Policy Handbook
SME POLICY EFFECTIVENESS IN JORDAN USER GUIDE 1: REINFORCING SME POLICY CO-ORDINATION AND PUBLIC-PRIVATE DIALOGUE
The project “SME Policy Effectiveness in Jordan,� implemented by the OECD and the Jordan Enterprise Development Corporation from 2016-19 helped to improve SME and entrepreneurship policy making by reinforcing institutional co-ordination and dialogue, advocating for better monitoring and evaluation of policies and programmes, and identifying ways to improve business and entrepreneurship statistics. Three User Guides are the main outputs of the project: User Guide 1: Reinforcing SME policy co-ordination and public-private dialogue gives guidance on how to orchestrate efforts among the many actors providing SME support. User Guide 2: Effective monitoring and evaluation of SME and entrepreneurship policies and programmes provides advice on how to assess the impact of SME support. User Guide 3: SME statistics and entrepreneurship indicators in Jordan offers useful guidance on how to improve the evidence base for SME policy making. The User Guides build on international practice and provide concrete areas of action for Jordan, but can also be of interest to other countries wanting to improve the effectiveness of their SME policy making. The project was funded by the MENA Transition Fund and was implemented jointly by the Global Relations Secretariat; the Centre for Entrepreneurship, SMEs, Regions and Cities; and the Statistics and Data Directorate of the OECD. www.oecd.org/mena/competitiveness/smes-and-entrepreneurship www.oecd.org/cfe www.oecd.org/sdd
SME POLICY EFFECTIVENESS IN JORDAN . USER GUIDE 1
Micro, small and medium-sized enterprises (SMEs) and entrepreneurs have the potential to become important drivers of change and development in Jordan. Private businesses employing one to nineteen people account for over half of employment in the business economy and from 70 to 80% of jobs in sectors such as professional services, real estate, and wholesale and retail. Yet, the productivity and performance of Jordanian SMEs is limited. For example, over 54% of those working in service-sector businesses employing fewer than four people are unpaid workers (e.g. family members), compared to just 8% in businesses with 5 to 10 workers, and 0.23% of businesses with 20 or more workers.
SME Policy Effectiveness in Jordan User Guide 1: Reinforcing SME policy co-ordination and public-private dialogue
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FOREWORD
Foreword From 2016 to 2019 the OECD and the Jordan Enterprise Development Corporation (JEDCO) have been implementing the MENA Transition Fund project “SME Policy Effectiveness in Jordan” to help improve co-ordination and dialogue among the many actors involved in supporting small and medium-sized enterprises (SMEs) in order to increase the impact of their actions, identify gaps and avoid any overlaps. It also aims to introduce and strengthen monitoring and evaluation mechanisms, and to help the Jordanian authorities – notably the Department of Statistics and the Jordan Enterprise Development Corporation (JEDCO) – to improve SME and entrepreneurship data collection to strengthen the knowledge base for policy making. Many actors support the creation and growth of SMEs in Jordan, including numerous government or government-backed agencies, independent and privately led organisations, and donors and technical assistance agencies. Their efforts are certainly useful, but remain mostly unconnected and disaggregated. Meanwhile, the effective implementation of the 2015-2019 National Entrepreneurship and SME Growth Strategy – which intended to provide coherence to the efforts by many actors – four years after its finalisation is still pending. Against this background, this manual came about following a request to the OECD from JEDCO for guidance on improving the institutional structures and co-ordination mechanisms for implementation of policy measures and programme actions outlined in the SME strategy. The manual identifies good practice at each stage of a continuous, cyclical process of policy development and implementation to enhance entrepreneurship and SME development, including the incorporation of public-private policy dialogue. Taken as a whole, the manual not only provides a practical toolkit for the Jordanian Government, but also for other governments in developing and transition economies. The manual is the first in a series of policy manuals or user guides produced for Jordan under this project: 1. User Guide 1: Reinforcing SME policy co-ordination and public-private dialogue. 2. User Guide 2: Effective monitoring and evaluation of SME and entrepreneurship policies and programmes. 3. User Guide 3: SME statistics and entrepreneurship indicators. The user guides also serve as textbooks for policy analysis and policy improvement in the areas addressed by the project. They intend to help all Jordanian actors in charge of SME support in their efforts to increase SME policy effectiveness. They also intend to help and inspire other countries in the region and beyond to better analyse and strengthen their policies.
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ACKNOWLEDGEMENTS
Acknowledgements This document was prepared in the context of the project SME Policy Effectiveness in Jordan, funded by the MENA Transition Fund established under the Deauville Partnership for Arab Countries in Transition. This work was also undertaken as part of the activities of the MENA-OECD Competitiveness Programme, which is supported by the Swedish International Development Co-operation Agency. The programme is a structured and concerted effort for MENA countries to benefit from OECD work, tools and standards. This document was prepared by Lois Stevenson, international consultant and expert advisor to the OECD, in co-operation with Jorge Gálvez Méndez of the Global Relations Secretariat of the OECD and Mira Hussein of the Jordan Enterprise Development Corporation (JEDCO). The report builds on the exchanges held during various seminars organised by JEDCO and the OECD and with the participation of representatives of the Jordanian Ministries of Industry and Trade, Planning and International Co-operation, Labour, Finance, Municipal Affairs, Higher Education and Scientific Research, among others. The seminars also benefited from the participation of government agencies such as the Department of Statistics, the Customs Department, the Central Bank of Jordan, the Companies Control Department, the Employment and Development Fund, the Jordan Loan Guarantee Corporation and the Income and Sales Tax Department, among others. Important contributions were also provided by the private sector, including the Jordan Chamber of Commerce, the Jordan Chamber of Industry, the Business and Professional Women Association, and other organisations. Agencies and organisations providing support to SMEs and entrepreneurs were also part of the project, including the Business Development Centre, the Young Entrepreneurs Association, Injaz, the Crown Prince Foundation, the King Abdullah Fund for Development, the SME Association, Endeavor, Oasis 500, iPark Technology Hub and the Information Technology Association, among many others. Donors and international partners including the European Union and USAID also contributed to the discussion seminars. The documents produced under this project were reviewed by Alexander Böhmer, Head of the South East Asia Division at the Global Relations Secretariat of the OECD. The documents were harmonised and prepared for publication by Jorge Galvez Mendez, Sophie Elliott, Kristin Sazama and Carla Casado Rubert, under the supervision of Carlos Conde, Head of the Middle East and Africa Division of the Global Relations Secretariat, OECD. Fiona Hinchcliffe edited the reports. The project was implemented by the OECD Global Relations Secretariat, the Centre for Entrepreneurship, SMEs, Regions and Cities, and the Statistics and Data Directorate. The OECD Sherpa Office also contributed to the project in its role of coordinator of the Deauville Partnership and MENA Transition Fund. The Jordan Enterprise Development Corporation was the main beneficiary and co-ordinator institution in Jordan. The project also benefited from the support of To-Excel Consulting, which facilitated the implementation of the activities.
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TABLE OF CONTENTS
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Table of contents Foreword ................................................................................................................................................ 3 Acknowledgements ................................................................................................................................ 5 Acronyms and abbreviations ................................................................................................................ 9 Executive summary ............................................................................................................................. 11 Chapter 1. Good practice structures for managing and co-ordinating SME policy ..................... 13 1.1. Creating a high-level council for SME co-ordination ................................................................. 14 1.2. Setting up a co-ordination body for SME development and policy ............................................ 19 1.3. Designing mechanisms for linking national, regional and local SME policy development efforts ................................................................................................................................................. 20 1.4. Managing public-private sector engagement .............................................................................. 21 1.5. Communicating with the public and key stakeholders on SME development issues ................. 25 1.6. Guidance checklist for good practice SME policy governance structures .................................. 26 Bibliography ...................................................................................................................................... 28 Chapter 2. Implications for Jordan ................................................................................................... 31 2.1. Ensuring inter-ministerial co-ordination through the Higher-Level Committee on Entrepreneurship and SMEs .............................................................................................................. 32 2.2. Formalising JEDCO’s co-ordination role for SME development and policy ............................. 33 2.3. Establishing SME focal points in relevant ministries and agencies ............................................ 34 2.4. Forming regional entrepreneurship and SME committees in the governorates .......................... 35 2.5. Establishing a public-private dialogue mechanism ..................................................................... 36 2.6. Creating a communication strategy and SME web portal........................................................... 38 2.7. Summary of key recommended actions for Jordan based on global good practice .................... 38 Bibliography ...................................................................................................................................... 41 Annex A. Comparison of SME agencies in selected countries: missions, roles, responsibilities .. 43 Annex B. Actors involved in initiatives and actions under the Jordan National Entrepreneurship and SME Growth Strategy .................................................................................. 46 Annex C. Proposed entrepreneurship and SME policy structure for Jordan .............................. 48
Tables Table 1.1. Structure of inter-ministerial committees for co-ordinating SME policy in Malaysia and the Philippines ............................................................................................................................... 15
Figures Figure 1.1. Good practice structures for developing, co-ordinating and managing SME policy .......... 14
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Boxes Box 1.1. Strategic functions of inter-ministerial committees in Malaysia, Mexico, the Philippines and Thailand .................................................................................................................................. 16 Box 1.2. The secretariat role of the Philippines Bureau of Small and Medium Enterprise Development ................................................................................................................................. 18 Box 1.3. Mechanisms for linking national, regional and local SME policy efforts: examples from Kazakhstan and Mexico ................................................................................................................ 21 Box 1.4. Criteria for effective public-private sector dialogue ............................................................... 23 Box 1.5. The structure and role of Ireland’s Advisory Group for Small Business................................ 24 Box 2.1. The Jordan National Committee for Higher-Level Support for SMEs ................................... 32
SME POLICY EFFECTIVENESS IN JORDAN: USER GUIDE 1- INSTITUTIONAL COORDINATION © OECD 2019
ACRONYMS AND ABBREVIATIONS
Acronyms and abbreviations BDC
Business Development Centre
BDU
Business Development Unit
BSMED
Bureau of Small and Medium Enterprise Development (Philippines)
BPWA
Business and Professional Women Association
BRM
Business Roadmap (Kazakhstan)
CIPE
Centre for International Private Enterprise
CIU
Co-ordination and Implementation Unit
DBEI
Department of Business, Enterprise and Innovation (Ireland)
DEF
Development and Employment Fund
ECOSOC
Economic and Social Council
E-TVET
Employment, Technical and Vocational Education Training (Fund)
FP
Focal point
HCST
Higher Council for Science and Technology
HLC
Higher Level Committee
HSPU
High-potential start-up
IBS
Institute of Banking Studies
ICT
Information and communications technology
IMC
Institute of Management Consultants and Trainers
INT@J
Information and Communications Technology Association of Jordan
IRADA
The Enhanced Productivity Centres Program
JEDCO
Jordan Enterprise Development Corporation
JFBPW
Jordan Forum for Business and Professional Women
JIC
Jordan Innovation Centres (Business incubators network)
JLGC
Jordan Loan Guarantee Corporation
JLGF
Jordan Loan Guarantee Facility
KACE
King Abdullah II Centre for Excellence
KAFD
King Abdullah Fund for Development
MENA
Middle East and North Africa
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10 │ ACRONYMS AND ABBREVIATIONS MIT
Ministry of Industry, Trade and Supply
MOPIC
Ministry of Planning and International Co-operation
MSME
Micro, small and medium-sized enterprise
MSMED
Micro, Small and Medium Enterprise Development
MSS
Ministry of SMEs and Startups (South Korea)
NAFES
National Fund for Enterprise Support
NCRD
National Centre for Research and Development
NES
National Employment Strategy
NGO
Non-government organisation
NSDC
National SME Development Council (Malaysia)
OSMEP
Office of Small and Medium Enterprises Promotion (Thailand)
QRCE
Queen Rania Centre for Entrepreneurship
RCC
Regional Co-ordinating Council
SBA
Small Business Administration
SME
Small and medium-sized enterprise
SMED
Small and Medium Enterprise Development
SMEFAC
SME Financing Advisory Committee
USA
United States of America
VTC
Vocational Training Corporation (Jordan)
YEA
Young Entrepreneurs Association
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EXECUTIVE SUMMARY
Executive summary Micro, small and medium-sized enterprises (SMEs) and entrepreneurs have the potential to become important drivers of change and development in Jordan. For example, private firms that employ between 1 to 19 people account for over half of employment in the business economy and from 70 to 80% of jobs in sectors such as professional services, real estate and wholesale and retail. Yet, the productivity and performance of Jordanian SMEs is limited. For example, over 54% of those working in service-sector firms that employ fewer than four people are unpaid workers (e.g. family members), compared to just 8% in firms with 5 to 10 workers, and 0.23% of firms with 20 or more workers. A wide range of ministries, agencies, private sector and non-government organisations are involved in delivering entrepreneurship and SME development policy measures and programmes in Jordan. These are focused on a number of areas, including trade policy, labour policy, regulatory policy, industrial and sectoral policy, financial sector policy, education policy, and technology policy, to name a few. Thus, effective institutional, coordination and consultation mechanisms are critically important for implementing the national strategy and for addressing the diverse challenges faced by the SME sector. The 2015-2019 National Entrepreneurship and SME Growth Strategy proposed a governance and oversight structure for developing, co-ordinating, implementing and monitoring policy and programmes to support the development and growth of entrepreneurship and SMEs. However, limited progress has been made in setting up the proposed institutional structures for effective oversight and co-ordination. This user guide opens with general guidance on good practice structures for the management and co-ordination of SME policy, including establishing a co-ordinating department or agency for SME development and policy; ensuring interdepartmental/ministerial co-ordination and communication; creating mechanisms for linking national, regional and local policy development efforts; and managing engagement and consultation input with the SME sector on policy needs. It concludes with a guidance checklist for good practice in SME policy governance structures. Chapter 2 applies the good practice guidelines to the case of Jordan and makes key recommendations for enhancing management and co-ordination for the effective implementation of the SME strategy.
