A survey of 6 thousand firms: Political imbalance, corruption, electricity & financing insufficient support are major obstacles to investment
A report, submitted by the European Bank for Reconstruction and Development (EBRD), European Investment Bank and the World Bank, says that the private sector can be a major incentive of growth in the Middle East and North Africa if only effective policies are made. The report uncovers the obstacles to private sector in the region, in addition to presenting solutions out of more than 6 thousand surveyed firms, operating in the private sector, in Djibouti, Egypt, Jordan, Lebanon, Morocco, Tunisia, West Bank, Gaza and Yemen.
According to surveyed private firms, the main obstacles to the private sector are political imbalance, corruption, electricity insufficient support and lack of sufficient funds. In addition, qualified labour is hard to obtain, which represents another obstacle to innovation and growth. Similarly, there is a lack of communication among official financing channels and private firms.
The report concludes that public authorities in the region have to set their priorities which are supporting private firms and reallocating resources to channel them to the most productive firms. Moreover, policies should be made to improve major domains such as business environment, financial support, education and employment opportunities, trade and innovation. Although, the banking sector in the region is quite large, too many private firms do not get sufficient financial support. This could be solved by increasing the efficiency of banks in credit risk evaluation. Credit guarantee systems are an effective solution to lighten up guarantees’ obstacles. Moreover, it is beneficial to strengthen laws related to guaranteed loans which will enhance small and medium-sized enterprises without any financial stability risks, according to the report.
The report stressed on the significance of making policies that support women to enter the job market, along with providing youth with top quality education and increasing efficiency of new employees’ training. In regard to trade, competition and innovation, the report observed that increasing the productivity of companies require the region to get more open to international trade. One way of helping the region in this regard is to pass trade and custom regulations that are much effective for imports and exports, the report highlights.
