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  • MENA BENCHMARKING REPORT 2014Countries in the Middle East and Northern Africa (MENA) region have undergone many changes and experienced new challenges recently. A strong private sector is critical for being able to respond to these challenges.

    MENA Benchmarking Report 2014 aims to benchmark the business environment that private sector companies face in MENA countries. The report focuses on the enhancement of the business environment and performance of SMEs in the region. It contains a macroeconomic analysis of MENA countries, an overview of SME performance in the region and a Business Environment Index, created specifically for this report. The Business Environment Index measures country performance in 5 Policy Areas:

    Institutions

    Infrastructure

    Access to finance

    Innovation, entrepreneurship and human capital

    Market sophistication

    The report has been developed by business organisations belonging to the ARAB-EU Business Facilitation Network. The network consists of leading Business Membership Organisations from 15 MENA countries: Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syrian Arab Republic, Tunisia, United Arab Emirates and West Bank and Gaza. The ARAB-EU Business Facilitation Network encourages discussions on the challenges that companies in the region are facing as well as solutions and policy recommendations to overcome those challenges.

    More information about the ARAB-EU Business Facilitation Network as well as a PDF version of the MENA Benchmarking Report 2014 can be found on the networks webpage: http://ae-network.com

    MENABenchmarking Report

    2014M

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    Mena omslag 426,4x297.indd 1 02/01/15 10.16

  • MENA Benchmarking Report 2014

    Published by the Confederation of Danish Industry January 2015 1st edition

    www.di.dk/english

    Funded by the Danish-Arab Partnership Programme

    www.detarabiskeinitiativ.dk

    Editors: Iman Awadh, ConsultantTel.: +4533773793 Email: imaw@di.dk

    Oleg Izgorodin, Business AnalystTel.: +4533773708 Email: oliz@di.dk

    Design and print:fru nielsens tegnestue

    ISBN: 978-87-7144-041-6200.1.15

    Mena omslag 426,4x297.indd 2 02/01/15 10.16

  • MENAbenchmarking report 2014

  • 2 FOREWORD - MENA BENCHMARKING REPORT 2014

    FOREWORD

    Countries in the Middle East and Northern Africa (MENA) region have experi-enced many challenges recently. The effects of the global financial crisis as well as political uncertainty in the region have reduced the growth potential of many MENA countries. Moreover, with bloated public sectors and state owned enter-prises, the region faces pressing employment challenges.

    In such conditions, policies aimed at overcoming structural economic rigidities have become even more important. Reforms aimed at making the economies more open, competitive and diversified could help the region to return to growth levels seen earlier. These changes would also contribute to improving the politi-cal and social environment in the countries.

    There is a consensus that a stronger private sector is needed to respond to structural challenges such as youth unemployment. The private sector as well as small and medium enterprises (SMEs) have become a priority for policymak-ers and business communities in our region, who see SMEs and entrepreneur-ship as a mechanism for improving competitiveness, raising incomes, and gen-erating employment. As a result a wide range of supply-side programmes have been initiated. Despite the many supply-side support programmes, there is little research and almost no systematic follow-up studies on the development of the private sector in the region.

    In order to assess the development of the private sector, it is essential to have an understanding of the business environment that private companies face each day. The goal of this report is exactly that: it aims to benchmark the business environment and SME performance in the MENA region.

    Some MENA countries have made major investments into infrastructure, re-search and innovation recently, while the others are still behind in these terms. We hope that this report will help highlight the strengths and weaknesses of in-dividual MENA countries in terms of their business environment and serve as a useful tool for designing policies aimed at private sector development.

    We are therefore very pleased to present this first edition of the MENA BENCH-MARKING REPORT 2014. The report has been developed and drafted by the leading business organisations in the MENA region under the auspice of the ARAB-EU Business Facilitation Network. The network works towards stronger commercial links, a better and more transparent business environment, region-al integration and reform initiatives, which all propel economic growth and jobs in our respective countries.