Key messages 1.
Pursue the establishment of a Higher-Level Committee on Entrepreneurship and SMEs (HLC) as a mechanism for inter-ministerial co-ordination, and review its functions, especially policy and programme co-ordination and integration, annual planning and reporting on implementation progress to parliament. Confirm the Jordan Enterprise Development Corporation (JEDCO) as the Secretariat to the HLC.
2.
Formalise JEDCO’s role in co-ordinating and implementing SME and entrepreneurship policy, including the entrepreneurship and SME growth strategy. Establish a designated
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12 │ EXECUTIVE SUMMARY unit in JEDCO with the responsibility for co-ordinating its implementation across government. Clarify the role of the Entrepreneurship and SME Growth Advisory Committee (created in 2015) as an implementing body to support JEDCO in managing and monitoring progress in achieving targets under each pillar of the national strategy. 3.
Designate SME focal points in relevant ministries and agencies to work in co-ordination with JEDCO on designing and implementing an annual work/action plan to support entrepreneurship and SME growth; agree on specific actions for each implementing partner in delivering on the action plan.
4.
Begin the process of setting up Regional SME Committees in each governorate with the aim of strengthening the ecosystem for entrepreneurship and SME support at the local level and building capacity for the consistent delivery of SME policy measures. JEDCO could act as coordinator or secretariat to the Regional SME Committees.
5.
Establish a formal mechanism for public-private sector policy dialogue on SME issues with a membership including entrepreneurs/SME owners, business and sector associations, women’s business associations, financial institutions, business support providing organisations, etc., tasked with bringing the views of the SME sector to the policy agenda through regular meetings with the HLC. Ensure the representation of SMEs on government committees and councils, such as economic councils, so their voice is heard on broader business environment reforms.
6.
Establish an SME donor working group, facilitated by the Ministry of Planning and International Co-operation (MOPIC), to promote dialogue among donors and other international actors on their entrepreneurship and SME support programmes so as to better co-ordinate and align their project actions and plans with the priorities of the SME strategy.
7.
Create a communication mechanism and SME web portal to disseminate relevant information in a consolidated manner and to liaise with SMEs and other important actors such as academics, business support organisations, etc. This guide will be of use to many governments interested in designing effective structures for implementing entrepreneurship and SME policies and strategies, particularly those in the early stages of such activity. It may also be of interest to private sector business associations and donor agencies.
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1. GOOD PRACTICE STRUCTURES FOR MANAGING AND CO-ORDINATING SME POLICY
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Chapter 1. Good practice structures for managing and co-ordinating SME policy
Many actors, both public and private, are involved in implementing SME policies and strategies, as well as reforms affecting the SME sector. This is due to the cross-cutting nature of SME policies in addressing the many and diverse challenges faced by the SME sector. These are affected by a wide range of policy areas, including trade policy, labour policy, regulatory policy, national competitiveness policy, industrial and sectoral policy, financial sector policy, education policy, and technology policy, to name a few. Policy coherence and co-ordination become critically important in managing the formulation and implementation of policies affecting SMEs, especially when a range of ministries, local governments and third-party organisations are involved. Co-ordination ensures appropriate and synergistic action across all implementing bodies, reduces the risk of policy and programme overlaps, and achieves complementarity between actions by public and private sector actors. The importance of co-ordinated action is noted in good practice guidelines for small businesses (OECD and UNIDO, 2004). These suggest the following actions for establishing effective SME policy co-ordination and management:
Establish a high-level council for inter-ministerial co-ordination and communication: co-ordination mechanisms such as these aid by clearly setting out the role of the various departments involved in SME development and the mechanisms by which policies and programmes will be co-ordinated across government. These mechanisms include high-level co-ordination at the ministerial level, and co-operation at the working or technical level among relevant ministries.
Set up a co-ordinating mechanism, including a department or agency for SME development and policy: this separate department of government or autonomous agency should be charged with the overall management and co-ordination of SME policy and programmes and have the authority to influence policy development by other ministries in favour of SME development.
Link national, regional and local policy development efforts: these should be guided by a clear vision of the respective roles of central, regional and local authorities and agencies and the ways in which the central government can facilitate and support local and regional efforts in creating the conditions for SME and entrepreneurship development. Mechanisms for co-ordinating policy and practice between central and local governments and harmonising the SME development activities of other stakeholders should be created.
Manage engagement with the SME sector through public-private sector policy dialogue mechanisms: Ensure that mechanisms are in place to enable the effective “bottom-up” articulation of SMEs’ needs as part of formal public policy dialogue.
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14 │ 1. GOOD PRACTICE STRUCTURES FOR MANAGING AND CO-ORDINATING SME POLICY In addition, good practice stresses the importance of communicating effectively with the public at large and with the key stakeholders to create awareness of SME development issues. These structural components are schematically presented in Figure 1.1. This chapter describes these structural components, while Chapter 2 provides guidance to Jordan in implementing them. Figure 1.1. Good practice structures for developing, co-ordinating and managing SME policy
Chaired by a lead authority, such as the lead minister responsible for enterprise development. Other members are ministerial counterparts from economic ministries, ministry of finance, central bank, etc.
The SME agency or department can serve as secretariat to the High Level Council and to the SME and Entrepreneurship Advisory Committee. The Inter-ministerial Working Group is composed of SME Focal Points from the relevant ministries.
The Advisory Committe provides advice to the Inter-Ministerial Working Group and is composed of business and sector associations, business development service providers, experts in the field, etc. The Sub-national Coordination mechanism helps to co-ordinate support between central and local authorities.
High-Level Council on SMEs and Entrepreneurship
Department or Agency for SME Development
SME and Entrepreneurship Advisory Committee
Inter-ministerial Working Group
Sub-national Coordination mechanism
Source: based on (OECD and UNIDO, 2004).
1.1. Creating a high-level council for SME co-ordination Since SME policy is horizontal, transcending the scope of any one ministry or agency, managing a national SME and entrepreneurship policy agenda requires co-ordination to avoid fragmentation and duplication. Co-ordination mechanisms can ensure co-operation among the various departments of government, such as between ministries of employment or education in matters of entrepreneurship education and training; or between ministries responsible for sectoral policies affecting SME development, such as ministries of tourism, industry, agriculture or crafts. Co-ordination mechanisms also seek to attribute clear responsibilities for SME development to the relevant departments and local and regional bodies for the delivery of particular programmes/projects, such as the operation of local business advice centres. To address the co-ordination challenges in the formulation and implementation of SME policies at the highest level, it is critical to establish inter-ministerial mechanisms. Interministerial committees are a common co-ordination vehicle (Figure 1.1). Their role is to oversee and manage entrepreneurship and SME policies across government, and to define the role of the different ministries and departments and the structures through which policies and programmes will be co-ordinated.
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1. GOOD PRACTICE STRUCTURES FOR MANAGING AND CO-ORDINATING SME POLICY
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At the ministerial level, such mechanisms commonly take the form of a high-level council represented by a number of key ministries relevant to the SME policy agenda. The general mandate of these councils is to formulate policy and plans for the development of SMEs across government; set the strategic directions for focused and co-ordinated inter-agency effort for implementing SME policy and strategy across all sectors; and promote, analyse and monitor support programmes, instruments and actions. The composition and size of these councils vary considerably from country to country, although all are represented at the ministerial level. Table 1.1 describes the high-level SME councils in place in Malaysia and the Philippines. The Micro, Small and Medium Enterprise Development (MSMED) Council in the Philippines is an example of a relatively small council (three ministers, the chairperson of one state agency, representatives from two national commissions, and three representatives from the MSME sector); whereas the Malaysia National SME Development (NSDC) Council is larger, with representation by 14 ministries. With their broad memberships, each of these high-level councils can play their inter-ministerial co-ordination role, as well as enhance interaction between the state and SMEs. Table 1.1. Structure of inter-ministerial committees for co-ordinating SME policy in Malaysia and the Philippines
Name of council Mandate
Committee Representation
Malaysia National SME Development Council (NSDC), Malaysia Highest policy-making body to set strategic direction for focused and co-ordinated inter-agency effort on the development and implementation of SME policy and strategy across all sectors of the economy. Prime Minister, Chair Minister of International Trade and Industry Minister of Finance Minister of Agriculture and Agro-based Industry Minister of Science, Technology and Innovations Minister of Rural and Regional Development Minister of Education Minister of Higher Education Minister of Tourism and Culture Minister of Domestic Trade, Co-operatives and Consumerism Ministry of Plantation Industries and Commodities Minister of Youth and Sports Ministry of Women, Family and Community Development Minister of Industrial Development Sabah Ministry of Industrial and Entrepreneur Development Sarawak Governor of Central Bank Director-General of Economic Planning Unit (Prime Minister’s Office) Chief Secretary to the Government (Prime Minister’s Office)
Philippines Micro, Small and Medium Enterprise Development (MSMED) Council, the Philippines Mandated to carry out the policy declared in the Magna Carta for Small Enterprises to promote the growth and development of SMEs in the country. Minister of Trade and Industry, Chair Minister of Agriculture Minister of the Interior and Local Government Chair of the Small Business Corporation (financing and credit delivery agency) Three representatives from the MSME sector (with at least one of them representing the microenterprise sector) One representative from the Philippine Commission on Women One representative from the National Youth Commission
The actual composition of an SME inter-ministerial committee will vary across countries depending on the design and components of the national SME policy or strategy and the role of specific ministries. However, certain ministries will have a central role to play in an SME inter-ministerial committee. For example, the Ministry of Finance should be
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16 │ 1. GOOD PRACTICE STRUCTURES FOR MANAGING AND CO-ORDINATING SME POLICY represented because of its role in fiscal policy and funding; the Central Bank because it supervises the banking sector and often introduces measures to facilitate access to finance such as reducing the capital requirements banks need to hold; the Ministry of Labour because of policies to promote self-employment; and the Ministry of Science and Technology or innovation because of its role in boosting the innovation potential of SMEs. The core functions assigned to high-level councils also vary, with some given broader scope and more detailed functions than others (see examples for Malaysia, Mexico, the Philippines, and Thailand in Box 1.1). However, they tend to share a number of common functions:
formulating broad policies and measures to facilitate the development of SMEs across all sectors of the economy
co-ordinating and integrating policies and action plans for SME development across government
making recommendations to the head of government and/or parliament
annual reporting on the results of policy implementation.
The examples in Box 1.1 also reveal the variation across countries in the designated chairpersons of the inter-ministerial committees. In Malaysia, the inter-ministerial council is chaired by the Prime Minister; in Mexico, by the Minister of Finance (vice-chaired by the Under Secretary of SMEs in the Ministry of Economy); in the Philippines, by the Minister of Trade and Industry; and in Thailand by the Deputy Prime Minister. With the exception of Malaysia, the composition of the Council, including the designated chairperson, was specified in an SME law. Box 1.1. Strategic functions of inter-ministerial committees in Malaysia, Mexico, the Philippines and Thailand Malaysia: National SME Development Council (NSDC) – chaired by the Prime Minister
Formulate broad policies and strategies to facilitate the overall development of SMEs across all sectors of the economy.
