roundtable on micro, small and medium enterprise … · roundtable on micro, small and medium...

Roundtable on

Micro, Small and Medium Enterprise (M/SME) Data & Indicators

September 26th, 2007

Summary

of Discussions & Conclusions

Small and Medium Enterprise Policy Development Project (SMEPol)

Canadian International Development Agency (CIDA)

International Development Research Centre (IDRC)

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Table of Contents 1. Background to the M/SME Data Roundtable.......................................................................................... 3 2. The Agenda and Objectives for the Roundtable .................................................................................... 4 3. Conclusions & Summary of Roundtable Discussions ........................................................................... 4

A. Main Conclusions............................................................................................................................ 4 B. Recommendations Arising from the Roundtable................................................................................. 5

C. Summary of Roundtable Discussions .................................................................................................. 6 Annex 1: Roundtable Agenda .................................................................................................................. 11 Annex 2: The Current Status of M/SME Data in Egypt .............................................................................. 12 Annex 3: M/SME Data Needed for More Effective Policymaking............................................................... 29 Annex 4: List of Participants ................................................................................................................... 37

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1. Background to the M/SME Data Roundtable Having access to comprehensive, up-to-date and regularly-reported data and statistics on the micro, small and medium enterprise (M/SME) sector is critical to policy-making effectively geared to improving the operating environment for its growth and development. This is a particularly important issue for Egypt because of the significant role played by M/SMEs in employment and economic growth. However, comprehensive data on the sector is sparse making it difficult to ascertain the key dimensions and dynamics of its make-up and to track its performance over time. Deficiencies in the M/SME data system are becomingly increasingly evident as different parts of the government accelerate efforts to formulate policies and initiatives to address the many barriers M/MSEs appear to face in the regulatory and operating environment. For example, the new National Strategy on Micro and Small Enterprises, requested by the Prime Minister in 2007, and currently under development, is being based on “measurable” objectives for which performance indicators will be needed. In this context, it is timely to move forward on an initiative to take stock of data needs and availability. In 2002 and 2003, the SMEPol Project commissioned two major pieces of work to fully examine the state of M/SME data in Egypt. Fiani & Partners/Kompass Egypt completed a scan of international practices in government-led SME data and reporting systems and conducted a review of all relevant data and sources in Egypt.1 This work was led by IDRC/SMEPol in concert with a Steering Committee comprised of representatives from IDRC, the American University in Cairo, Banq du Caire, the Economic Research Forum (ERF), and SMEPol. The review of the Egyptian data system revealed that a number of ministries and agencies are involved in collecting M/SME-related data: the Central Authority for Public Mobilization and Statistics (CAPMAS), the General Authority for Investment and Free Zones (GAFI), the Information and Decision Support Center (IDSC), the Ministry of Planning, the Ministry of Finance, the Ministry of Trade and Industry, the Social Fund for Development (SFD), the Population Council, and the Central Bank of Egypt, in addition to the Chambers of Commerce. The data generated comes from a variety of administrative records, surveys, and Censuses not necessarily collected for the purpose of measuring or monitoring the M/SME sector. Nor is the data collected in a way to readily integrate data from different sources to compile a comprehensive picture of the composition of the enterprise sector (including M/SMEs) or of the owners of these enterprises. This data, if integrated in a systematic way and produced on a more timely basis, could potentially provide a reasonably comprehensive picture of the M/SME sector and developments within it on a longitudinal basis. There are some weaknesses in the “statistical system” currently preventing this from happening. As well, there are other data needs not met at the moment to complete the picture of the status of M/SMEs and enable more effective input to the policymaking and program design processes. During the past three years, there have been many international developments in the area of SME indicators development. For example,

• The SME Statistics Directorate at the OECD and Euro-Stat have both been working with member countries and states to harmonize SME data and develop comparative reporting systems for benchmarking purposes.

• MED-STAT is working with Mediterranean countries along similar lines although progress has been moderate and the focus has been mainly on trade statistics.

• The World Bank has developed the Doing Business set of indicators which allows countries to benchmark themselves on the ease of doing business.

• The OECD has also set up an Entrepreneurship Indicators Directorate that is partnering with a number of OECD countries on a project to develop and refine a list of indicators to measure entrepreneurship development. This projects deals primarily with tracking business entry, exit and growth rates. Much of

1 “Proposed Scheme for an Egyptian M/SME Policy Information System, Part 1: Survey of M/SMEs Information System & Portals in Selected Countries,” June 2002; and “Conceptual Design for an M/SME Database in Egypt,” July 2003.

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this development is based on the innovative work initiated by an Entrepreneurship Index Consortia led by the Danish Government.

• The Global Entrepreneurship Monitor (GEM) project, supported by research teams in several countries (including governments) has become an accepted benchmarking for measuring the level of entrepreneurial activity levels in developed and developing countries.

2. The Agenda and Objectives for the Roundtable In 2007, the SMEPol Project commissioned Fiani & Partners to update the matrix of M/SME-related statistics and data initiatives and to identify Egyptian developments and new initiatives since 2003. The September 26, 2007 roundtable was an opportunity to convene a multitude of government agencies and donors involved in these data initiatives to share the findings of the update and to examine possibilities for a more coherent system for identifying, collecting and reporting on M/SME data. If this were to be achieved, it would ultimately lead to an improved environment for policymaking and program design and ability to benchmark progress within the M/SME sector.

The agenda for the September 26, 2007 roundtable is attached at Annex 1. Its objectives were to:

• Review the scope of current government-wide efforts in producing M/SME-related data, including data

definitions, data collection and reporting (e.g., who is doing what, for what purpose) and identified limitations of the existing data and data systems to provide adequate evidence for more effective policy-making in the field.

• Identify the M/SME data and indicators needed to more accurately describe and monitor developments in the M/SME sector.

• Reach consensus on an action plan for moving forward to design a more comprehensive and integrated system for collection and timely reporting on the M/SME sector in Egypt.

The roundtable was attended by 43 representatives of all state agencies involved, directly or indirectly, in the collection and / or production of M/SMEs data or statistics, as well as the main donors and international organizations involved in this sector (see Annex 4 for list of participants). As such, one can consider that the discussions and conclusions reached represent a consensus of concerned parties on the path forward in addressing this crucial issue.

