SME Policy Assessment in the EaP Region

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SME Policy Assessment in the EaP Region

• Presentation to Civil Society Forum
• Michaela Hauf, DG ENTR, Unit for International
  Affairs and Missions for Growth
• Brussels, 13th May 2013

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The Eastern Partner region is composed of a group
of heterogeneous countries
The Eastern Partner countries are different in
terms of their size, population, resources
endowment and their stage of economic and
institutional development

• Value added of main economic sectors as of GDP,
  2011

Example Economic structure of EaP countries
Armenia, Georgia, Republic of Moldova are small
economies, highly dependent on services,
agriculture and remittances Azerbaijan, Belarus,
Ukraine are resource-rich economies with
significant revenues from export of commodities

• Sources World Bank, World Development Indicators

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SMEs in the Eastern Partner countries contribute
less to employment and GDP compared to the OECD
countries on average
Private sector share in GDP, 2010
Contribution of SMEs to employment and GDP, 2010

• Sources OECD (2012 ), SME Policy Index Eastern
  Partner Countries 2012
• Share in turnover is used instead of GDP

Source EBRD
SMEs today account on average for only about 50
of employment , compared to 60-70 in OECD
economies, and contribute on average just over
30 of value added, in comparison to 55 in OECD
economies
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SME Policy Index 2012 Eastern Partner Countries
Assesses SME policies in each EaP country and
formulates recommendations
Armenia Azerbaijan Belarus Georgia -
Republic of Moldova - Ukraine
2011
2014
2012
2013
2010
2015
2009
Eastern Partnership Enterprise Policy Performance
Assessment Phase I 21 months
REGIONAL PROJECT
DELIVERABLES
KEY QUESTIONS

• How to enhance the performance of SMEs in the
  Eastern Partnership region?

• Development of a comprehensive policy assessment
  tool to assess SME policy frameworks

• Recommendations on how to align with the
  principles of the Small Business Act

• How to create an enabling policy environment to
  support SME growth?

• Exchange of best practices through regional
  policy working groups and capacity building
  seminars

• Which policy tools have or have not worked to
  support SMEs?

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SME Policy Index 2012 Eastern Partner
Countries ... follows the principles of the Small
Business Act for Europe
Dimensions Sub-dimensions Dimensions Sub-dimensions Dimensions Sub-dimensions
6 Access to finance for SMEs Access to finance for SMEs
Sub-Dimensions 6.1 Sources of external finance for SMEs
Sub-Dimensions 6.2 Legal and regulatory framework
Sub-Dimensions 5.3 ACAAs
SME Policy IndexEastern Partner Countries 2012
Covering priority dimensions relatedto the Small Business Act for Europe Entrepreneurial learning and womens entrepreneurship Bankruptcy and second chance for SMEs Regulatory framework for SME policy making Operational environment for SMEs SME support services and public procurement Access to finance for SMEs Standards and technical standards Enterprise skills and innovation policy for SMEs SMEs in a green economy Internationalisation of SMEs
Sub-dimensions Indicators Sub-dimensions Indicators Sub-dimensions Indicators
6.1 Sources of external finance for SMEs Sources of external finance for SMEs
Indicators 6.1.1 Credit guarantee schemes
Indicators
Indicators
Indicators Level of Reform Indicators Level of Reform Indicators Level of Reform Indicators Level of Reform Indicators Level of Reform Indicators Level of Reform Indicators Level of Reform
Indicators 1 2 3 4 5
Indicators Credit guarantee schemes
Indicators Public start-up funding
Indicators Business angels network
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SME Policy Index 2012 Eastern Partner
Countries ... and is based on a participatory
process with all SME stakeholders involved
Regional Policy Working Group
Six national stakeholder meetings
Regional Policy Working Group
Capacity Building Seminar
Regional Policy Working Group
Policy Seminar
Policy Seminar
9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10
2010 2010 2010 2010 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012
Ministries
Agencies
Private sector associations
Government assessment
Public authorities
European Commission
Independent consultant
International organisations assessment
ETF
EBRD
OECD
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Key findings of the SME Policy Index 2012SBA
assessment results at regional level
Most EaP countries have started to implement
business climate reforms to create a conducive
environment for private sector development Howeve
r they still face significant challenges in
developing a comprehensive approach towards the
SME sector to complement these efforts with more
targeted measures.
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Key findings of the SME Policy Index Key
conclusions
EaP countries are supporting SMEs and
entrepreneurship through business environment
reforms Institutional frameworks for SME policy
are developing at different paces in EaP
countries More targeted SME policy tools are
still needed to further support SME growth across
the region Data on SMEs remains scarce across
the EaP region.
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EaP countries are supporting SMEs and
entrepreneurship through business environment
reforms
All Eastern Partner countries ... are taking a
pro-active approach to streamline the operational
environment for business activities (company
registration, online government etc.) ... have
undergone reforms in legislative simplification,
although some countries are more advanced than
others. ... have started to improve the legal
and regulatory framework to expand the financial
sector beyond bank lending, however, with mixed
results
Weighted average score for sub-dimension 4.1
Company registration

• Example sub-dimension 4.1 Company registration
• Eastern Partner countries have achieved
  significant progress in the area of company
  registration, saving time, reducing costs and
  removing administrative barriers for SMEs.
• All Eastern Partner countries have introduced
  one-stop-shops for company registration. Georgia
  and Belarus have managed to integrate all
  registration and notification procedures within
  one-stop-shops, while Georgia has introduced
  Public Service Halls, integrating one-stop-shops
  with a range of other government services.