Review the roles and responsibilities of government ministries and agencies in relation to the development of SMEs across all sectors.
Enhance co-operation and co-ordination, as well as guide government ministries and agencies to ensure effective implementation of development policies and action plans for SMEs across all sectors.
Encourage and strengthen the role of the private sector in supporting the overall development of SMEs.
Mexico: National Council for Competitiveness of SMEs – chaired by the Minister of Economy
Study and propose support measures to promote the competitiveness of SMEs through the analysis of proposals arising from the public and other sectors.
Develop mechanisms for SMEs to receive consultancy and training in marketing, technology and production processes, product design and financing, and in terms of standardisation and certification.
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Encourage the establishment of business incubators, and the initiative and creativity of entrepreneurs.
Develop options for the training, professional development, and certification of specialists who provide consulting and training to SMEs.
Facilitate integration among SMEs and link SMEs with large companies.
Stimulate the integration and efficiency of productive chains.
Formulate mechanisms and strategies for direct and indirect export promotion among MSMEs.
Promote schemes that facilitate access to financing for SMEs.
Institute national awards that recognise the competitiveness of SMEs.
Annually evaluate the mechanisms, programmes and policy actions for developing the competitiveness of SMEs.
Philippines: Micro, Small and Medium Enterprise Development (MSMED) Council – chaired by the Minister of Trade and Industry
Help establish a conducive environment and opportunities for the growth and development of the SME sector.
Recommend to the President and Congress all policy matters affecting SMEs.
Co-ordinate and integrate various government and private sector activities relating to SME development.
Review existing policies of government agencies affecting the growth and development of SMEs and recommend changes to the President and Congress through the Committee on Economic Affairs of the Senate and the Committee on Small Business and Entrepreneurship Development of the House of Representatives (and to report annually to Congress on the result).
Monitor and determine the progress of various agencies (e.g. State ministries/agencies, local government units, private sector groups/associations) geared towards development among SMEs.
Provide the appropriate policy and co-ordination framework in assisting relevant government agencies in tapping into local and foreign funds for SME development.
Direct and/or assist relevant government agencies and institutions at the national, regional and provincial level to engage in specified support activities to promote the productivity and viability of SMEs.
Co-ordinate, monitor and assess the implementation of the SMED Plan, and adjust it in line with changing conditions in both the domestic and international environment.
Conduct research to support women’s entrepreneurship and provide policy direction to enable more opportunities for women to engage in entrepreneurship.
Develop, in co-ordination with the education authorities, an entrepreneurship course curriculum/training programme to be integrated in the curriculum of educational and training institutions at all levels.
Formulate the policy and plan for SME promotion for approval by the Council of Ministers.
Thailand: National Board of SMEs Promotion – chaired by the Deputy Prime Minister
Determine the definitional characteristics of SMEs (criteria) to be issued in the Ministerial Regulations.
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Present reports on the situation of SMEs in the country to the Council of Ministers and arrange to disseminate such reports to the public at least once a year.
Review and approve the Action Plan on SMEs Promotion prepared by the OSMEP.
Provide recommendations to the relevant official agencies, state agencies, state enterprises or private organisations on the implementation of the Action Plan on SME Promotion.
Suggest to the relevant official agencies, state agencies or state enterprises measures on monetary and financial matters, taxes and duties or other matters in order to promote the implementation of the policy and plan for SME promotion.
Propose the issuance, amendment or revision of the laws relating to SME promotion to the relevant official agencies, state agencies or state enterprises.
Formulate measures to promote collaboration and co-ordination in the promotion of SMEs, both within the country and abroad, among official agencies, state agencies, state enterprises, private organisations, domestically and internationally, and international organisations.
Sources: Malaysia: SMECORP. (2019). About SMECORO. Retrieved May 2019, from http://www.smecorp.gov.my/index.php/en/about/2015-12-21-08-40-32/nsdc/; Mexico: Cámara de Diputados. (2017). Law on the Development of the Competitiveness of Micro, Small and Medium Enterprises. Retrieved from www.diputados.gob.mx/LeyesBiblio/pdf/247_190517.pdf/; Philippines BMSMED. (2009). "Guide to the Magna Carta for Micro, Small and Medium Enterprises”. Retrieved from: http://www.smefinanceforum.org/post/guide-to-the-magna-carta-for-micro-small-and-medium-enterprises; Republic of the Philippines. (2014). Retrieved from “[REPUBLIC ACT NO. 10644], An Act Promoting Job Generation and Inclusive Growth Through the Development of Micro, Small and Medium Enterprises; Thailand: Kingdom of Thailand. (2000). Small and Medium Enterprises Promotion Act, B.E. 2543 (2000). Government Gazette, 54(8), 270-285..
The lead ministry or agency for SME development (see Section 1.2) usually acts as secretariat to the inter-ministerial SME committee. Functions generally include:
preparing the agenda and background materials for the committee meetings, such as position papers for discussion
co-ordinating the preparation of SME strategy documents and annual action plans for approval by the committee
providing progress reports on implementation of SME policies and measures according to the strategic plans
preparing recommendations for policy actions for consideration and/or approval
maintaining records of committee deliberations and decisions.
Box 1.2 provides an example of these functions for the Philippines. Box 1.2. The secretariat role of the Philippines Bureau of Small and Medium Enterprise Development In the Philippines, the Bureau of Small and Medium Enterprise Development (BSMED) acts as the secretariat to the Micro, Small and Medium Enterprise Development (MSMED) Council. Its functions include:
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Preparing and recommending, in co-ordination with local government units and/or associations of local government officials, annual as well as medium-term SME development plans for approval of the council.
2)
Co-ordinating the preparation of position papers and background materials for discussion or approval during council meetings.
3)
Assisting the council in co-ordinating and monitoring SME policies, programmes and activities of all government agencies with respect to SMEs.
4)
Preparing, collating and integrating all inputs to the council’s yearly report on the status of SMEs in the country.
5)
Submitting periodic reports to the council on the progress and accomplishment of its work programme.
6)
Performing ad-hoc functions as authorised by the council.
Source: Republic of the Philippines. (2008). Republic Act No. 9501, 23 May 2008.
1.2. Setting up a co-ordination body for SME development and policy Over the past three decades governments worldwide have experimented with a variety of approaches to managing the development of the SME sector. Common models for ensuring central policy leadership are: a) establishing an SME department within the ministry responsible for industry, trade, commerce, or economic affairs, or even a special ministry for SMEs/entrepreneurship; b) creating an autonomous umbrella state agency with special authorities to develop, co-ordinate and deliver SME policy objectives in concert with other government departments and often also tasked with overseeing regional support structures; or c) creating an independent agency in which the private sector plays a role, particularly through its representation on the governing board of directors. The decision on which model to use is very much country-specific. Annex A gives some international examples to illustrate these approaches. In the United States, the government has established the Small Business Administration (SBA) as an autonomous state agency to be responsible for SMEs, reporting directly to the US President. This structure was created by the Small Business Act of 1953. In Thailand, the government has established, via the SMEs Promotion Act, B.E. 2543 (2000), the Office for Small and Medium Enterprises Promotion (OSMEP) as the SME agency, reporting directly to the Prime Minister. In Korea, Malaysia and Morocco, special SME agencies have been established under the auspices of the ministry responsible for economic development. Recently, the Malaysian Government has established the Ministry of Entrepreneurship Development, to which SME Corp. Malaysia now reports (previously under the Ministry of International Trade and Industry). The Korean Government has also established a full Ministry of SMEs and Start-ups (MSS) to develop and implement government policies to promote start-ups and the growth of SMEs to global enterprises (an upgrading of the former Small and Medium Business Administration). One of the motivations for creating these separate ministries for SMEs and entrepreneurship was the need to increase policy legitimacy and authority for their role – critical for garnering the co-operation, collaboration and support of other ministries in policy co-ordination. The legislative authority to co-ordinate the delivery of SME policy measures appears to be a determining factor in the success of various structures for cross-ministry co-ordination.
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20 │ 1. GOOD PRACTICE STRUCTURES FOR MANAGING AND CO-ORDINATING SME POLICY It is strengthened where the SME agency is given the legislative authority for dealings with government ministries in its co-ordination role. Inter-ministerial policy co-ordination is also important at the bureaucratic working level. Ideally, the ministry, department or agency responsible for SME and entrepreneurship development should form and chair a working group represented by ministries/agencies involved in delivering SME policy measures. The membership typically mirrors the ministries represented on the inter-ministerial committee. The purpose of the working committee is to collaborate in the preparation of an SME development action plan consistent with the SME strategy approved by the higher-level council, develop and approve joint guidelines for ensuring co-ordination of the programmes that are implemented under state support for SMEs, and participate in monitoring and progress reporting. An effective mechanism for operationalising this committee is to designate people as SME focal points in each relevant ministry and agency represented on the higher level interministerial committee. These focal points would meet on a regular basis with the lead ministry/agency on SME development to design SME support measures and action plans and to monitor implementation by the responsible ministries/agencies.
1.3. Designing mechanisms for linking national, regional and local SME policy development efforts All levels of government have a role to play in SME policy (national, regional and local); thus it is important to ensure links across all these levels in policy and programme efforts. This is especially important because of the limitations in the role of central government in creating the conditions for entrepreneurship and SME development at the sub-national level. The position of regional and local governments is much better suited to taking direct action to meet SMEs’ needs due to their closer proximity to SMEs on the ground and their greater understanding of local context and needs (OECD and UNIDO, 2004). In many countries, provinces, governorates, states, or local authorities may have the authority to develop their own SME development programmes, independent of the central level. In this case, co-ordination efforts should be in place to develop synergies among the national, regional, and local policy directions and programmes to benefit SMEs. Decentralising SME development responsibilities may often involve creating regional and/or local development centres or contractual arrangements with third party entities for delivering services through business development centres. These development centres provide the basis for managing development policy, taking into account the characteristics and potential of the regional or local economy. Critical to the success of the decentralised approach is ensuring these local centres have: 1) the freedom to develop their own plans within a national development framework; 2) the capacity to create differentiated programmes and products; 3) the ability to work effectively with and co-ordinate the efforts of the various stakeholders at the local level; and 4) funding and financial accountability (OECD and UNIDO, 2004). Examples of mechanisms in use by governments in other countries to link national, regional and local SME policy and programme efforts are presented in Box 1.3. The Kazakhstan Government has established Regional Programme Co-ordinators and Regional Coordinating Councils (RCCs) for implementing the national Business Roadmap (BRM) policy priorities and programmes in accordance with the needs of each region. The Mexican Government employs a similar approach by establishing State Councils (at the governorate
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level), representing federal, state and municipal governments, to co-ordinate SME support measures and project proposals. These are good practice approaches to co-ordinating SME policies and support initiatives across vertical levels of government and for engaging regional and local service providers in implementing national policy initiatives. Box 1.3. Mechanisms for linking national, regional and local SME policy efforts: examples from Kazakhstan and Mexico Kazakhstan’s Regional Co-ordinating Councils The Kazakhstan Government has created mechanisms to foster linkages between national and regional authorities on economic policies, and theoretically on entrepreneurship and SME development policies. The roles and responsibilities of local executive bodies in policy implementation, including for actions to support SMEs; and the role of the national entrepreneurship body in co-ordinating SME support mechanisms in the regions, are clearly specified in the 2006 Law on Private Entrepreneurship. The resulting structure is the system of Regional Programme Coordinators, which are responsible for co-ordinating implementation of the Business Roadmap (BRM) 2020 in the 14 regions. The BRM is intended to provide a clear vision of the ways in which the national government, in close co-operation with the Economic Development Department (responsible for national SME policies), can facilitate and support local and regional efforts in creating the conditions for entrepreneurship and SME development, setting up mechanisms for coordinating policy and practice between national and local governments, and harmonising the development activities of other stakeholders. The Regional Programme Co-ordinators are also responsible for the formation of Regional Coordinating Councils (RCCs) headed by the governors of each region, which are responsible for determining their region’s priorities, and approving BRM 2020 projects in their regions (for example, infrastructure support for SME projects). Members of the RCCs include government officials, development institutions, business organisations, second-tier banks, independent experts and entrepreneurs, and are essentially consulting and advisory bodies on entrepreneurship and SME policies and programmes at the local and regional level. Mexico’s State Councils for Competitiveness of MSMEs In Mexico, the National Council for Competitiveness of MSMEs has established mirror State Councils for Competitiveness of MSMEs in each state. The mandate of the State Councils is to study and propose the regional, state and municipal support measures for developing the competitiveness of MSMEs through the analysis of proposals from the public sector and other sectors of the economy. Towards this end, the State Councils are tasked with: 1) evaluating and proposing measures to help promote the competitiveness of production chains and of MSMEs; 2) implementing mechanisms to promote compliance with the objectives of the Law for the Development of the Competitiveness of MSMEs; and 3) discussing and analysing project proposals submitted by the municipalities, the Federal District delegations, and sectors for the development and fulfilment of the objectives of the MSME law. The existence of these State Councils strengthens national and regional linkages as well as enhancing the level of co-ordination with state governments. The State Councils operate subject to guidelines issued by the National Council, meet on a quarterly basis, and periodically report to the National Council on the development of their activities.