3. Conclusions & Summary of Roundtable Discussions

A. Main Conclusions • There have been a number of positive developments since the first survey on M/SMEs data and statistics

availability in Egypt, commissioned by the SMEPoL Project in 2003, and greater awareness among a number of state or semi-state agencies of the importance of M/SME data and statistics. A number of agencies have started collecting and / or upgrading their M/SME registries, such as the Federation of Chambers of Commerce, the Commercial Registry Agency, the Social Fund for Development, and the General Organization for Import and Export Control. Other agencies are more open to giving access to the M/SME statistics collected through their activities, such as the Social Insurance Fund and the Investment Authority.

• The presentations and following discussions highlighted a number of key issues : 1. A lack of consensus on the definition of M/SMEs and inconsistent use of data definitions.

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2. An agreement on the need to develop common definitions for use by the various agencies and based on economic and not only legal considerations.

3. The need to take international standards into consideration with respect to the M/SME definition (even if

adapted), as Egypt is part of the global economy and needs to produce statistics which can be benchmarked internationally.

4. The absence of gathering and storing of a range of additional information on individual M/SMEs at the

level of the agencies whose activity involves a direct contact with the M/SMEs. If available, such data would substantially enrich the base of existing statistics.

5. The absence of exchange of M/SME data among the different agencies. 6. The absence of dissemination of M/SME data and statistics to non-government stakeholders and the

business community at large.

7. The lack of M/SME statistics at a sectoral level, which would play a major role in better orienting M/SME development and helping the business community take better decisions. Indeed, most M/SMEs data to date is at a "macro level".

8. The absence of longitudinal and archival data on the development of individual M/SMEs, which would

allow tracking of key M/SME sector statistics (e.g., number of new entries, number of exits, growth rates of existing enterprises, etc…) at a sectoral and geographic level.

9. The need to develop methods to collect and validate data on the informal sector, as this represents the

majority of M/SMEs in Egypt. 10. The need to revise and update the definition of "classified information" established in 1965 to be in line

with the demands of a market economy. 11. The need to provide access to non-private individual information on companies to better enable M/SME

linkages with large companies as well as "clusters".

12. The challenge of establishing an "information culture" in Egypt among both public and private sector bodies, and of raising awareness of the merits of sharing and integrating information to improve decision-making processes.

13. The importance of the "Information Act" currently under preparation as a means to start implementing an

"information culture" in Egypt. B. Recommendations Arising from the Roundtable • Consensus was reached among the participants on the need to establish an ad-hoc working group of

representative agencies and entities to take up many of the issues raised at the roundtable. • The working group would aim to: 1. Organize the needed number of workshops to discuss the issues identified during the roundtable. 2. Develop consensus on what data is needed to fully understand the dynamics and role of the M/SME

sector and sector developments over time (including Federation of Chambers of Commerce, the Population Council, CAPMAS, the Social Fund for Development and others).

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3. Examine the question of definitions – both of definitions in use for M/SMEs and of data definitions, with a view to achieving more consistent application and use in statistical and administrative data agencies.

4. Explore how to organize longitudinal studies of the M/SME sector.

5. Recommend and support projects or studies or research, if needed. 6. Study the "Information Act" and propose an approach to its implementation within the M/SME sector. 7. Examine the opportunity for a system allowing for the exchange and dissemination of M/SME information

and statistics among all stakeholders. Participants agreed it would be useful to hold a series of meetings to identify the specific dimensions of the M/SME data challenge and develop strategies for how to deal with them. In that effort, they also agreed that an international experience workshop would be helpful in providing guidance on move forward. C. Summary of Roundtable Discussions 1. Introductory Remarks Mr. Nabil Rashdan, Advisor to the Minster, Ministry of Finance outlined the objective for the roundtable as being to establish closer links with statistical agencies and develop the foundation to work together in a more integrated fashion. He stressed the importance of having a solid database and quality information as the foundation for being able to identify appropriate national micro, small and medium enterprise policies and to prioritize them. He indicated that the Ministry of Finance was ready to continue to support such initiative. Ms. Lois Stevenson, Senior SME Specialist, International Development Research Centre (IDRC) and SMEPol Project Coordinator, offered brief remarks on behalf of Dr. Eglal Rached, Regional Director of IDRC. IDRC is a Canadian crown corporation reporting to the Parliament of Canada on its efforts to support developing countries in building research capacity and promote evidence-based policy in many areas affecting private sector and SME development. It has been a partner with the Canadian International Development Agency (CIDA) and the Government of Egypt, specifically the Minister of Finance, in implementing the SMEPol project for the past seven years. She explained that the roundtable is a follow-up to previous efforts to map and analyze M/SME-related data and sources started in 2002-03. The updated information prepared for this roundtable is intended to stimulate discussion among government agencies and donors that are involved in producing, analyzing, or using M/SME-related statistics or supporting initiatives to improve the Egyptian statistical system. Mr. Peter Paproski, Head of Aid, Canadian International Development Agency (CIDA) reported that about 50 percent of CIDA’s aid budget in Egypt is allocated to its SME program, a clear indication of the importance Canada gives to this sector. In the area of SME statistics, he noted that Canadian M/SME data and monitoring systems (i.e., Statistics Canada) are considered among the world's best practices. He also mentioned the efforts of the OECD to standardize SME data for purposes of international comparability and cross-country benchmarking, indicating that this issue is of importance to both developed and developing countries. In light of the Government of Egypt’s current initiative to develop a National Micro and Small Enterprise Strategy, the need for good data to support policy directions and to monitor against the quantifiable objectives and targets set for the strategy, is further emphasized. CIDA is willing to work with the Government of Egypt on improving its M/SME data and systems, pending identification of priorities. Mrs. Josse Dorra Fiani, Fiani & Partners, reviewed the agenda for the workshop and started the first session of the roundtable.

