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14 Jan 2014

Micro-, Small- and Medium-Sized Enterprises with High-Growth Potential in the Southern Mediterranean

Identifying Obstacles and Policy Responses

Rym Ayadi / Willem Pieter De Groen

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The Arab Spring, which took root in Tunisia and Egypt in the beginning of 2011 and gradually spread to other countries in the southern Mediterranean, highlighted the importance of private-sector development, job creation, improved governance and a fairer distribution of economic opportunities. The developments led to domestic and international calls for the region’s governments to implement the needed reforms to enhance business and investment conditions, modernise their economies and support the development of enterprises. Central to these demands are calls to enhance the growth prospects of micro-, small- and medium-sized enterprises (MSMEs), which represent an overwhelming majority of the region’s economic activity.

On the basis of interviews conducted among high-growth potential MSMEs in selected countries in the southern Mediterranean – Algeria, Egypt, Morocco and Tunisia – this report identifies and ranks key obstacles preventing MSMEs from reaching their high-growth potential and puts forward effective policy responses to reduce these obstacles. If implemented, the authors argue that these policies could unlock the MSMEs potential to contribute more to their economies.

Rym Ayadi is Senior Research Fellow and Head of the Financial Institutions, Prudential Policy and Tax research unit at CEPS and Willem Pieter De Groen is Researcher in the same unit at CEPS.