1.4. Managing public-private sector engagement In addition to horizontal and vertical government co-ordination, good practice in the design and implementation of entrepreneurship and SME policy requires an effective mechanism for dialoguing and consulting with SMEs on their concerns and needs (OECD and UNIDO,
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22 │ 1. GOOD PRACTICE STRUCTURES FOR MANAGING AND CO-ORDINATING SME POLICY 2004). It is important to hear the “voices” of SMEs themselves, solicit advice on the various challenges and obstacles facing entrepreneurs and SMEs, identify the types of assistance and support needed to address these concerns, and seek recommendations for how best to ensure sustainable SME growth. This requires formal mechanisms to engage private sector associations in a dialogue to explain the SME perspective, and may require creating formal “advocacy” systems for input from the SME sector. Public-private sector policy dialogue comes in many forms, either structured or ad-hoc, formal or informal, wide-ranging or focused on specific issues. Recent years have seen a body of case studies and synthesis research papers emerge on techniques for establishing public-private sector dialogue mechanisms and promoting successful policy dialogue (Herzberg, B., and A. Wright, 2006). This is particularly important in the area of SME development. Although including SMEs in public-private sector policy dialogue is essential policy practice, ensuring that the organised voice of SMEs is as powerful in government as that of large firms can be very challenging. Even in the most sophisticated economies a substantial gap often exists in communication with SMEs, especially those which are informal and microenterprises. To filter up to the national level, consultation mechanisms need to be established to ensure proper “bottom-up” communication from SMEs at the local level. Involving relevant stakeholders in the SME environment will help to create effective dialogue on policy issues to address the challenges faced by SMEs. Criteria for effective public-private sector dialogue mechanisms are presented in Box 1.4. Business membership associations, including chambers of commerce and industry, are the main mechanisms for public-private sector dialogue at national, regional and local levels. However, the major business associations may not be sufficiently representative of micro and smaller businesses or inclusive in their membership. Due to the heterogeneity of SMEs and the differing needs of enterprises of various sizes (e.g. microenterprises versus exporting SMEs), it may be necessary to encourage business associations to increase their representation of the various types of SMEs in their membership. This would provide the best chance for productive interactions between public and private sectors in the design of a dialogue process. In addition, special efforts may be warranted to reach out to underrepresented groups of SMEs and entrepreneurs through, for example, networks of women entrepreneurs, entrepreneurs with disabilities, young entrepreneurs, and microenterprises. Increasingly, governments can also directly engage with a wide range of SMEs on particular issues through online mechanisms. Public-private dialogue initiatives can also benefit from the input of international and donor organisations (development partners) active in a country. Not only can development partners encourage the conditions for dialogue, they can also play a role in promoting, supporting and facilitating dialogue processes, as well as building the advocacy capacity of business and sector associations to present coherent views to policy makers (Herzberg, B., and A. Wright, 2006). In addition, international and donor organisations should co-ordinate among themselves to avoid duplicating their efforts. Participating in public-private dialogue processes is also an opportunity to gain a collective view of development priorities, including those directly related to entrepreneurs and SMEs, as well as issues indirectly affecting SMEs.
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Box 1.4. Criteria for effective public-private sector dialogue The following criteria have been put forward by the United Nations Conference on Trade and Development (UNCTAD), and refer in particular to policy dialogue with SMEs:
all relevant stakeholders are represented and their selection criteria are transparent;
the objectives and the agenda are clearly stated and relevant to stakeholders;
there is transparency over how and by whom the agenda is set, how representatives are selected, how often meetings are held;
sessions are held regularly, or are called based on criteria that are transparent and accepted by all stakeholders;
there is accountability, such as monitoring progress or impact of dialogue;
the dialogue process is mutually beneficial: as a forum for the government to sound out the private sector on issues and also a route for the private sector to raise issues;
dialogues are held at all levels: national, regional and local;
the attitude towards public-private sector dialogue is open and positive, and there is a willingness to take into account private sector views in policy making, recognising the benefits of dialogue processes and the value of private sector views influencing government policies.
Capacity building and training in public-private sector dialogue may be necessary to ensure that certain segments of the SME community are able to express their concerns and needs adequately, especially if SMEs are underrepresented in the advocacy activity of larger business and trade associations with government authorities. It is also important to encourage SMEs, rural, women and young entrepreneurs to engage in dialogue through business associations. Source: UNCTAD Secretariat. (2005). How to build an effective policy framework for SMEs: a developing countries' perspective. International Conference on Reforming the Business Environment, Cairo, Egypt, 29 November-1 December, United Nations
The role of formal SME advisory councils or committees To increase the influence of SMEs on policy and programming, the ministries responsible for SMEs can establish private sector-led forums and councils and create effective local/regional platforms for the expression of SME interests. A common mechanism at the national level for advice and input on SME policy issues is a formal SME advisory committee (Figure 1.1). In countries where they exist, SME laws1 generally specify that such advisory committees be formed, stipulate the composition of membership, and outline the major functions, although the specific details will vary by country depending on their context and needs. These committees might be viewed as national “think tanks” for the promotion and development of SMEs. Reporting to the high-level inter-ministerial SME committee, they may be asked to examine any number of issues, such as the execution of the SME policy framework; the review of current policies, strategies and plans with advice on innovative strategies and interventions; and structural changes to the institutional landscape to be more efficient and cost-effective in delivering services to SMEs. They may also be asked to advise on emerging SME issues and recommend corrective measures, and provide policy advice on initiatives and actions to foster the creation and growth of new enterprises.
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24 │ 1. GOOD PRACTICE STRUCTURES FOR MANAGING AND CO-ORDINATING SME POLICY The membership of these advisory committees is generally quite broad, including entrepreneurs, chambers of commerce and industry, small business associations, associations of entrepreneurs, SME support organisations, and independent experts (see Box 1.5 for an example from Ireland). Box 1.5. The structure and role of Ireland’s Advisory Group for Small Business Ireland’s Advisory Group for Small Business (AGSB) was established by the Ministry of State for Small Business in 2011 as a private sector body to facilitate regular dialogue between the government and representatives of the small business sector and to provide policy advice to government on the key issues affecting the SME sector and the actions to best address these. As a platform for structured engagement, with a view to influencing policy among small business owners, their representative bodies and the government, AGSB members use their experience and expertise in business to raise key issues requiring government action. They also advise on the impact of government proposals on small business and assist government in identifying areas where further work may be required. The AGSB’s specific functions are to: 1.
provide information and views to the Minister of State for Trade, Employment, Business, EU Digital Single Market and Data Protection, government departments, agencies and state bodies on issues affecting small business;
2.
provide feedback and/or input on certain consultations as required, for example the Action Plan for Jobs process, the Regional Action Plan for Jobs process and the budget;
3.
review Ireland’s annual performance as reported in the European Commission Small Business Act (SBA) Factsheet and suggest possible actions in order to ensure Ireland further improves its overall standing in relation to EU colleagues;
4.
assist in promoting relevant state-led initiatives.
In 2018 the AGSB had 19 members, including representatives from the Department of Business, Enterprise and Innovation (DBEI), the main small business representative bodies, and state enterprise support agencies:
Minister of State for Trade, Employment, Business, EU Digital Single Market and Data Protection, Chair;
three senior representatives from the Department of Business, Enterprise and Innovation (DBEI);
Small Firms Association;
Irish Small & Medium Enterprise Association;
Design and Crafts Council of Ireland;
National Association of Community Enterprise Centres;
Irish Tax Institute;
Irish Hotels Federation;
Irish Farmers Association;
Top Part Motor Factors;
CPA Ireland;
Chambers Ireland;
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Retail Excellence Ireland;
The Digital Hub;
Enterprise Ireland;
Local Enterprise Office Centre of Excellence.
The AGSB meets every two months. The DBEI performs the secretariat function to the Council. Source: Dept. of Business, Enterprise and Innovation. (n.d.). Small Business. Retrieved May 2019, from https://dbei.gov.ie/en/What-We-Do/Supports-for-SMEs/Small-Business/
1.5. Communicating with the public and key stakeholders on SME development issues Good practice also stresses the importance of communicating effectively with the public at large, with the media and with all the key stakeholders to create wide awareness of SME development issues (OECD and UNIDO, 2004). This communication can be enhanced by equipping the key stakeholders with whom SMEs interface (such as banks, professional services and regulatory authorities) with appropriate information dissemination capacities; issuing regular bulletins or small business publications; appointing local ombudsmen who can answer queries on key issues; and making use of government websites to communicate information on SME policies and programmes, which has become a common practice. An equally important aspect of the implementation of SME strategies is to develop a communications plan to adequately inform SMEs and stakeholders of the strategy’s existence, of SME policies and support measures, and the actions to be taken to address the diverse needs of the heterogeneous enterprises that comprise the SME sector.
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1.6. Guidance checklist for good practice SME policy governance structures To summarise, the following checklist is offered to guide the application of good practice in creating effective governance structures for SME policy. Inter-ministerial committee on SMEs Is an inter-ministerial SME/entrepreneurship committee in place? Is the committee represented by key ministries relevant to the SME policy agenda? Is the mandate and role of the committee well-articulated? Does it include a mandate for approving annual plans for the development of SMEs and coordinating SME policy actions across government? Is the committee responsible for annual reporting to Parliament, Congress, or the Cabinet? Does the committee have regularly scheduled meetings (e.g. quarterly, semi-annually?) Has the ministry, department or agency responsible for SME development been tasked with role of acting as Secretariat to the committee? National coordinating department or agency of government for SME policy and development Is there a designated ministry, department or agency for SME policy and development? Does this designate have the mandate to coordinate SME policy and measures across the national government? Have SME focal points been appointed in other ministries and agencies? Does the SME ministry/department/agency work collaboratively with these focal points to design annual work plans on SME development, with the aim of achieving coherence in policy actions and less fragmentation of policy and programme efforts? Are the SME focal points brought together on a regular basis to report on progress in implementing SME policy and support actions within their own ministries/agencies and held accountable for progress and performance? Has a national SME development strategy been developed and approved by the government (e.g. through the inter-ministerial SME committee)? Has this national strategy been developed in collaboration with other ministries and agencies and in consultation with key stakeholders on the national and regional levels? Is the structure of the SME ministry/department/agency aligned with the key pillars of the SME strategy? Is there a coordination and implementation unit in place? Is there a mechanism in place for monitoring and tracking of the implementation of SME policy measures across government? Does the designate carry out consultations with SMEs and support organisations on policy and programme needs? Is the designate responsible for producing an annual report on the state of SMEs in the country, progress in implementing the SME policy agenda, and the impact of policy measures?