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Presentation by Mrs. Josse Dorra Fiani, Fiani & Partners: “The Current Status of M/SME Data in Egypt” (see Powerpoint slides in Annex 2). Mrs. Fiani presented the findings from an updated review of current and planned M/SME-related data initiatives based on interviews with officials from almost 20 ministries and agencies during August and September 2007. She identified several data and statistical challenges, such as:

• Insufficient efforts to share data and information across ministries and agencies due to how “confidentiality” is defined and operationalized.

• Use of many different definitions for what comprises a micro, small or medium enterprise (i.e., lack of consistency in use of size criteria, e.g., number of employees, paid-in capital, turnover).

• No clear estimate of how many M/SMEs there are in Egypt (different data sources, based on different data definitions produce different results). For example, the number of operational business establishments in the 2006 CAPMAS Census is 2.6 million; while there are 4.5 million business establishments registered in the Commercial Registry; and 1.8 million business establishments in the Social Insurance Registry. Informal enterprises are generally not included in these estimates.

• Incomplete data on the number of workers employed by M/SMEs due to under-reporting in official statistics.

• Large time gaps between reporting periods for many of the data sets, which make it impossible to track annual performance of the M/SME sector.

• Insufficient analysis of some sources of collected data that could contribute to a better understanding of the dynamics of the M/SME sector.

• Absence of public access to much of the statistical information and analysis. Mrs. Fiani’s presentation indicated that the number of M/SMEs in Egypt has increased since 2002/03 when she last conducted a review of statistics for the SMEPol Project. Also, since then there have been a number of new statistics-related developments in the country to improve the quality of statistical systems. Among these were: the merger between the Income Tax and VAT agencies; the adoption of the Special Data Dissemination Standards in production of the key production index; data automation projects (Commercial Registry Authority, Social Insurance Fund; importers and exporters database; General Authority for Investment); the MEDSTAT project to bring Egypt to European statistical norms; and implementation of a Unique Identifier Number for micro and small enterprises registered with the Social Fund for Development. However, she indicated that data-gathering and compilation is not accurate enough to adequately inform M/SME policy. Cooperation is starting to happen among agencies, but not at all levels. Consensus on the key statistics needed for M/SME sector monitoring and support is not yet established. To meet the data requirements of a market economy, Ms. Fiani concluded that the Egyptian government should:

• Adopt a Unique Identifier Number for each business establishment • Standardize M/SME definitions to match international best practice • Adopt international activity classifications, i.e. NACE (EU standard in line with MEDSTAT

compliance) • Update records with only “live” companies • Update the Economic Information Act giving access to financial statements of all companies (starting

with joint stock and limited liability) in line with Basel II and SME lending requirements • Shift from “macro statistics” more towards “micro statistics” that are shared with businesses to enable

market driven forces

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• Implement information sharing as a dynamic process, which must be disseminated to generate change as well as produce the expected feedback

• Engage businesses as well as government ministries and agencies in development of successful M/SME policies

• Implement awareness campaigns to promote information exchange and dissemination as key to growth

• Include sector specific segmentation in the M/SME data structure to generate much needed market information

• Include in the M/SME data structure, monitoring of financial and non-financial services needs and delivery effectiveness, as well as census surveys

• In M/SME data dissemination, supply individual firm profiles (and not only general statistics) as a way of addressing missing vertical and horizontal linkages, and promoting clusters among M/SMEs and linkages with large companies.

. 2. First Discussion Period

In the discussion period following the presentation, participants agreed that better collection and dissemination of data is needed. Also, because up to 30 different agencies are responsible for collecting data, a discussion of M/SME definitions in use would be very helpful. Clarity is needed about the number of employees and capital paid and the size breakdowns differentiating the micro, small, medium and large enterprises. It is difficult to obtain accurate data on this due to under-reporting by M/SMEs. To design a better statistical system, it is essential to reach a basic decision on what kind of M/SME-related data and information is required. Suggestions made during this session:

• Assign a “government body” to lead a M/MSE data project that coordinates all M/SME statistics collected by other ministries and agencies.

• Extend the use of a Unique Identifier Number to all enterprises, not only those registered with the Social Fund for Development.

• Develop more precise and measurable criteria for defining “registered” enterprises and design a system to collect better data on unregistered enterprises, in order to quantify the economic impact of all M/SMEs.

• Examine all data collected for administrative purposes to determine if it can be collected and analyzed in a way to better describe the M/SME sector and developments over time.

3. Presentation by Ms. Lois Stevenson, Senior SME Specialist, IDRC: “M/SME Data Needed for More

Effective Policymaking” (see Powerpoint slides in Annex 3) Ms. Stevenson gave the context for the SMEPol Project’s interest in the M/SME data issue, primarily that effective policymaking needs good data inputs and the ability to measure impact of policies on M/SME sector development. Developing key indicators for measuring the M/SME sector and working to develop more timely reporting of M/SME data were included in the SMEPol Project workplan funded by IDRC and CIDA. She then highlighted the international context around this issue, stating that governments all over the world are working to improve national SME data as they move to more evidence-based policy formulation. The OECD SME Statistics Directorate and EuroStat are both working with member countries to harmonize SME data and develop comparative reporting systems to facilitate cross-country benchmarking. MED-Stat is working along similar lines but mostly on trade statistics. The OECD has also set up Entrepreneurship Indicators Project to measure entrepreneurship development (tracking business entry, exit and growth rates), and the Global Entrepreneurship Monitor (GEM) is becoming an accepted benchmark for measuring levels of entrepreneurial activity in developed and developing countries.