    We hope you enjoy the 2014 report

  • 3MENA BENCHMARKING REPORT 2014

    Forum des Chefs d'Entreprises (FCE),

    Algeria

    Bahrain Chamber of Commerce and Industry

    (BCCI), Bahrain

    Confederation of Danish Industry (DI),

    Denmark

    Federation of Egyptian Industries (FEI), Egypt

    Jordan Chamber of Industry (JCI), Jordan

    Kuwait Chamber of Commerce & Industry (KCCI),

    Kuwait

    Association of Lebanese Industrialists (ALI),

    Lebanon

    Libyan Businessmen Council (LBC), Libya

    Confdration Gnrale des Entreprises du Maroc (CGEM),

    Morocco

    Oman Chamber of Commerce and Industry (OCCI),

    Oman

    Federation of Palestinian Chambers of Commerce, Industry & Agriculture

    (FPCCIA), West Bank and Gaza

    Qatar Chamber of Commerce and Industry,

    Qatar

    Council of Saudi Chambers (CSC),

    Saudi Arabia

    Damascus Chamber of Industry (DCI), Syria

    Union Tunisienne de lIndustrie, du Commerce et de lArtisanat (UTICA),

    Tunisia

    Sharjah Chamber of Commerce and Industry,

    United Arab Emirates

    Federation of GCC Chambers (FGCCC)

  • 4 CONTENTS - MENA BENCHMARKING REPORT 2014

  • 5MENA BENCHMARKING REPORT 2014

    CONTENTS

    7 INTRODUCTION

    8 MACROECONOMIC ANALYSIS

    9 Macroeconomic analysis: Introduction

    10 Country performance

    32 BUSINESS ENVIRONMENT INDEX

    33 Business Environment Index: Introduction

    36 Institutions

    46 Infrastructure

    50 Access to finance

    56 Innovation, entrepreneurship and human capital

    62 Market sophistication

    70 Overall results

    72 SPECIAL THEME: SMES IN THE MENA REGION

    73 SMEs in the MENA region: Introduction

    74 SME performance

    80 Main challenges

    84 APPENDICES

    85 Country profiles

    99 Description of terms

    100 Methodology

    104 List of macroeconomic indicators

    107 List of business environment indicators

    111 Description of sources

  • 1

    MACRO- ECONOMIC ANALYSESINTRODUCTION

  • 7MENA BENCHMARKING REPORT 2014

    INTRODUCTION

    The inaugural MENA Benchmarking Report is designed as a comparative benchmarking analysis focused on measuring the enhancement of the busi-ness environment as well as the success and performance of SMEs in the MENA (Middle East and Northern Africa) region. The report provides a tool for monitoring the development of the general macroeconomic and business environment as well as SME performance in the MENA region in a timely manner, which allows judging the effectiveness of policies in the countries.

    MENA Benchmarking Report is a product of the Arab-EU Business Facili-tation Network an alliance of 15 leading Business Membership Organisa-tions from the MENA region. The organisations have pledged to work stra-tegically together, promoting relevant policy issues within and between their respective countries. The network serves as a platform from which business associations from the region can discuss the challenges for businesses and identify shared solutions and policy recommendations. A specific emphasis is on improving access to the EU market for businesses in the region. The Arab-EU Business Facilitation Network was launched in 2010 and consists of Business Membership Organisations from Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syrian Arab Republic, Tunisia, United Arab Emirates and West Bank and Gaza. The Con-federation of Danish Industry (DI) acts as a facilitating organisation in the network.

    The report opens with an analysis of the macroeconomic performance of MENA countries. This is followed by an assessment of the business environ-ment: performance of countries in the Business Environment Index, consist-ing of 5 Policy Areas (Institutions; Infrastructure; Access to finance; Inno-vation, entrepreneurship and human capital; Market sophistication), is ana-lysed. An assessment of SME situation in the MENA region follows. Finally, the Appendices provide country profiles, description of terms, methodology of the report, a list of all macroeconomic and business environment indica-tors as well as a list of sources used in the report.

  • 1

    MACRO- ECONOMIC ANALYSES

    1

    MACRO- ECONOMIC ANALYSIS

  • 9MENA BENCHMARKING REPORT 2014

    INTRODUCTION

    Aggregate macroeconomic indicators are a useful source of information about the levels of economic development of different countries, their economic policies, business conditions and performance on the global market. Countries and regions across the world have historically experienced different levels of eco-nomic growth, driven by local