Al-Ahram daily reported in its issue of Thursday that the Deauville Partnership for Mideast and North Africa has approved grants totalling $6.5 million to finance a major project undertaken by the Social Fund for supporting smaller and medium projects. The Social Fund, according to its Secretary General Ghada Wali, is the first Egyptian entity to obtain grants from the Deauville Partnership, an initiative launched at a leaders' summit held in May 2001 at Marseilles, France, by the Group of Seven (G-7) industrial nations, plus Russia, to bolster support for Middle East and North African countries in transition (Arab Spring states as they have come to be known). Ever since, the Deauville Partnership has been welcoming moves by international financial institutions to improve coordination. In addition, Kuwait, Qatar, Saudi Arabia, Turkey, and United Arab Emirates joined the Partnership. Recent events in the Middle East and North Africa have challenged macroeconomic stability in the near term. In a difficult global environment with heightened financial risks and rising commodity prices, some countries have been experiencing a drop in economic activity, tourism, and investment flows, at a time when they were also faced with increased domestic social pressures due to chronically high unemployment – particularly among the young – and calls for greater freedom and fairer distribution of economic opportunities. To go further in coordinating their action, the international financial institutions have agreed to ‘facilitate information-sharing and mutual understanding; coordinate monitoring and reporting on the implementation of the Deauville Partnership; and identify opportunities for collaboration on financing, technical assistance, and policy and analytical work.' It should be noted here that smaller and medium enterprises (SMEs) constitute a special risk group due to their vulnerability, insufficient independent funds of their own, dependence on fewer clients and lack of collateral or credit history. As an engine of growth, they are essential for competitive and efficient markets and critical for poverty reduction. They play a particularly important role in developing countries where poverty is most severe. Meanwhile, the SMEs sector is the largest provider of employment in most countries. It is sometimes the only source of employment in poorer and remote areas where self-employment is the only source of income for many poor people. It tends to employ poor and low-income workers. The Deauville initiative, therefore, is a move in the right direction as smaller and medium enterprises need support from both the government and finance agencies, local and otherwise. Government support is not necessarily financial; it should focus on the simplification of procedures and regulations, rather than on control and punishment. Local banks, on the other hand, should facilitate lending services and offer loans at lower interest rates.