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She then presented six categories of M/SME indicators for which data would be very helpful (based on international developments), along with the data needed to support those indicators and the possible data sources:

• Level of entrepreneurial activity and M/SME density • Employment impacts of M/SMEs • Annual change in M/SME dynamics (e.g., entries, exits, net change in number of M/SMEs) • M/SME contribution to GDP • Demographics of M/SME owners and changes over time • Growth of women entrepreneurs

Ms. Stevenson also emphasized the importance of monitoring changes in M/SME behaviours over time, information that is best obtained through regular sample surveys (for example, behaviour with respect to: extent and sources of external financing; use of BDS services and business/market information; access to training of various kinds; adoption of new technologies/ upgraded machinery; engagement in innovation activities; participation in government procurement contracts; formalization activity; membership in business and professional associations; and barriers faced to start-up and growth. In terms of directions for Egyptian stakeholders, she suggested:

• A strategic focus on filling gaps needed for M/SME policymaking • Integrating data sets • Moving towards adoption of more common definitions • Incorporating measures for the informal enterprise sector • More regular collection of data • Implementation of annual M/SME panel surveys • Annual public reporting on trends and performance of the M/SME sector and firms within it • Annual monitoring of changes in the profile of entrepreneurs

4. Second Discussion Period on How to Bridge the Gap Between Available and Needed Data Participants made several comments about this presentation. First of all, it is necessary to sort out what is meant by ‘administrative data” and “statistical data”. It is very important to obtain individual enterprise data, the kind produced by the Establishment Census and household surveys. But longitudinal enterprise type surveys are lacking at present and this deficiency needs to be addressed. No longitudinal surveys are conducted, hence it is impossible to compare data over a given number of years and in particular to track the same company over time, to monitor entry of new firms, and the growth and decline of existing enterprises, all valid M/SME statistics. Secondly, a large quantity of data is produced by the various ministries and agencies but is not shared because of “data confidentiality” classifications under law 35/1965. This is also a critical constraint. Participants recommended a review and update of law 35/1965 to rationalize the protection of privacy with the demand/need for information. They suggested a change in CAPMAS’s name to the Egyptian Statistical Agency. They also agreed there is a need for more regular data and for more consensus on the M/SME definition (in line with international standards). Thirdly, although participants were not in favour of “carte blanche” adoption of developed country practices, they agreed that they could learn much from international experience and good practice in dealing with the M/SME data issue. Technical assistance would be very helpful to Egyptian officials in order to create a national M/SME data strategy, acknowledging that CAPMAS is Egypt’s official statistical agency. There was

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also consensus that stakeholders must work more closely together to resolve M/SME data and statistical deficiencies and to give more importance to use of information in the policymaking process. 5. Closing Remarks

Mrs. Fiani closed by re-emphasizing that a large amount of data is currently being produced but it is very important to share more of it for the purpose of better understanding the M/SME sector. Information exchange between stakeholders is a must, which will lead to unifying data structures and defining distribution of roles. She sought confirmation from roundtable participants that it would be of value to organize a series of follow-up workshops to deal with some of the identified issues and to work on prioritization of actions leading to a national strategy for improvements in the M/SME data system. She also restated the importance of promoting the generation, sharing and use of information and recommended that the new Information Law and disclosure be studied further.

Ms. Stevenson obtained agreement from roundtable participants to attend follow-on workshops, perhaps leading to the creation of a Steering Committee or Working Group on M/SME Data. Participants expressed support for a workshop where international experts and government officials could be brought in to present on their experience. Mr. Abdel Aziz, Manager of the SME Unit, Ministry of Finance, concluded that the outcome of the roundtable meeting is the beginning of a process to establish a Forum for further dialogue on the issue of M/SME data – the beginning of a partnership to build on in the future.

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Annex 1: Roundtable Agenda 10:00 – 10:30 Registration

10:30 – 10:45 Opening remarks: Mr. Nabil Rashdan, Advisor to the Minister of Finance, Mr. Peter Paproski, Head of Aid, CIDA, and Ms. Lois Stevenson, Senior SME Specialist, International Development Research Centre (IDRC)

10:45 – 10:50 Overview of agenda: Mrs. Josse Dorra Fiani, Chairperson & CEO, Fiani & Partners/Kompass Egypt

10:50 – 11:20 “The Current Status of M/SME data in Egypt” (review of present and planned data initiatives & respective agencies) by Mrs. Josse Dorra Fiani

11:20 – 12:00 Discussion on the effectiveness of the current system and possible solutions for its improvement - Moderated by Mrs. Josse Dorra Fiani

12:00 – 12:15 Break

12:15 – 12:35 “M/SME data needed for more effective policy-making” (in light of international experience) by Ms. Lois Stevenson, Senior SME Specialist and SMEPol Project Coordinator, IDRC

12:35 – 1:15 Discussion of how to bridge the gap between available data and needed data - Moderated by Mrs. Josse Dorra Fiani

1:15 – 1:30 Conclusion and actions for moving forward

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Annex 2: The Current Status of M/SME Data in Egypt

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“The Current Status of M/SME Data in Egypt

Review of present and planned data initiatives and respective agencies

Report prepared by Mrs. J. Dorra Fiani, Fiani & Partners / Kompass Egypt for SMEPOL Roundtable on M/SMEs Data and Indicators

September 2007

Contents :

• Agencies surveyed• The M/SME population in Egypt :

* Definitions* Segmentation* Key findings

The M/SMEs present and planned data initiatives * Present status * Planned initiatives* Key findings

• The challenge : building an “information culture”

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Agencies surveyed :

• Central Agency for Public Mobilization & Statistics (CAPMAS)• Commercial Registry Agency / Ministry of Trade & Industry • Economic Research Forum • Federation of Chambers of Commerce• General Authority for Investment & Free Zones (GAFI)• General Organization for Import & Export Control (GOIEC)• Industrial Development Authority (IDA)• Industrial Modernisation Centre (IMC)• Cabinet Information & Decision Support Center (IDSC)• Ministry of Economic Development • Ministry of Interior • Ministry of Justice• Population Council• Principal Bank for Development & Agricultural Credit (PBDAC)• Social Fund for Development (SFD)• Social Insurance Fund / Ministry of Finance• Utilities :Telecom Egypt (TE)

The M/SMEs Population in EgyptDefinitions:

Legal Framework : Law 141/2004A definition based on capital paid and number of employees for micro and small enterprises :

- micro enterprise:* less than EGP 50,000 capital paid - * below 5 employees and up to 10 employees- small enterprise: * EGP 50,000 up to EGP 1 million capital paid

* number of employees : up to 50 employees

Smepol Definition: - medium enterprise:

* industrial sector: 50 to 100 employees/up to 10 million EGP capital* trade & ser.sector: 10 to 19 employees/1/2 to 2 million EGP capital

- large enterprise: * industrial sector: above 100 employees* trade & service sector: above 20 employees

