Efforts are underway to facilitate the development of small and medium enterprises and their integration into the mainstream economy. Niveen Wahish reports The small and medium enterprise (SME) sector represents 90 per cent of non-agricultural private projects, absorbs 75 per cent of labour in the private sector and contributes 80 per cent of the value added. The figures, cited by Hani Seif El-Nasr, managing director of the Social Fund for Development (SFD), show the importance of focussing on this vital sector to achieve economic growth. Speaking on behalf of Minister of Foreign Trade Youssef Boutros Ghali, Seif El-Nasr was addressing a workshop organised by the Small and Medium Enterprises Policies project (SMEPol) affiliated with the Ministry of Foreign Trade. SMEPol, jointly set up by the Egyptian and Canadian governments, aims to support the Ministry of Foreign Trade in the development of policies, legislation and regulations in support of SME development. Current efforts to assist the development of SMEs have reached only five per cent of the total number of SME establishments, said Manal Hussein, advisor to the minister of foreign trade on micro, small and medium enterprises affairs. These establishments are in need of assistance to enter the market and cut registration and licensing costs, she said. While acknowledging that administrative and regulatory obstacles hinder the work of the business sector in general, Hussein said these obstacles impact SMEs to a larger degree. To establish a company, Hussein said, the investor has to follow procedures governed by at least 17 laws and 100 administrative decisions. "Completing these procedures takes almost a year and SMEs are less capable of dealing with this kind of bureaucracy," she said. The aim of last week's workshop was to find a shortcut through this labyrinth of procedures. Discussions revolved around a study prepared by Samir Macary, head of Macary Consulting Firm, that devised a practical system through which the procedures for SMEs can be simplified. The study focussed on striking a balance between facilitating the1to deal with the procedures required to acquire a license. Macary listed the main procedural problems: lack of information and transparency regarding the required procedures and documents; bureaucracy and the multiplicity of authorities investors have to deal with; duplication in the required documents and the slow pace at which they move from one concerned authority to the other and the inefficiency and lack of skills of government employees dealing with investors. The study presented the idea of a one-stop shop, where all the authorities an investor needs to deal with would be located. An office providing information on the required documents would be set up that would also make available a shortlist of lawyers who would be able to deal with the required paperwork on behalf of the investor in return for a pre-fixed sum. The complex would also include representatives of various ministries. Another worthwhile suggestion in the study is instituting an incentives system for employees dealing with investors. One example Macary gave would be to have investors pay only part of the fees when applying and, if they receive approval on time, they would then pay the rest of the fees, part of which would go into a fund for employee incentives. Facilitating the setup procedures for SMEs comes as part of government efforts to develop the sector. A draft law that aims to simplify procedures for small investors is currently being reviewed by the prime minister and is expected to be presented to the People's Assembly for discussion. The draft law aims to provide a clear, but flexible definition of what small and micro enterprises are and to devise a tax system that encourages SMEs to integrate into the mainstream economy. The law also addresses the issue of government procurements and means of allowing SMEs a shot at government tenders and bids. Certain facilities for SMEs, such as cheaper freight prices on the national carrier, are also stipulated by the draft law. While the one-stop shop may help solve procedural problems, SMEs still face a range of other obstacles including financing, product development and quality control, the workshop concluded.