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Institutional frameworks for SME policy are
developing at different paces in EaP countries

• Armenia, Georgia and the Republic of Moldova
  have started to develop the institutional
  framework through on-going public-private
  consultations and effective policy co-ordination
  mechanisms
• Azerbaijan, Belarus and Ukraine have started to
  provide support measures to the business sector,
  but often in an ad hoc manner without a long-term
  plan and with limited co-ordination between the
  relevant public authorities.

Example sub-dimension 3.1 Institutional
framework ... Armenia and the Republic of Moldova
have the building blocks for and SME policy
making ... Georgia has achieved noticeable
results following a horizontal approach to
business climate development. ... in Azerbaijan a
number of implementation agencies exist with a
focus on different areas however co-ordination
between these actors could be further improved to
ensure a common approach towards SME
development ... in Belarus SME policy is
developed at ministry level, but no
implementation agency exists ... in Ukraine an
agency for SME policy was re-established in 2012,
but its effectiveness will largely depend on
mandate and financing.
Weighted average score for sub-dimension 3.1
Institutional framework
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More targeted SME policy tools are still needed
to further support SME growth across the region

• Availability of financial and human resources
  remains a particular constraint to SME
  performance in all EaP countries.
• Support services for SMEs and start-ups are
  available across the EaP region as a combination
  of public and donor-funded programmes
• Most EaP countries have agencies specialised in
  export promotion however policies to support
  export-oriented SMEs remain weak across the
  region.
• Innovation policies remain inadequate with
  considerable scope for further development of
  target policies to encourage SME involvement in
  the innovation process.

Weighted average score for dimension 8B
Innovation policy for SMEs

• Example dimension 8b Innovation policy for SMEs
• All Eastern Partner countries have established
  public research institutions, or initiatives to
  promote technology transfer
• Financial and technical support schemes for
  innovative companies are provided on an ad-hoc
  basis in the Eastern Partner region, often with
  support from donors and international
  organisations.

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Data on SMEs remains scarce across the EaP region

• Data on the SME sector remains scarce, even in
  those countries where policy formulation for SME
  support is already well advanced.
• Despite the existence of specialised
  institutions, data on the SME sector is often
  incomplete or entirely lacking.

Examples Indicator 3.2 Availability of
statistical data The official data on SMEs in EaP
countries is often incomplete or fragmented, and
covers only a limited number of
sectors. Indicator 8a.4
Start-ups No EaP country has been able to provide
sufficient statistical evidence on the ratio of
start-ups trained and/or those that received
business support services.

• While countries have made significant progress in
  data collection, several shortcomings remain
• Weak international comparability
• Low accessibility and low level of detail
• Limited availability online and lack of regular
  updates

Score for dimension indicator 3.2 Availability
of statistical data
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Key findings of the SME Policy Index 2012
Guidelines for implementing SME-friendly policies
While there is no one-size-fits-all solution for
advancing SME policy development, all Eastern
Partner countries are invited to take advantage
of the following guidelines to structure their
own policy reform agenda
Historically outside of the policy making
process, the private sector in Eastern Partner
countries especially SME associations needs
to be further integrated into the policy debate
at all stages to increase responsiveness of
policies to the fast-moving needs of the
marketplace. Buy-in from the business community
will also ensure more effective implementation of
reforms.
Consult more closely with the private sector on
policy reform
Improve co-ordination between government agencies
Better co-ordination between different agencies
supporting SME development would avoid overlap,
ensure better use of resources and increase
policy impact. This can be achieved by designing
comprehensive SME development strategies with
clear and measurable objectives.
Develop policy tools to foster SMEs growth,
investment, innovation and export capacity in key
economic sectors such as agribusiness,
information and communications technology,
tourism and construction. Such tools are
especially critical to improve access to finance,
enterprise skills, innovation, business support
services and export promotion.
Develop targeted SME policy tools
Collect better data for better policies
Collect more detailed structural statistics to
monitor and evaluate public policy tools on a
regular basis and assess SME performance both at
national and sector level.
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Follow-up to SME Policy Assessment

• 2 projects based on the SME Policy Assessment to
  be undertaken by the OECD in cooperation with the
  European Commission
• Assistance to EaP countries with regard to the
  implementation of policy reforms (focus on
  particular sectors) to be launched at the end
  of 2013
• 2nd Round of SME Policy Assessment with a focus
  on effective implementation and output
  (methodology will be revised in line with
  'lessons learned') to be launched early 2014

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Institutional Framework and Participation

• Apart from dedicated project meetings,
  discussions on the implementation of SME policies
  will take place within the framework of the SME
  Panel of the Eastern Partnership
• Eastern Partnership countries will be closely
  involved through their SBA Co-ordinators
• Active participation also from business
  representatives is key to a successful and
  productive project

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• For further information please contact
• Michaela Hauf
• Policy Officer Eastern Partnership
• michaela.hauf_at_ec.europa.eu