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Does the ministry/department/agency responsible for SME development implement a communication strategy to inform SMEs of support policies and measures? Formal mechanisms for policy dialogue and consultation input from SMEs Is there a strong and demonstrated commitment of the government to engage in publicprivate sector dialogue on policy issues? Are public-private sector dialogue discussions carried out on a formal (e.g. organised on specific issues with collective of representative stakeholders) or more informal basis (e.g. one-to-one meetings with individual business associations)? Do the main business associations engaged in public-private sector dialogue processes genuinely represent SMEs? Does the government hold public-private sector dialogue sessions to consult regularly with SMEs and entrepreneurs on proposed economic policies and strategies? Are forums in place for receiving input from SMEs and their representative advocacy associations on specific issues affecting the SME sector? Are special efforts made by policymakers and business associations to ensure inclusiveness of views from entrepreneurs and SMEs in policy dialogue, e.g. women entrepreneurs, young entrepreneurs, micro-enterprises? Has the government established a national SME and entrepreneurship advisory committee to advice on policy and programme issues? Is the committee membership comprised mostly of private sector representatives of SMEs, SME associations, and organisations providing support to SMEs? Does the advisory committee engage directly with the ministry responsible for SMEs and/or the inter-ministerial SME committee? Does the SME ministry/department/agency act as Secretariat to the advisory committee? Are reports from the SME Advisory Committee made publicly available? Mechanisms for linking national, regional and local SME policy development efforts Does the national SME ministry/department/agency provide policy leadership to regional and local governments in the design of SME support policies and programmes? Has the national SME ministry/department/agency worked with regional and local government authorities to establish SME committees at the regional/local level? Has the national SME ministry/department/agency facilitated the forming of networks of SME and entrepreneurship delivery organisations and agents at the regional/local level (i.e. concept of building entrepreneurial and SME support ecosystems)? Communication with the public at large and key stakeholders on SME development issues Does the SME agency/department/ministry regularly disseminate information on SME development issues, policies, strategies, and action plans? Is there a government website that displays information on SME policies and programmes?
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Notes 1
The existence of a basic law for small and medium enterprises (SMEs) is considered important to establish a national framework and governance structure to guide SME sector development. Normally, such SME laws will minimally define SMEs (including microenterprises), designate the regulating and governing bodies for SME sector development, and outline the scope of incentives and policy measures to foster the promotion and development of SMEs. The law is used as the basis for guiding sustained policy actions. Although there are arguments regarding the necessity of having an SME Law, it offers the benefit of ensuring smoother, more effective and consistent long-term policy support for SME sector development by providing a core and overarching policy framework.
Bibliography Al Rantawi. (2017). Jordan/SME Sector Participation of SME Associations in Public-Private Dialogue. Al Quds Center for Political Studies, presented at the 9th Global Workshop on “Public-Private Dialogue on Enterprise Development for Youth & Inclusion” Tunis, May 9-11. Retrieved from http://www.publicprivatedialogue.org/workshop%202017/2017%20%20Public%20Private%20Dialogue%20in%20Jordan.pdf BMSMED. (2009). "Guide to the Magna Carta for Micro, Small and Medium Enterprises”. Retrieved from http://www.smefinanceforum.org/post/guide-to-the-magna-carta-for-micro-small-andmedium-enterprises Cámara de Diputados. (2017). Law on the Development of the Competitiveness of Micro, Small and Medium Enterprises. Retrieved from www.diputados.gob.mx/LeyesBiblio/pdf/247_190517.pdf/ Dept. of Business, Enterprise and Innovation. (n.d.). Small Business. Retrieved May 2019, from https://dbei.gov.ie/en/What-We-Do/Supports-for-SMEs/Small-Business/ Economic Policy Council. (2017). Jordan Economic Growth Plan 2018-2022. Economic Policy Council, Amman. Herzberg, B., and A. Wright. (2006). The PPD Handbook: A Toolkit for Business Environment Reformers – Operational Guidelines for the Charter of Good Practice in Using Public-Private Dialogue for Private Sector Development. DfID/World Bank/IFC/OECD Development Center, Small and Medium Enterprise Department, World Bank, Washington, DC. Kingdom of Thailand. (2000). Small and Medium Enterprises Promotion Act, B.E. 2543 (2000). Government Gazette, 54(8), 270-285. OECD and UNIDO. (2004). Effective Policies for Small Business: A Guide for the Policy Review Process and Strategic Plans for Micro, Small and Medium Enterprise Development. OECD, Paris. Republic of the Philippines. (2008). Republic Act No. 9501, 23 May 2008 (“An Act to Promote Entrepreneurship by Strengthening Development and Assistance Programmes to Micro, Small and Medium Scale Enterprises. Amending for the Purpose Republic Act No. 6977, as Amended, Otherwise Known as the. Republic of the Philippines. (2014). Retrieved from “[REPUBLIC ACT NO. 10644], An Act Promoting Job Generation and Inclusive Growth Through the Development of Micro, Small and Medium Enterprises
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SMECORP. (2019). About SMECORO. Retrieved May 2019, from http://www.smecorp.gov.my/index.php/en/about/2015-12-21-08-40-32/nsdc/ UNCTAD Secretariat. (2005). How to build an effective policy framework for SMEs: a developing countries' perspective. International Conference on Reforming the Business Environment, Cairo, Egypt, 29 November-1 December, United Nations.
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Chapter 2. Implications for Jordan
During 2013-2014 the European Union funded a project to support Jordan to develop a National Entrepreneurship and SME Growth Strategy (“the SME strategy”) which would be implemented during 2015-2019. The main goal of the SME strategy is to foster job creation and income generation by increasing the entry of start-ups and improving the performance and growth of existing SMEs to elevate the contribution of the SME sector to Jordan’s economy. The SME strategy, however, has not been fully adopted or implemented by the government. The primary focus of the strategy is on creating an entrepreneurial culture; easing the legal and regulatory burden to foster the entry of new businesses and the expansion of existing SMEs; strengthening the entrepreneurial capacity of Jordanians to start new businesses with higher value-added and job-creation potential; improving the survival and growth possibilities of early-stage enterprises through provision of post-creation support; enhancing the capacity of existing SMEs to improve their productivity, competitiveness, international orientation and job creation and growth trajectories; fostering a higher percentage of rapidly-growing and innovative enterprises; and ensuring all enterprises have access to the financial resources necessary to launch and develop. Many ministries, agencies, private sector and non-government organisations are involved in delivering entrepreneurship and SME development policy measures and programmes in Jordan (see Annex B). These are influenced by a wide range of policy areas, including trade policy, labour policy, regulatory policy, national competitiveness policy, industrial and sectoral policy, financial sector policy, education policy, and technology policy, to name a few. Thus, effective institutional, co-ordination and consultation mechanisms are critically important for implementing the national strategy and for addressing the multitude of diverse challenges faced by the SME sector. In line with the international good practice outlined in Chapter 1, the SME strategy proposed a governance and oversight structure for developing, co-ordinating, implementing and monitoring policy and programmes to support the development and growth of entrepreneurship and SMEs. This included creating a Higher-Level (interministerial) Committee on Entrepreneurship and SMEs and an external SME/Entrepreneurship Advisory Committee. It also confirmed JEDCO as the lead body for co-ordinating actions under the strategy (and acting as the Secretariat to the Higher Council), established SME focal points in relevant ministries and agencies to collaborate with JEDCO in implementing the SME strategy, and formed regional networking committees at the governorate level (see the strategy extract in Annex C). This proposed set-up reflects the good practice institutional structures for co-ordinating and managing SME policy presented in Figure 1.1. Since 2015, the Jordanian Government has made a certain degree of progress in implementing these proposed actions. Of considerable significance is that many of the pillar objectives and activities outlined in the strategy document and its accompanying action plan have been referred to in the Jordan Economic Growth Plan 2018-2022
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32 │ 2. IMPLICATIONS FOR JORDAN (Economic Policy Council, 2017). However, limited progress has been made in setting up the proposed institutional structures for effective oversight and co-ordination outlined in Annex C. This chapter reviews the progress made to date and suggests the next steps for Jordan in improving its SME policy co-ordination and structures, following the principles outlined in Chapter 1.
2.1. Ensuring inter-ministerial co-ordination through the Higher-Level Committee on Entrepreneurship and SMEs An inter-ministerial co-ordinating mechanism is very important for Jordan because several ministries and agencies are involved in implementing entrepreneurship and SME policies. Although the Ministry of Industry, Trade and Supply (MIT) leads on SME development policy issues (with JEDCO as implementation agency), as in other countries several other ministries and agencies are also involved in SME-related policy actions. Annex B describes the roles of the various relevant ministries and agencies in implementing the action plan prepared as part of the National Entrepreneurship and SME Growth Strategy. The establishment of a National Committee for Higher-Level Support for SMEs (HLC) was endorsed by the Jordanian Cabinet in February 2015 (Box 2.1). However, largely due to ministerial shuffles, including in the Ministry of Industry and Trade and Ministry of Planning and International Co-operation (MOPIC), and turnover of the Jordan Enterprise Development Corporation (JEDCO) CEO, the HLC has been inactive since its first meeting in June 2015. Box 2.1. The Jordan National Committee for Higher-Level Support for SMEs The HLC was constituted with the following members:
Minister of Industry, Trade and Supply, Chair
Minister of Finance
Governor of the Central Bank
Representative from the Ministry of Planning and International Co-operation (MOPIC)
Representative from the Ministry of Labour
Representative from the Ministry of Social Development
Director General of the Development and Employment Fund (DEF)
Governor of the Jordan Co-operative Corporation (Ministry of Agriculture)
Chair of the Jordan Chamber of Industry
Chair of the Jordan Chamber of Commerce
The mission of the HLC is to outline the general framework for high-level support for SMEs in Jordan, approve the roadmap for improvement of SMEs, improve SME programmes and support services, and ensure these supports are available in all parts of Jordan by reaching out to all governorates. The committee’s main responsibilities and tasks are to: develop a roadmap and working methodology to promote the SME sector and to support SMEs in all sectors and aspects; set priorities for funding of SME projects and the distribution of lending support from the different
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financing windows; make recommendations for expanding SMEs, including outside provincial centres, with emphasis on new projects (start-ups); and entrust all stakeholders with carrying out their roles according to their area of competence. The Jordan Cabinet requires the Committee to submit quarterly reports to the Prime Minister on its work. Source: Information gained from JEDCO at OECD project meeting in November 2017.
The HLC should be operationalised and more emphasis could be placed on its role in coordinating and integrating policies and action plans for SME development across government, based on the international good practice described in Chapter 1 (see examples in Box 1.1). Consideration should also be given to expanding its membership to other key ministries involved in the Entrepreneurship and SME Growth Strategy Action Plan. Of particular importance would be the Minister of Education and the Minister of Higher Education, who play key roles in implementing initiatives for entrepreneurship education and training. JEDCO is assumed to be the secretariat to the HLC – its role and functions should be confirmed and clarified (see next section), perhaps using the example from the Philippines as a model (Box 1.2). Its roles could include preparing the agenda for the HLC meetings, jointly with the Chair; preparing the annual work plan for entrepreneurship and SME growth for approval; preparing progress monitoring reports on the implementation of the work plan for discussion and approval; preparing annual reports on the status of the SME sector and outputs/outcomes from the support programmes and projects (see User Guide 2: Effective monitoring and evaluation of SME and entrepreneurship policies and programmes); and preparing the minutes of the HLC committee meetings, and other duties as assigned by the HLC.
2.2. Formalising JEDCO’s co-ordination role for SME development and policy In co-ordinating and implementing the SME strategy, JEDCO has multifaceted roles to play. These include advocacy, co-ordination (with other ministries, agencies, and SME stakeholder groups), partnership development, networking of business services and programme delivery partners, capacity building to ensure the quality of service delivery to SMEs, and monitoring and evaluation of the implementation of the SME strategy. JEDCO may encounter challenges in its co-ordination role unless it is given the legislative authority to require ministries and agencies to co-operate on implementing policy actions and measures under the strategy. This could be achieved through amendments to the act establishing JECDO, or through a ministerial decree by the Minister of Industry, Trade and Supply. These options should be considered in order to formalise JEDCO’s co-ordination role. For specific implementation purposes, the strategy proposed that JEDCO create a Strategy Co-ordination and Implementation Unit (CIU). Since 2014, JEDCO has made a number of changes to its organisational structure. Although an SME Strategy Co-ordination and Implementation Unit is not officially named in the new organisation chart, the prime responsibility for implementing the strategy (once it is approved) lies with the CrossCutting Support and Policymaking Directorate. However, this has not yet clearly defined a CIU/Team for the Entrepreneurship and SME Growth Strategy Action Plan. Ideally this would include a lead officer to manage interaction among the SME focal points in the other relevant ministries and agencies (see Section 1.2 in Chapter 1); to build the capacity of the systems for co-ordinating implementation of initiatives and actions; and to report on
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34 │ 2. IMPLICATIONS FOR JORDAN progress to the HLC committee. The directorate would also assume responsibility for serving as the HLC Secretariat (see previous section). The JEDCO monitoring and evaluation officer and the SME Observatory team, both located in the Cross-Cutting Support and Policymaking Directorate, could be key supporting contributors (if fully functioning). At the same time, the Cross-Cutting Support and Policymaking Directorate would benefit from efforts to build an internal team to coordinate the strategic actions for which JEDCO, as an implementing body, is primarily responsible. This would involve the Financial Support Tools Directorate (responsible for implementing Pillar 2 Access to Finance); the Operations Support Services Directorate (Pillar 6, Market Access); and Start-ups Directorate and External Offices Directorate (Pillar 3, Entrepreneurial/Management Skills and Top Quality Business Support). The Industrial Support Directorate and the Services Support Directorate are also involved. The CrossCutting Directorate will also need to co-opt internal or external resources to develop the necessary information technology infrastructure, online management information systems and web-based tools for monitoring implementation progress.
