Micro-, small- and medium-sized enterprises (MSMEs) in the Southern and Eastern Mediterranean suffer from credit constraints. Given their contribution to employment and growth, similarly as in other regions, policy-makers have developed credit guarantee schemes (CGSs) in order to facilitate small companies’ access to debt capital. CGSs are risk-sharing mechanisms under which a guarantor ensures the lender against a share of the possible losses it incurs when extending a loan. Despite the maturity of some schemes, knowledge of the schemes’ functioning, operating environment as well as performance in guaranteeing loans for MSMEs is scarce. Building on a previous study of CGSs in the region, this paper extends the available knowledge on the region’s schemes, building on the results of an exclusive questionnaire to gain insights into these mechanisms. First, the paper reviews the conditions of MSMEs’ access to finance in the Southern and Eastern Mediterranean; second, it presents the results of the questionnaire across a number of dimensions ranging from ownership to financial performance; and third, the paper presents some avenues for future policy research in this area.
Rym Ayadi is Senior Research Fellow, Head of the Financial Institutions and Prudential Policy Unit at CEPS and Coordinator of the MEDPRO project. Salim Gadi is MEDPRO Research Assistant at CEPS.