Agencies do not share the same definition of M/SMEs

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The M/SMEs Population in Egypt Segmentation :

Key figures collected from the main agencies for the formal sector and partiallythe informal sector : • Business establishments identified in CAPMAS census 2006: 4,533,467• Business establishments in operation in CAPMAS census 2006: 2,616,217• Business establishments registered at Social Insurance Fund (2007): 1,796,000• Commercial Registry establishments issued up to 2006 average: 4,500,000• Federation of Chambers of Commerce total members in 2006: 3,800,000• Industrial Registry (IDA) no. of industrial registers by mid 2007: 28,210• Exporters, Importers and Agents Registry (GOIEC) average in 2006: 80,000• GAFI : companies registered in Law 8 and Law 159 by mid 2007: average 55,000

(of which 50% have paid capital up to EGP 1 million) • SFD, SME database (benefiting from SFD loans) by mid 2007: 260,000

SFD micro enterprises database (benefiting from SFD loans) by mid 2007: 447,033

The M/SMEs Population in Egypt Selected indicative tables

1. CAPMAS Census 2006 : • Evolution 1996/2006• Establishments distribution by work status • Establishments distribution by sector • Establishments distribution by legal entity • Establishments distribution by no. of employees

2. Social Insurance Fund :• Evolution of registered entities 2000/2001 to 2006/2007• Sectoral breakdown of establishments registered • Segmentation of private sector companies registered by no. of employees

3. IDA : Profile of Industrial Establishments

4. GAFI : Profile of SMEs within Investment and Company Law

5. Labor Market survey 2006 (Population Council)

6. Sectoral Segmentation of business establishments & employed persons(Economic Census 2000-2001 – CAPMAS)

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The M/SMEs Population in Egypt Selected indicative tables 1. CAPMAS Census 2006 : Evolution 1996/2006

1,23304323,2757038Other

0,037770,193246Branch of Foreign Company

0,66162531,3323227Joint Stock

0,0716800,04677Limited Liability

0,0512260,02424Partnership by Shares

0,2867880,366297Limited partnership

1,39342272,3140356Inherited

3,00739406,78118712Partnership

93,29229935285,71495958Individual Enterprise

100 2464675 1001745635

No. of Est. in operation or temporarilyClosed according to legal status (except government sector)

0,26115981,1936713Other

22,85103649924,78761462Barren area

1,10496951,0331210Under construction

4,081848184,32132610Closed storage area

12,625719827,64234878Completely or stopped activity

1,38626581,5347147Temporarily closed

57,71261621759,511828581In operation

10045334671003072601Establishments

%No.%No.

Preliminary Results Census 2006

Final Results Census 1996Establishments / data or results

57.7%

1.4%

12.6%

4.1%1.1%

22.9%

0.3%

Working

Temporarily closed

Permanently closed or

stopped

Closed store

Under prepartion

Unbuilt area

Other

Establishments Distribution by Work Status

The M/SMEs Population in Egypt (CAPMAS census 2006)

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4.7%0.5%

1.9% 91.1%

0.4%0.4%

1.0%

Government

Public or business

public

Private Investment

Private

Joint & cooperative

Non governmental

associations

Other

Establishments Distribution by Sector


93.3%3.0%

1.4%0.3%

0.0%

0.1%

0.7% 1.2%

Sole proprietorship

General partnership

Inherited

Limited partnership

Partnership limted by

shares

Limited liability

company

Corporation

Foreign affiliate

Other

Working Establishments (and Temporarily Closed) Other than Government

Distribution by Legal Entity


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Distribution of No. of employees by business establishment (except government entities)

69793901104846587154444168568872383529618255953421760823419262402017

* Average total no.of

employed persons per business establishment is

2.9,i.e. less than 3 Employees 19943312934641700867102022019925682096497411194208879903923389

* Average no.ofemployees non-owners is 1.84982059811382417067733966366879822708654158542312340014620231478628

* Vast majority of business establishmentowners operate on revenue & not

ona salary basis TotalFemalemaletotalfemale maletotalfemalemale

&without salary without salary

RemarksTotalEmployees withBusiness Owners

No. of Establishments Operating except Governmentestablishments

The M/SMEs Population in Egypt

Evolution of businesses registered (Social Insurance Fund) from 2000/2001 to 2006/2007

3.7317290002005/2006

-35.6 1685247 1684009 1238 2004/2005

2.9 2617383 2616160 1223 2003/2004

0.9 2542775 2541533 1242 2002/2003

3.8 2565647 2564399 1248 2001/2002

0.0 2472303 2471054 1249 2000/2001

% change Total Private Sector Public Sector Period

3.9017960002006/2007

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Sectoral breakdown of establishments registered (Social Insurance Fund)

17950371728418Total

209912202122Social and Other Services

4869546888Financial and Business Services

8700054885Transport

1002100964909Trade, Hotels & Restaurants

5796655815Contracting and Housing

361347Utilities (electricity, gas, water)

348777335833Industry

934899Mining and Quarries

6929266720Agriculture and Fisheries

2006/20072005/2006Activity Sector


Segmentation of private sector companies registered by no. of employees (2006/2007)

(Social Insurance Fund)

37242841795038

More than 501 employed822814659

From 201 to 500 employed3625251180






None employed-----635692

Employees SegmentationTotal EmployedNo. of Companies

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IDA :Total no. of Industrial Companies According to main activity Values: Million L.E.