2.3. Establishing SME focal points in relevant ministries and agencies As suggested in Section 1.2, an efficient mechanism for managing the crossministerial/agency co-ordination of projects in Jordan would be to assign SME focal points in each of the relevant ministries/agencies involved in implementing actions under the framework of the entrepreneurship and SME growth strategy. The SME focal points would participate in regular meetings with JEDCO to plan and co-ordinate policy, programmes and other support interventions targeting SME development and entrepreneurship. There is a broad range of ministries/agencies involved, with some playing a more dominant role than others (see Annex B). For example, the Ministry of Industry and Trade, MOPIC, Ministry of Finance, Ministry of Higher Education, the Central Bank of Jordan, and Vocational Training Corporation (VTC) are each involved in actions falling under three or four of the six pillars of the SME and Entrepreneurship Growth Strategy (the six pillars are listed in Annex B). No action has yet been taken to establish SME focal points in all relevant ministries and agencies. This could be achieved by sending request letters from the Minister of Industry, Trade and Supply to the relevant ministerial counterparts asking them to designate SME focal points to work in collaboration with JEDCO on developing and implementing a workable annual action plan based on the Entrepreneurship and SME Growth Strategy.1 A similar letter requesting the assignment of SME focal points could also be sent to nongovernment entities involved in implementing the entrepreneurship and SME strategy action plan (e.g. those outlined in Annex B). Once these SME focal points have been designated, JEDCO is advised to bring them together in an orientation workshop to review the Implementation Action Plan for the Entrepreneurship and SME Growth Strategy. This would have three objectives: 1) to identify initiatives and actions that have already been implemented or are underway; 2) to seek confirmation of the role and participation of the stakeholder organisations in the implementation of the other initiatives and actions going forward; and 3) to agree on an annual work plan for the coming period to be submitted to the HLC for approval. Following this, JEDCO should work with the focal points to clarify their roles, responsibilities and accountabilities for implementing the specific actions within the mandate of their respective organisations.
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In addition, given the important number of donors and international agencies active in supporting SMEs and entrepreneurship in Jordan, the Ministry of Planning and International Co-operation (MOPIC) could establish an SME Working Group of Donors to better co-ordinate entrepreneurship and SME support initiatives.
2.4. Forming regional entrepreneurship and SME committees in the governorates In Jordan, regional and municipal authorities have the flexibility to develop their own local entrepreneurship and SME development policies and strategies. Consequently, there is a great deal of variation in the focus on SME development across governorates, and in the sophistication of their SME support measures and infrastructure. This suggests an opportunity for JEDCO to demonstrate policy leadership by strengthening formal mechanisms to create closer working relationships and inter-institutional learning vertically among central ministries and regional and municipal administrations and horizontally across governorates. Co-ordination could be enhanced by: 1) establishing mechanisms to support interaction among the national, governorate and municipal authorities and to provide a channel for feedback when shaping national SME policy initiatives; 2) facilitating the creation of public-private partnership forums, at the governorate and local levels, to promote and support entrepreneurship and SME development and garner input into national SME policies; and 3) fostering peer support and learning networks between governorate-level and municipal administrations for exchanging experience and practice in the design and implementation of SME policies. This would help to promote the development of entrepreneurial/SME development ecosystems at the governorate level. This will mean that, as already proposed in the strategy (see Annex C), JEDCO will need to foster the creation of regional SME committees in each governorate. These committees would consist of key programme and service delivery partners. Regular meetings of these regional committees would allow them to share information, experiences and good practices, and enhance the relevance and quality of the services being provided. They would also be a conduit for identifying gaps in services to new entrepreneurs and SMEs, creating opportunities for providing better services to meet their needs, and establishing a pathway for entrepreneurs and SMEs from one service provider to another. This is relevant since not every agency and institution has (or is able to have) subnational activities. To date, no specific actions have been taken by JEDCO to form regional SME committees. Ideally it should inventory/map entrepreneurship and SME support organisations at the governorate level. This could link to or build on an eco-mapping project led by the German Development Co-operation Agency to identify entrepreneurship and SME support institutions with a local presence in each governorate. This mapping would include government offices, such as IRADA (the Enhanced Productivity Centres Program), DEF (the Development and Employment Fund) and the Ministry of Labour; foundations and NGOs; and other business support and SME financing entities, such as business incubators, education and skills development initiatives, business information services, microfinance institutions, angel investor networks, etc. As well as being a tool for strengthening the regional presence of national initiatives, the mapping of regional SME support ecosystems will aid in constructing a comprehensive referral system for various organisations to refer their clients to the relevant actors as part of a collaborative “pathways” ecosystem (rather than operating in silos).
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36 │ 2. IMPLICATIONS FOR JORDAN To start the process of initiating SME regional committee networks, JEDCO should first hold meetings with the local authorities to champion the concept and co-opt co-operation and support. Next it could invite representatives from each of the entities identified to become part of the SME regional committee in each governorate. Based on clear terms of reference for the committee outlining its role and objectives, JEDCO could encourage regular meetings of the committee members to share information, exchange experiences, and identify opportunities for working collaboratively to improve support to entrepreneurs and SMEs in the governorate.
2.5. Establishing a public-private dialogue mechanism The good practice outlined in Section 1.4 advocates for establishing formal dialogue mechanisms on SME policy issues, as well as ensuring that the specific views of SMEs are captured on policy issues affecting them (e.g. tax policy, labour laws and regulations, broader business environment reforms, new legislative proposals, etc.). One of the weaknesses in Jordan may be the lack of a collective SME voice in policy dialogue. The Jordanian Government makes use of public consultations when developing national policies, such as the national development plans and the Jordan Economic Growth Plan 2018-2022. For example, while developing the SME strategy, a number of bilateral consultations were held with ministries, agencies, NGOs, financial institutions, and business and sector associations. There was also a series of workshops, as well as a national conference for reviewing and commenting on the draft strategy document. However, in general, public-private sector dialogue is carried out in a more traditional manner, mostly on a bilateral basis between a ministry and the major business and sector associations, including the chambers of industry and chambers of commerce. Although the Jordan Chamber of Industry has been building strength in SME advocacy, generally the chambers represent the view of larger firms. The SME sector itself is not well organised, and lacks the capacity to represent its views to the government, although there is an active association of young entrepreneurs, associations of businesswomen and entrepreneurs, and an SME association (Jordan SMEs). However, each association generally carries out its own policy advocacy efforts. The need for a coalition of SME stakeholder organisations with a more coherent and coordinated voice has been noted. Advocacy under the leadership of the Young Entrepreneurs Association (YEA) has led to interest from more than 20 organisations in forming a coalition to be known as “Jordan Mass Action for Development”. In addition, the Al Quds Center and the Center for International Private Enterprise (CIPE) have been working on forming the Federation of Business Associations as a mechanism for stronger representation of SMEs and an amplified voice in public-private policy dialogue (Al Rantawi, 2017). The federation consists of several sectoral associations of SMEs which have agreed to work together in a structured way to craft an agenda of common policy reform priorities. With the main goal of empowering SME associations to participate more effectively in Jordan’s public policy dialogue, the project is providing support to create the federation, consolidate its internal structure, and build members’ capacity in policy dialogue with policy makers. These collective efforts, combined with capacity building in policy dialogue, will ultimately strengthen the SME voice in Jordan and facilitate the stronger inclusion of SMEs in formal public-private sector dialogue processes. Chapter 1 has outlined the international good practice approach of establishing a formal SME Advisory Committee as a mechanism
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for dialoguing and consulting with SMEs on their concerns and needs. While Jordan has taken initial steps to establish an Entrepreneurship and SME Advisory Committee, its proposed structure does not serve the role of putting SME matters onto the policy agenda as defined by good international practice (see Section 1.4). This is because the membership of the incipient Advisory Committee is not confined to private sector representatives – instead it has a wide-ranging membership of parliamentarians, government, quasigovernment, foundations, universities, business associations, financial institutions, nongovernment organisations, donor organisations, and private sector consultants. It is therefore more of an advisory network of delivery partners complicit in the implementation of the SME strategy. While it would potentially have significant value to JEDCO at the working level to enable it to perform its central role of implementing the national entrepreneurship and SME growth strategy,2 there is still a need for a body for publicprivate dialogue, as outlined in Section 1.4. Therefore, a formal SME Advisory Committee is needed that would operate at the consultative, policy input level with a direct line to the HLC. Unlike the Entrepreneurship and SME Advisory Committee, it would not generally include parliamentarians or government entities (or international donors) as its role is to communicate the views of the SME sector and advise government (through the HLC) on policy and initiatives to reduce obstacles and strengthen the sector. It should be composed exclusively of non-government organisations (entrepreneurs/SME owners, their representative business and sector associations, business support-providing organisations, SME experts, etc.) and should not mix public and private sector representatives. Thus, a separate, distinct SME Advisory Committee should be established along these lines as the advisory body to the HLC. Its mandate should be defined by the HLC, but could include advising the government on emerging policy issues and how best to address these. It could also be directed to lead consultation processes with entrepreneurs and SMEs, including in the governorates (to solicit the views of rural SMEs and microenterprises). To this end, the SME Advisory Group could hold annual roadshows or town hall events in each governorate to promote this public-private sector dialogue with the SME sector. The size and composition of the SME Advisory Committee would be at the discretion of the HLC, but for example could include representatives of the Young Entrepreneurs Association (YEA), the Business and Professional Women Association (BPWA)/Jordan Forum for Business and Professional Women (JFBPW), key sector associations (with high percentages of SMEs as members), the Information and Communications Technology Association of Jordan (INT@J), the Institute of Banking Studies (IBS), Jordan Microfinance Network, an SME-sensitive bank, an SME expert (researcher, consultant), the Business Development Center (BDC), and Injaz, plus a small number of successful entrepreneurs/SME owners. The Jordan Chamber of Industry and Jordan Chamber of Commerce are members of the HLC, so would be redundant on the SME Advisory Committee; however, it might be worth including the Amman Chamber of Commerce. The Advisory Committee should be chaired by a member of the committee. JEDCO should act as Secretariat to the SME Advisory Committee. This would entail preparing the agenda for the meetings, in consultation with the Advisory Group chair and the chair of the HLC, recording meeting minutes and assisting the group with any of its undertakings, as appropriate and necessary. In the meantime, the Government of Jordan should seek to ensure that SMEs are adequately represented in any policy dialogue mechanisms with the private sector. In addition, annual or bi-annual roadshows should be conducted with SMEs in each governorate to share policy
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38 │ 2. IMPLICATIONS FOR JORDAN developments and seek input on future priorities so as to better address their concerns and needs. The government could also make use of online surveys to invite SMEs and their stakeholder organisations to present their views on proposed policy actions.
2.6. Creating a communication strategy and SME web portal Disseminating information about SME policies, programmes and services to SMEs and other stakeholders will be an important communications role for JEDCO. Jordan will need a comprehensive SME information web portal to communicate to entrepreneurs and SMEs more effectively about support programmes and services and disseminate information on the requirements to start and grow a business. Currently, there is no centralised web portal for online access to information on SME support services in Jordan.3 The JEDCO website only provides information on the programmes and services that it specifically provides. It is therefore proposed that JEDCO work collaboratively across ministries/agencies and with other stakeholders offering support to entrepreneurs and SMEs in Jordan to design a central online platform for disseminating this information. This platform or portal could be based on models such as the SME web portal in Canada (www.canadabusiness.ca) or the Singapore SME Portal (http://www.singapore-sme.com/). It could use a domain name such as “www.sme.gov.jo” or “www.sme-support.gov.jo”. It could include information on planning, registering, starting, managing, growing and exiting a business; the assistance and support programmes available to aid in each stage of the process, such as access to infrastructure (e.g. enterprise centres, incubators, technology parks); sources of financing, entrepreneurship training, skills upgrading and advisory services (with links to organisational websites); tips on how to prepare loan requests; and information on markets, how to export and source technology, etc. The portal should include information on available support (and support organisations) in a systematic way to make the ecosystem of support more transparent to entrepreneurs and SME owners at different stages of development.
