a local equivalent staff member so that you have European expertise and the expertise of the country. There is also a training component in each of the programmes. There again with the Business centres we discuss planning ‘train the trainers' activities, and that is involving the local consultants sector too.
In addition to that there is an instrument common to all the Business Centres in the form of a regional framework contract through which we recruit short-term expertise. In principle, this is not only European expertise. We can also recruit local expertise. Anyway this is one of the areas where we want to put much more focus in future, and for example to establish systems in the Partners whereby we can recruit local consultants directly.

***
Devolution from Brussels headquarters to the Commission Delegations is now taking place. But what kind of decentralisation can be introduced within the Partners themselves, especially the most populated ones ?

SM:
For example the Egypt IMP foresees the creation of 20 Business resource centres all over the country where there are of course needs in industrial zones or the like. In Algeria as well, the project of support to SMEs foresees the creation of antennas. In many Partners we have planned to set up a central PMU, which would allow for replicating some operations in those areas of the country that need the relevant type of service.

IS:
So far there has always been one single location for each national Business Centre at the outset, except in Syria. The approach taken in Turkey of starting 3 Business Centres in 3 different locations at the same time is much more demanding because you have to make sure that all the services start in parallel whereas you can also reach the same objective more gradually. Indeed in Morocco the project started in Casablanca, and it is now going into a 2nd phase of working with other industrial centres in the country in co-operation with local organisations such as Chambers of Commerce or business federations.

***

How do you perceive the link and the complementing with the new regional industrial programmes being launched this year ?

IS.
The Commission is also funding regional programmes in the field of industrial cooperation in 3 main areas (investment, quality, and innovation). These programmes are quite complementary to our own because they are very different in substance.
Regional co-operation involves the EU Member States plus the 12 Mediterranean Partners and there you have a very wide forum. The key area of regional co-operation is exchange of experiences and best practice. Bilateral programmes have a different focus, and more financial resources available so they can really go in-depth within a country to address the situation of industry with very concrete assistance to companies. At regional level you can have exchanges between Ministries of industry, or national institutions in charge of quality and investment. Within the regional framework conferences and seminars can be held, some training activities can be supported while with bilateral co-operation you can provide the private sector in the Partners with direct assistance. Therefore the two types of co-operation are quite complementary.

Bruxelles,09 11 2002
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