13663148273331056828210Total

1022973515256Personal and Household Services

2662003329911660433Electricity, Gas and Steel

4189938442786564Other Manufacturing Industries

318724203746117884135503Fabricated Metal, Machinery and equipment

1089684773576132672568Basic Metal Industries

100011082725336200041961Non-Metallic Mineral Products, except Pet & Coal

2415202266455871003173198Chemicals, Petroleum, Coal, Rubber and Plastics Products

42569408954680351674Paper and Paper Products,Printing and Publishing

14130915196222272516Wood and Wood Products, including Furniture

226043162924658329206238Textile, Wearing Apparel and Leather Industries

214726805144514681125812Manufacture of Food, Beverages and Tobacco

56725047433649Other Mining

10782200251Metal ore Mining

5801686139730986212Crude Petroleum & Natural Gas Products

259714983652Coal Mining

111936507924023Agriculture and Hunting

WagesLabor no.InvestmentsProduction ValueFactories no.ACTIVITY


GAFI / Segmentation of Small Companies under Investment Law & Law 159(from 1/1/1970 till 31/8/2007) with issued capital up to 1 million EGP

N.B.: This is average 50% of registered companies under Investment Law and Law 159

10,910.1627,855Total

482.801,256Contracting & Housing

507.95857Finance

512.831,189Tourism

734.921,888ICT

1,125.802,115Agriculture

2,135.768,839Services

5,410.1011,711Industry

Issued Capital (in MEGP)No. of CompaniesActivity Sector

20


Labor Market survey 2006 (Population Council)


Labor Market survey 2006 (Population Council)

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The M/SMEs Population in Egypt Sectoral Segmentation of business establishments & employed persons (Economic Census 2000-2001 – CAPMAS)

46225-----------4735473518. NGOs

79391------------4653465317. Sports, Social Clubs & Centers

21125------------61761716. Media, Culture, Cinema

4444873----------------5134415. Health Care & Veterinary

76775-----------5490549014. Education (private)

315566-----------16845516845513. Other Services

131804------2928231112. Banks / Insurance, Fin Services

94012-----------------1117711. Post & Telecommunications

254076---------------548810.Transport

296234-------341025161025509. Hotels & Restaurants

258358------881372811373698. Maintenance Services

1616778------11751631 (more than 5 empl)1099408 (up to 4 empl)

11022147. Retail Trade

64486-----21516325-----6. Wholesale Trade

164226144107----2515. Utilities, Energy, Gaz

445845-----30310331334. Contracting & Housing

1531467------5739014 (more than 10 empl)238795 (up to 9 empl)

2483823. Industry

20189-----272522792. Mining & Quarries

95445----------4198041980 1. Agriculture & Fisheries

Employed PersonsMunicipalitiesPublic SectorPrivate SectorTotalSector

5,956,8751,896,904Total


Key findings

Agencies surveyed do not use the same definition of M/SMEs, thus statistical data collected is difficult to match

However, convergence towards use of no. of employees and capital paid among several agencies

Adopting these 2 criteria is constrained by : - Unreliability of no. of employees, as vast numbers are not registered at Social

Insurance- Most businesses are under capitalized and operate on shareholder account financing

Need to benchmark Egypt’s M/SMEs definition to int’l best practices

Need to study optimum M/SMEs definitions and key segmentations criteria which will better represent the sector and allow its monitoring

Harmonization of M/SMEs definitions among agencies to be addressed

Time for updating M/SMEs statistics need to be shortened to take into account rapid market variations

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The M/SMEs present and planned data initiatives

A. Present Status1. On going processing of M/SMEs statistical data

Ministry of Economic Development: SDDS• Adopted since 2004 with assistance from IMF and USAID, the Special Data

Dissemination Standards provide int’l standards for Egypt’s key production index• Published monthly on Ministry web site and covers 60% of GDP with monitoring of

8 main economic sectors

Central Agency for Public Mobilization & Statistics (CAPMAS)• State agency in charge of all census, including business establishments census• Conducts Labor, Employment and Salary Surveys and Consumer Price Index• Conducts specific surveys and issues regular statistical publications • Data provided includes both field data and data from other government agencies

(Social Insurance, etc…)• In charge of MEDSTAT implementation (the European Union statistics norms)• CAPMAS publications available on its intranet on subscription basis


A. Present Status2. Agencies conducting M/SME surveys

Cabinet Information & Decision Support Center (IDSC)• Conducts surveys on M/SMEs through its poll center for own use and for third party• M/SMEs data as well as other data is collected as well from various state agencies

and aggregated by IDSC• All data is published on IDSC web site

Population Council • Produces sample studies of which labor market panel in 1998 and 2006 on SME

sector (industry, trade and services)

Economic Research Forum (ERF)• Produces surveys within its mandate and for third party of which MSES survey on

5000 entities in 2002 and 2003

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A. Present Status3. Agencies generating M/SMEs data through their activity

These are state agencies which activity require and imply the production and maintenance of M/SMEs databases, however without mandate to disseminate: Ministry of Finance: income tax and VAT tax:

• Merge of 2 tax agencies and new income tax law together with updated and automated tax declaration are creating top level M/SMEs data source

• Unified tax ID could allow M/SMEs revenues statistical analysis• Up to 2006, number of establishments registered at VAT is averaging 200,000

Ministry of Finance: social insurance fund : • Maintaining automated and updated records of all public and private establishments

registered at the fund and of their employees insured• Estimated high level of not insured employees due to low level of penalty and its lack

of enforcement


A. Present Status3. Agencies generating M/SMEs data through their activity –cont’d

Ministry of Interior: Civil registry • Unique national ID number fully automated could generate statistical data on

occupation and profile of self-employed and employed labor• Specialized statistics on M/SMEs employing or owned by foreigners could be

developed

Ministry of Justice:• Commercial courts judgments: liquidation and protested bills are notified to

Federation of Chambers of Commerce, which are digitized and distributed to date only to the banks

• In process, 2 major data automation projects in cooperation with MCIT: the real estate property registry and the agricultural land registry. Both will also produce GIS maps, with expected completion by 2009

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A. Present Status3. Agencies generating M/SMEs data through their activity –cont’d

General Authority for Investment & Free Zones (GAFI)• Supervises both companies under Investment Law and under Law 159, totaling to

date average 55,000 establishments of which 50% up to EGP 1 million capital paid• Data in process of being fully automated• GAFI publishes monthly detailed statistical analysis of recently established

companies with sectoral, geographical and nationality of investments segmentation

General Organization for Import & Export Control (GOIEC)• Fully automated databases on importers, exporters and agencies with updates,

generated through capture and processing of foreign trade operations • Monitoring new traceability project on agriculture produce