2.7. Summary of key recommended actions for Jordan based on global good practice Based on the good practice described in Chapter 1 and the analysis of the situation in Jordan outlined in this chapter, the following list summarises the key actions that the authorities could undertake to increase SME policy effectiveness through greater co-ordination and public-private dialogue: 1. Review the HLC’s functions and make additions as deemed desirable (based on practices of other countries described in Chapter 1 and Box 1.2), especially policy and programme co-ordination and integration, and annual planning and reporting on implementation progress to parliament. 2. Confirm JEDCO’s role as the Secretariat to the HLC, with responsibilities for organising meeting agendas (in consultation with the Minister of Industry, Trade and Supply), preparing materials, reporting on the outcomes of the meetings, and other duties such as preparing annual SME development action plans for approval by the HLC, preparing periodic progress reports to the HLC on implementation of the action plan initiatives, and preparing annual reports on the status of the SME
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sector (from analysis of data from the Department of Statistics and the SME Observatory). 3. Request relevant ministries and agencies to designate SME focal points to work in co-ordination and collaboration with JEDCO to develop an annual work/action plan to support entrepreneurship and SME growth and agree to the specific actions of each implementing partner to deliver on the action plan. Animate the process. 4. Establish a designated unit in JEDCO responsible for co-ordinating implementation of the SME strategy across government. 5. Establish the membership of an SME Advisory Committee – including entrepreneurs/SME owners, business and sector associations, financial institutions, business support providing organisations, etc. at the policy input level – tasked with bringing the views of the SME sector to the policy agenda through biannual meetings with the HLC. Include representation by women’s business associations to bring to the fore policy issues affecting the participation of Jordanian women in entrepreneurial/economic life. Provide flexibility for the committee to solicit input from the private sector on barriers hindering SME development and on new and pressing policy issues. 6. Establish a formal mechanism for public-private sector policy dialogue on SME issues. This could entail regular (annual or biannual) consultation sessions with business and sector associations on matters affecting SMEs, including legal and regulatory issues. It could also take the form of regional forums or “town hall” meetings in each of the governorates that would engage a broad cross-section of entrepreneurs and SMEs who might not be well represented by the main business and sector associations. In addition, ensure the representation of SMEs on government committees and councils, such as economic councils, so their voice is heard on broader business environment reforms. 7. Begin the process of setting up Regional SME Committees in each governorate with the aim of strengthening the ecosystem for entrepreneurship and SME support at the local level and building capacity for the consistent delivery of SME policy measures. 8. Establish an SME donor working group, facilitated by MOPIC, to promote dialogue among international organisations and donors on their entrepreneurship and SME support programmes so as to better co-ordinate and align their project actions and plans with the priorities of the Jordan National Entrepreneurship and SME Growth Strategy and Action Plan. 9. Create a communication mechanism and SME web portal to disseminate relevant information in a consolidated manner and to liaise with SMEs and other important actors such as academics, business support organisations, etc.
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Notes Jordan’s experience with the National Employment Strategy (NES) indicates that some challenges may be encountered with the focal point approach. In some cases, it may be difficult to get ministers to actually designate a focal point. In other cases, high turnover of the appointed focal point staff has hindered capacity building (if a trained focal point takes another job, then the replacement focal point needs to be trained), etc. It is noted that the NES Coordination Unit developed an occupational profile for all FPs and provided training to them so they could more closely match this occupational profile. This is something that JEDCO could consider if there are problems with the qualifications and capabilities of the FPs assigned by the different ministries/agencies. 1
2
The SME Strategy also gives it responsibility for reviewing progress on each pillar of the strategy, ascertaining whether initiatives are proceeding, and proposing solutions to the relevant government agency or ministry. 3
The Government of Jordan website (https://jordan.gov.jo/wps/portal/), for example, does not currently include any references to JEDCO or to SME support programmes.
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Bibliography Al Rantawi. (2017). Jordan/SME Sector Participation of SME Associations in Public-Private Dialogue. Al Quds Center for Political Studies, presented at the 9th Global Workshop on “Public-Private Dialogue on Enterprise Development for Youth & Inclusion” Tunis, May 9-11. Retrieved from http://www.publicprivatedialogue.org/workshop%202017/2017%20%20Public%20Private%20Dialogue%20in%20Jordan.pdf BMSMED. (2009). "Guide to the Magna Carta for Micro, Small and Medium Enterprises”. Retrieved from http://www.smefinanceforum.org/post/guide-to-the-magna-carta-for-micro-small-andmedium-enterprises Cámara de Diputados. (2017). Law on the Development of the Competitiveness of Micro, Small and Medium Enterprises. Retrieved from www.diputados.gob.mx/LeyesBiblio/pdf/247_190517.pdf/ Dept. of Business, Enterprise and Innovation. (n.d.). Small Business. Retrieved May 2019, from https://dbei.gov.ie/en/What-We-Do/Supports-for-SMEs/Small-Business/ Economic Policy Council. (2017). Jordan Economic Growth Plan 2018-2022. Economic Policy Council, Amman. Herzberg, B., and A. Wright. (2006). The PPD Handbook: A Toolkit for Business Environment Reformers – Operational Guidelines for the Charter of Good Practice in Using Public-Private Dialogue for Private Sector Development. DfID/World Bank/IFC/OECD Development Center, Small and Medium Enterprise Department, World Bank, Washington, DC. Kingdom of Thailand. (2000). Small and Medium Enterprises Promotion Act, B.E. 2543 (2000). Government Gazette, 54(8), 270-285. OECD and UNIDO. (2004). Effective Policies for Small Business: A Guide for the Policy Review Process and Strategic Plans for Micro, Small and Medium Enterprise Development. OECD, Paris. Republic of the Philippines. (2008). Republic Act No. 9501, 23 May 2008 (“An Act to Promote Entrepreneurship by Strengthening Development and Assistance Programmes to Micro, Small and Medium Scale Enterprises. Amending for the Purpose Republic Act No. 6977, as Amended, Otherwise Known as the. Republic of the Philippines. (2014). Retrieved from “[REPUBLIC ACT NO. 10644], An Act Promoting Job Generation and Inclusive Growth Through the Development of Micro, Small and Medium Enterprises SMECORP. (2019). About SMECORO. Retrieved May 2019, from http://www.smecorp.gov.my/index.php/en/about/2015-12-21-08-40-32/nsdc/ UNCTAD Secretariat. (2005). How to build an effective policy framework for SMEs: a developing countries' perspective. International Conference on Reforming the Business Environment, Cairo, Egypt, 29 November-1 December, United Nations.
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Annex A. Comparison of SME agencies in selected countries: missions, roles, responsibilities Korea Organisation (and website)
Ministry of SMEs and Startups (MSS) Established in 2017, replaced the Small and Medium Business Administration Website: http://www.mss.go.kr
Mission
To develop and implement government policies to: promote the growth of businesses at all stages of development from start-ups to SMEs and from SMEs to global enterprises; foster business start-ups, especially technology and knowledge-based; and strengthen the competitiveness of microenterprise.
Roles and responsibilities
Mandate is to strengthen competitiveness and support innovation of SMEs and microenterprises. Policy co-ordination, analysis and evaluation are among its roles. Policy directions are to: Establish a respectable ecosystem for venture firms and business start-ups; Build a growth ladder for businesses; Spread a creative economy to the middle-class economy and enhance policy efficiency. Policy measures address: Inspiring entrepreneurship (BizCool camps for school students, lectures to university students, senior start-up schools for retired persons) and fostering technology and knowledge-based startups; Creating an environment to ease the process of starting a business (Start-up Leading Universities and Start-up Academies for Youth in each region, start-up incubation centres, People’s Start-up Project Idea Audition), and fostering one-person start-ups (Business Centre for One Person Startup Business; Smart Creation Centre); Encouraging successful start-ups (business district information system for start-ups, 24-hour broadcasting on yes-TV on how to start and manage a business; microenterprise start-up school linked with training and policy funds; provision of experts to give business tips to shop owners); Enhancing the business management capacity and networks of microenterprises (supporting the collaboration of microenterprises through formation of co-operatives; modernising mom & pop shops; building ICT-enabled distribution and logistics systems for micro enterprises; training services to microenterprises on franchising, business conversion); Enhancing the capacity of SMEs for technological innovation; Fostering innovative SMEs; Supporting technological development through industry-academia-research institute co-operation and joint use of their equipment; supporting the protection of SME technologies; Globalisation of SMEs (Export Support Centres at regional MSS offices; dispatching trade missions; promoting supply chain linkages; Global Highway Programme); Providing a more stable business environment (enhancing the marketing base and domestic demand for SME products; bolstering the public procurement of SME products by the government; fostering the development of specialised vocational and technical schools to train workers needed by SMEs). Malaysia
Organisation (and website)
SME Corp. Malaysia Under the Ministry of International Trade and Industry Website: http://www.smecorp.gov.my In 2018, the government created the Ministry of Entrepreneurship Development to strengthen the SME policy co-ordination role.
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Development of competitive, innovative and resilient SMEs through effective co-ordination and provision of business support. Streamline, co-ordinate and monitor SME development initiatives across all related ministries and agencies
Roles and responsibilities
Central co-ordination agency for formulation of overall SME policies and strategies and implementation of SME development programmes across all relevant ministries and agencies. Central point of reference for information and advisory services for all SMEs in Malaysia. Roles: Co-ordinate policies and programmes across relevant ministries (15) and agencies (over 60), as well as to monitor and evaluate their effective implementation; Provide business information and advisory services through the “SME Business Centre”; Manage and disseminate data, information and research on SMEs (e.g. manage National SME Database, publish SME-related reports and statistics); Nurture and develop competitive SMEs through specific capacity building programmes and financial assistance, providing infrastructure support for SMEs, and facilitating linkages with large companies and multinational corporations; Serve as Secretariat to the National SME Development Council (NSDC), proposing policies and ensuring that the NSDC’s decisions are effectively implemented. Has a Programme Co-ordination Unit. Operates through 11 state offices across the country. Morocco
Organisation (and website)
Maroc PME (rebranding of the National Agency for the Promotion of SMEs) (under the Ministry of Industry, Trade, Investment and Digital Economy) Website: http://www.marcopme.ma
Mission
Achievement around three levers: improving the competitiveness of high-impact companies, contributing to inclusive growth, and promoting entrepreneurship.
Roles and responsibilities
The development and delivery of support programmes aligned with ecosystems and territories, The synergy of partners to relay actions of Maroc PME in the regions, and Capitalising on the recorded impacts, identified good practices and other entrepreneurial successes. Maroc PME agreement with the State for 2015–2020 commits to the following aims (see: http://candidature.marocpme.ma/): Strengthen the competitiveness of ecosystems and SMEs through operational performance, investment, creativity and co-development, and access to markets. Promote entrepreneurship and animation of the entrepreneurial ecosystem through the deployment of the status of auto-entrepreneur and support for the formalisation of activities. To bring out a new generation of entrepreneurs and SMEs with a structuring and high-impact business model. Thailand
Organisation (and website)
Office of Small and Medium Enterprises Promotion (OSMEP), Reports to the National Board of SMEs Promotion, chaired by the Prime Minister. Website: http://www.sme.go.th
Mission
Promotion and integration of SME promotion activities in order to enable SMEs to grow and compete internationally.
Roles and responsibilities
Responsible agency for stipulating SME promotion policy, co-ordinating all public and private agencies involved in SME development projects, and integrating all government services to support better access to entrepreneurs and SMEs. Prepares and manages Integrated Budgeting for Thai SME Promotion, inclusive of all agencies with SME projects.