Utilities registers • Automated registers such as Electricity Authority and Telecom Egypt, the latter

estimates number of commercial telephone lines at 1.2 million


B. Planned Initiatives The following agencies are in process of upgrading their M/SMEs databases

Industrial Development Authority (IDA)• Updating and upgrading the industrial registry presently standing at 28210 industrial

establishments• In plan: unification of industrial and commercial registries

Commercial Registry Authority (CRA)• Automation of the 4.5 million CR records in process with funding of USAID, of which

nearly 3 million are completed• Data registered to date should allow segmentation on basis of capital paid, legal

status, date established and location

Federation of Chambers of Commerce (Fedcoc)• Cooperation agreement with MCIT and Trade Information Center to automate their

3.8 million members data of which 2.4 million completed to date• Fedcoc also receives M/SMEs income tax declarations• Fedcoc succeeded in charging fees for C.R. services and other services delivery

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B. Planned Initiatives –cont’d Industrial Modernisation Centre (IMC)

• Commissioned a GIS mapping of all industrial M/SMEs, results expected in 2008, to include extensive information on employees and industrial equipment

Social Fund for Development (SFD)• Planning to sponsor and / or act as catalyst for M/SMEs databases development and

dissemination


Key Findings Awareness to growing necessity of complete and accurate data to support M/SMEs policies

Data gathering and compilation not accurate enough to facilitate M/SMEs policies

Start of cooperation among some agencies but not at all levels

Consensus on key statistics needed for M/SMEs monitoring and support not yet established

Definition of classified information to be addressed to allow information sharing with other agencies and with business community

M/SMES data collected to date designed to serve government decision making and not for business decision making

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The Challenge: building an “information culture”

The requirements of a market economy :

• A unique ID no. per establishment • Standardize M/SME definition matching int’l best practice • Adopting int’l activity classification, i.e. NACE (EU standard in line with MEDSTAT

compliance)• Updated records with only “live” companies • Economic information act giving access to financial statements of all companies

(starting with joint stock and limited liability) in line with Basle II and SMEs lending requirements

• Shifting from “macro statistics” to “micro statistics” shared with businesses to enable market driven forces

• Implementing information as a dynamic process, which must be disseminated to generate change as well as produce the expected feedback

The Challenge: building an “information culture” –cont’d

Engaging business as well as agencies:

• Successful M/SMEs policies require engagement of business and not only the agencies

• Awareness campaigns needed to promote information exchange and dissemination as key to growth

• M/SMEs data structure to include sector specific segmentation to generate much needed market information

• M/SMEs data structure to include in addition to census surveys, monitoring financial and non-financial services needs and effectiveness of their delivery

• M/SMEs data dissemination to supply individual profiles and not only statistics as key to generate missing linkages vertically and horizontally : clusters among M/SMEs and feeding links to large companies

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Discussion guide:

Do we need a common definition of M/SMEs and how to go about it?

Are there opportunities in sharing data among agencies?

How could existing data be better processed to inform M/SMEs policy makers?

Are there opportunities for dissemination of M/SMEs data to the other stakeholders, i.e. the market operators?

How to address data collection on the informal sector?

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Annex 3: M/SME Data Needed for More Effective Policymaking

29

M/SME Data Needed for More Effective Policymaking

Presented by Lois Stevenson, IDRCRoundtable on M/SME Data & Indicators

Hosted by Ministry of Finance & SMEPol ProjectSeptember 26, 2007

Current situation in Egypt

A number of agencies collecting M/SME-related dataCensuses, administrative records, labour force surveys, businessregistries

Potential to make better use of this data to describe and monitor developments within the M/SME sectorBut gaps in the data

Inconsistent parameters makes data comparisons difficultLack of integrated data capabilitiesGaps in timeliness of collection and reporting of dataIrregular surveying of M/SMEs (5, 8, 10 year cycles)Missing information needed for effective policymaking

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Context for addressing data gapsSMEPol Project includes a donor commitment to influence provision of regular updates of M/SME activity using key indicators, including research on key M/SME indicatorsM/SMEs are critical component of private sector

Better monitoring of the M/SME sector needed to monitor private sector performance

Pending National Micro and Small Enterprise Strategy based on quantifiable objectives and targets

Data will be needed to track developments over timeEffective M/SME policy development requires strategic data inputs

Some key policy questionsWhat is the structure of the enterprise sector and how is it changing over time?How are M/SMEs contributing to employment and where (sectors, firm size, etc.)?Where are the growth sectors?How important are M/SMEs to wealth creation/ GDP?What contributions do renewals (entries/exits) make to economic growth and productivity?Who is starting businesses and how is this changing over time (role of young people, women, technopreneurs)?How successful are policy measures in influencing the dynamic development of the M/SME sector?

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International developmentsIMF providing guidance to improve national statistical practices (SDDS)Governments all over the world working on improving national SME data SME statistics important sub-set of structural business statistics (OECD, 2005)OECD 2004 Ministerial meeting urged countries to develop more robust entrepreneurship & SME statistics to improve policy development and monitoringOECD SME Statistics Directorate and EuroStat working with member countries to harmonize SME data and develop comparative reporting systems to facilitate cross-country benchmarking

EU business demography database (birth, death, survival rates by legal form, sector and size)OECD Task Force on Structural Business Statistics; framework for business demography statistics

OECD Entrepreneurship Indicators Project to measure entrepreneurship development (tracking business entry, exit and growth rates)MED-Stat working on harmonization, but mostly on trade statisticsGlobal Entrepreneurship Monitor (GEM) becoming accepted benchmark for measuring levels of entrepreneurial activity US Panel Study on Entrepreneurial Dynamics

Key policy recommendations re SME Statistics (OECD 2005)

Promote international coverage of statistical concepts and processes (best practices in definitions, data formats & procedures, observation units and size classes)Foster greater international comparability of statisticsDevelop an integrated business statistical register (single identification number for enterprises); share administrative data with national statistical authorities; develop common format forstatistical business registers; regular business updatesPromote data linking to make better use of existing data for use by policymakers (while ensuring confidentiality of information re individual firms)Carry out policy-relevant empirical analysis to underpin evidence-based policy making – longitudinal studies to analyze firm behavior over time, provide insights on enterprise performance and growth

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Key obstacles in SME data collection (OECD 2005)

TimelinessPoor quality sampling framePoor use of data collection tools Poor coverage of the smallest businessesLegislative framework that limits the variables than can be collectedSmall sample size; low response rateAbsence of unique identifier, differences in definitions, & timeliness of data major impediments to use of administrative dataDifficulties in correctly measuring the entry and exit of enterprises

Optimal M/SME indicators, data sources, and gaps in Egyptian statistical system

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Polling? GEM partner?% of people intending/ trying to start a business

CR? Commercial Court Orders?