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Primary roles are as co-ordinator, facilitator, promoter and supporter for all SME promotional agencies. Central planning office for SME policies and co-ordinating body for the action plans of all relevant offices in promoting SMEs in Thailand. Designing of national Master Plan for SMEs. Operational arm for ensuring the implementation of these plans across ministries and agencies. Taking charge of SME promotional activities left unimplemented by other SME promotional agencies or not yet effectively serving SMEs and entrepreneurs in order to enhance SMEs’ potential. Current masterplan to strengthen and grow SMEs entails four strategies: Enhance technological innovation and productivity Promote access to finance Promote universal market access Develop and promote entrepreneurship. Has a Network Promotion and Collaboration Group with an SME Promotion Department and an SME Network Co-ordinator responsible for the SME Business Information Centre, the service providers network, and the co-ordination centre for NGOs and for SMEs from abroad. USA Organisation (and website)
Small Business Administration (SBA), Reports to the President of the USA Website: http://www.sba.gov
Mission
To “aid, counsel, assist and protect the interests of small business concerns, to preserve free competitive enterprise and to maintain and strengthen the overall economy” (https://www.sba.gov/about-sba/what-we-do/mission/)
Roles and responsibilities
Helps Americans start, build and grow businesses through an extensive network of field offices and partnerships with public and private organisations. Encourages small enterprises in all areas by proving assistance through five programmatic functions: Access to Capital: Provides small businesses with an array of financing from micro-lending to substantial debt and equity investment capital (venture capital). Entrepreneurial Development (education, information, technical assistance and training): Provides free individual face-to-face, and internet counselling for small businesses, and low-cost training to nascent entrepreneurs and established small businesses in over 1800 locations throughout the US. Government Contracting: Through the SBA’s Office of Government Contracting and Business Development sets goals with other federal departments and agencies to reach the statutory goal of 23% in prime contract dollars to small businesses; provide small businesses with subcontracting procurement opportunities, outreach programmes, and training. International Trade, Investment and Innovation: Facilitates export training and financing for small businesses; supports innovation through competitive small business programmes. Small Business Advocacy: Reviews Congressional legislation and testify on behalf of small business; assesses the impact of the regulatory burden on behalf of small businesses; conducts small business research. Operates field operations involving management of over 90 SBA field offices that deliver SBA programmes and initiatives to support entrepreneurs and small businesses, plus a network of Women Business Centres, Small Business Development Centres, and the SCORE advisory programme. The Office of Advocacy advances the views, concerns, and interests of small business before Congress, the White House, federal agencies, federal courts, and state policy makers.
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Annex B. Actors involved in initiatives and actions under the Jordan National Entrepreneurship and SME Growth Strategy
Pillar 1: Conducive Legal and Regulatory Environment
Ministries, Government Agencies, Public Sector JEDCO MIT - Companies Control Department/ Commercial Registrar Ministry of Finance
MOPIC Ministry of Higher Education Ministry of Education VTCS E-TVET Ministry of Labour Ministry of Social Development Ministry of Interior Ministry of Environment Ministry of Municipalities Ministry of Justice Legislative and Opinion Bureau Central Bank of Jordan Higher Council for Science and Technology (HCST) National Centre for Research and Development (NCRD) Industry Research and Development Fund Department of Statistics Social Security Corporation Economic and Social Council (ECOSOC) Jordan Investment Commission Development and Employment Fund (DEF) National Fund for Enterprise Support (NAFES) Civil Service Bureau Jordan Securities Commission Higher Committee on Human Capital Development Governmental funding agencies
X X
Pillar 2: Entrepreneur ship Awareness and Culture Building
Pillar 3: Entrepreneuri al/Manageme nt Skills and Top Quality Business Support
X X
X
X
Pillar 4: Access to Finance
Pillar 5: Innovation Capacity and Technology Adoption/ Development
X X X
X X X X X X
X (IRADA) X
X X (procurement dept.) X
X
Pillar 6: Market Access
X X X (General Supplies Department) X
X (R&D Fund)
X X
X
X X X X X X X
X X
X X (NCRD)
X X X X
X
X X
X
X X
X X
X X X X
SME POLICY EFFECTIVENESS IN JORDAN: USER GUIDE 1 INSTITUTIONAL COORDINATION© OECD 2019
ANNEX│ Private sector and non-governmental organisations Chambers of Commerce and of Industry Jordan Loan Guarantee Facility (JLGF) Jordan Loan Guarantee Corporation (JLGC) SME Financing Advisory Committee (SMEFAC) Association of Banks in Jordan Institute of Banking Studies Commercial banks Sanabel/Tanmeyah Shabab Al-Urdun Tamweelcom Al-Baqa Applied University Al-Quds College Al-Urdunia Lil Ebda Universities/colleges Business Development Center (BDC) Bedaya Business Angel Network Business and Professional Women Association (BPWA) Jordan Forum for Business and Professional Women (JFBPW) Jordan Women Industrial Community Endeavor Jordan German-Jordanian University Institute of Management Consultants and Trainers (IMC) INJAZ INT@J Jordan Innovation Centres (JICs) Jordan Exporters Association King Abdullah II Centre for Excellence (KACE) King Abdullah Fund for Development (KAFD) JTV, Ro’ya TV Knowledge Stations Mowgli Foundation Oasis500 Queen Rania Centre for Entrepreneurship (QRCE) Young Entrepreneurs Association (YEA) Local NGOs Kaizen and Quality Assurance Associations EDAMA Association Jordan Competitiveness Programme International donors
X
X (Jordan)
X
Chambers of Industry X X X
X
47
X
X X X (Islamic) X
x X X X X X X
X X X
X X X
X X
X X
X X X X X
X X X X
X X
X X
X
X X X
X X X
X X
X X(for youth and females) X X
X
X (GIZ, other donors)
X
X
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Annex C. Proposed entrepreneurship and SME policy structure for Jordan
Extracted from Chapter 6 of the Jordan National Entrepreneurship and Small and Medium Enterprise (SME) Growth Strategy – 2014/15-2018/19, March 2015. 1) Higher Level Committee to Support SMEs Given the horizontal nature of government policies impacting on development of entrepreneurship and SMEs, the national strategy seeks to implement an integrated policy approach with oversight from the highest levels of government. This is to be achieved through the Higher-Level Committee (HLC) represented by the key relevant ministries. The structure of the Council is illustrated in (the figure below). The (proposed) role of the HLC to Support SMEs is to provide policy direction and input on the development of measures and programmes within the context of the national entrepreneurship and SME growth strategy, approve annual action plans to achieve the goals and objectives of the strategy, foster co-operation in the implementation of action items within the jurisdictional mandates of Committee members, and monitor the execution of the strategy. In the implementation of the strategy, particularly relating to appropriate actions within the parameters of each of the strategy pillars, the HLC may establish subcommittees of other government ministries and agencies. For example, the Ministry of Education, the Ministry of Higher Education and the Higher Education Council may be asked to convene a sub-committee pertaining to those actions required to integrate entrepreneurship in the curriculum of educational institutions. 2) Entrepreneurship/SME Advisory Committee Further, based on international practices, an Entrepreneurship/SME Advisory Committee should be established to create a formal process for regular dialogue with SMEs, the representative entrepreneurship and SME associations, and key organisations providing business services to SMEs. The Higher Council will meet with members of the Entrepreneurship/SME Advisory Committee at least twice a year to solicit input on policy developments affecting SMEs. Membership of the Advisory Committee would consist of key sector and business associations, organisations delivering programmes and services to entrepreneurs (and potential entrepreneurs) and SMEs, financial institutions, and other experts specialising in the field. 3) Role of JEDCO JEDCO will have the lead role on implementation of the Strategy and act as the Secretariat to the Higher Council. JEDCOs role will incorporate an advocacy function, co-ordination (linkages with other ministries, agencies, and SMME stakeholder groups) and partnership development, networking of business services and programme delivery partners, capacity building to ensure the quality of service delivery to SMEs, and monitoring and evaluation of the implementation of the strategy. To carry out this role, an Entrepreneurship and SME Growth Directorate should be established within JEDCO. The Directorate will, in coSME POLICY EFFECTIVENESS IN JORDAN: USER GUIDE 1 INSTITUTIONAL COORDINATION© OECD 2019
ANNEX│
operation with SME stakeholder groups and partners, prepare annual work plans for the Entrepreneurship and SME Growth Strategy on the basis of the goals, objectives and directions laid out in the National Strategy. The action plans will include activities, budget estimates, and assignment of roles and responsibilities. This process will be co-ordinated by JEDCO in co-operation and consultation with ministries, agencies and stakeholders represented in the HLC to Support SMEs, as well as with any other key implementing entities. The annual action plan will be approved by the HLC…. The JEDCO Secretariat will also prepare annual reports on progress in line with its role in implementing an SME Observatory. 4) Designation of SME focal points in relevant ministries and agencies To assist JEDCO in its co-ordination function, SME focal points should be established in all ministries and public agencies implicated in the implementation of actions within the framework of the National Entrepreneurship and SME Growth Strategy. One of the roles of these focal points is to ensure that interests of entrepreneurs and SMEs are taken into account in the formulation of departmental policies and programmes. JEDCO will coordinate regular meetings of these focal points to assist in developing and implementing action plan activities and initiatives developed within the context of executing the National Entrepreneurship and SME Growth Strategy. Higher Council on Entrepreneurship and SME Growth Minister of Industry and Trade Minister of Planning and International Cooperation Minister of Finance Governor of the Central Bank of Jordan Chief Executive Officer of JEDCO Chairman of the Jordan Chamber of Commerce Chairman of the Jordan Chamber of Industry
Establishment of Sub-committees
JEDCO (Secretariat)
Related to the Strategy Pillars - at the discretion of the HLC Strategy Coordination and Implementation Unit
Entrepreneurship/SME Advisory Committee Members to include representatives from key business and sector associations, entrepreneurship promoters, business service providers, financial institutions, other experts in the field of entrepreneurship and SME development.
5) Formation of public-private sector entrepreneurship and SME development support networks JEDCO will form regional committees for enterprise creation and SME support in each governorate, consisting of the key programme and service delivery partners, such as the Business Development Units (BDUs), IRADA, the BDC, and the JEDCO Innovation (JIC) Network, as relevant in each governorate. The purpose of these committees will be to promote entrepreneurship and SME growth in the governorates and to co-operate in providing more co-ordinated actions within the framework of the national strategy. Regular
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50 │ ANNEX meetings of these regional committees will foster the sharing of experiences and good practices, and enhance the relevance and quality of services being provided. They will also be a conduit for identifying gaps in services to new entrepreneurs and SMEs and opportunities for providing better services to meet their needs.
SME POLICY EFFECTIVENESS IN JORDAN: USER GUIDE 1 INSTITUTIONAL COORDINATION© OECD 2019
Policy Handbook
SME POLICY EFFECTIVENESS IN JORDAN USER GUIDE 1: REINFORCING SME POLICY CO-ORDINATION AND PUBLIC-PRIVATE DIALOGUE
The project “SME Policy Effectiveness in Jordan,� implemented by the OECD and the Jordan Enterprise Development Corporation from 2016-19 helped to improve SME and entrepreneurship policy making by reinforcing institutional co-ordination and dialogue, advocating for better monitoring and evaluation of policies and programmes, and identifying ways to improve business and entrepreneurship statistics. Three User Guides are the main outputs of the project: User Guide 1: Reinforcing SME policy co-ordination and public-private dialogue gives guidance on how to orchestrate efforts among the many actors providing SME support. User Guide 2: Effective monitoring and evaluation of SME and entrepreneurship policies and programmes provides advice on how to assess the impact of SME support. User Guide 3: SME statistics and entrepreneurship indicators in Jordan offers useful guidance on how to improve the evidence base for SME policy making. The User Guides build on international practice and provide concrete areas of action for Jordan, but can also be of interest to other countries wanting to improve the effectiveness of their SME policy making. The project was funded by the MENA Transition Fund and was implemented jointly by the Global Relations Secretariat; the Centre for Entrepreneurship, SMEs, Regions and Cities; and the Statistics and Data Directorate of the OECD. www.oecd.org/mena/competitiveness/smes-and-entrepreneurship www.oecd.org/cfe www.oecd.org/sdd
SME POLICY EFFECTIVENESS IN JORDAN . USER GUIDE 1
Micro, small and medium-sized enterprises (SMEs) and entrepreneurs have the potential to become important drivers of change and development in Jordan. Private businesses employing one to nineteen people account for over half of employment in the business economy and from 70 to 80% of jobs in sectors such as professional services, real estate, and wholesale and retail. Yet, the productivity and performance of Jordanian SMEs is limited. For example, over 54% of those working in service-sector businesses employing fewer than four people are unpaid workers (e.g. family members), compared to just 8% in businesses with 5 to 10 workers, and 0.23% of businesses with 20 or more workers.
SME Policy Effectiveness in Jordan User Guide 1: Reinforcing SME policy co-ordination and public-private dialogue