Annual firm exit rate (closed enterprises /total M/SMEs)

OSS? SIR? CR? Chambers of Commerce? GAFI? ITA?

Annual business entry rate (new start-ups /total M/SMEs)

M/SMEs per 1000 population

Establishment Census; SIR?Number of M/SMEs (by size of firm, incl. informal)

Annual LFSS; CRA; SIR; Population Census

Number of employers(employer rate - % of total employment)

Annual LFSS; CRA; ELMS; Population Census

Number of self employed(self-employment rate - % of total employment)

1. Level of entrepreneurial activity; density

SourceData neededIndicator

None at present% of high growth firms

ITA? SIR? Annual update to Economic Census data?

% of firms that grow on annual basis (by size of firm)

SIR? CR? ITA?Annual change in M/SME employment (by size of firm)

CR; SIR? ITA? Are annual data available? LFSS

Annual change in number of M/SMEs (by size of firm – entry, exit, survival rates) + self-employed

3. Annual change in M/SME dynamics

SIR? Employment effects from new entries minus exits

Establishment Census; SIR?; Commercial Register

M/SME employment by size of firm

2. Employment impacts of M/SMEs


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Population Census; Economic Census; ELMS; panel surveys; no annual source

Age, education, training, gender, literacy, previous experience, household income, etc.

5. Demographics of M/SME owners and changes over time

LFSS; ELMS; Economic Census; Population Census

Share of self-employed; employers; M/SME owners; by sector, size of firm and governorate

6. Growth of women entrepreneurs

ELMS (employment); panel surveys?

Contribution of informal enterprises

TIC; Industrial CensusExport activity of M/SMEs

ITARevenue and wages generated by M/SMEs

4. M/SME contribution to GDP


Plus monitoring changes in M/SME behaviours Extent and sources of external financingUse of BDS servicesUse of business/market information and sourcesAccess to training of various kindsAdoption of new technologies/ upgraded machineryEngagement in innovation activitiesParticipation in government procurement contractsFormalization activityMembership in business and professional associationsBarriers faced to start-up and growth

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Getting from here to there….Need strategic focus on filling gaps for M/SME policymakingMake better use of what we have - integrating data setsMove towards more common definitionsIncorporate measures for the informal enterprise sectorMore regular collection of dataImplement annual panel surveysAnnual public reporting on trends and performance of the M/SME sector and firms within itAnnual monitoring of changes in the profile of entrepreneurs

So, what do you think?

How can we proceed?

What steps can we agree to take next?

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Annex 4: List of Participants Organization Representatives Title

Mr. Peter Paproski Head of Aid Canadian International Development Agency (CIDA) Ms. Eman Omran Team Leader, SME Programs

Ms. Awatef Hussein Emam Head of Statistical Training Center Ms. Eman Ahmed Ahmed El-Hetta Head of Department

Central Agency for Public Mobilization and Statistics (CAPMAS) Mr. Mohamed Mohamed Head of the Central Department for

Production material Commercial Registry Mr. Nabil Yaakoub General Manager

Commercial Registration European Commission Delegation

Mr. Christophe Besse Counsellor, Head of Trade, Science and Enterprise Section

Federation of Chambers of Commerce

Mr. Samy Nasr Abdel Maksoud Manager of Regional & International Organization Department

Ms. Josse Dorra Fiani Chairperson & CEO Ms. Anne Dorra Fiani Executive General Manager Ms. Lobna Ali P.R. Officer

Fiani & Partners

Mr. Fady Henry Business Development Manager French Embassy Mr. Loic Prunet-Foch Charge d'Affaires

Economic Mission Dr. Amr Hossny Development Organizations Manager Mr. Alaa M. Soueif Information and Decision Support

Director Mr. Mohamed Mohamed Abu Seree' Economic Researcher, OSS

General Authority for Investment and Free Zones (GAFI)

Mr. Ahmed Hassib Head of the Economic Performance Monitoring Sector

Industrial Modernization Center Mr. Amr Taha Programme Monitor Dr. Ashraf Shaheen Executive director of the Information

Dissemination Department Dr. Soheir El-Sherif Egypt SMEs' Portal Project Manager

Information and Decision Support Center (IDSC)

Ms. Eman Refaat Ibrahim Economic Researcher International Development Research Centre (IDRC)

Ms. Lois Stevenson Senior SME Specialist

Ms. Nada Shousha Country Officer International Finance Corporation (IFC) Mr. Gregory Rung Banking Specialist, Program

Manager, Bank Advisory Program Eng. Hoda Dahroug Deputy Director Ministry of Communication

And Information Technology Ms. Shereen Aly El-Ghatit Consultant, ICT Trust Fund Mr. Nabil Rashdan Advisor to the Minister Dr. Mohamed Sorour Advisor to the Deputy Minister on Tax

Policies Mr. Mohamed El-Sayed Head of the Inspection Department,

Social Insurance Fund Mr. Samy Abdel Hady Head of the Monitoring Department,

Social Insurance Fund

Ministry of Finance

Mr. Hesham Kandil Head of the Central Department for IT, Social Insurance Fund

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Ministry of Investment Dr. Sherif Arafat Oteifa Advisor to the Minister Ms. Magda Seleit Undersecretary, The SME Export

Development Sector Mr. Mohamed Ibrahim Undersecretary, Head of the Central

Department for Enhancing SME Competitiveness Programs

Dr. Fouad Issa Senior Economic Advisor

Ministry of Trade and Industry

Mr. Hussein Abdel Motteleb Economic Researcher Population Council Dr. Ragui Assaad Regional Director

Mr. Mohamad Abdel Aziz SME Unit Manager Ms. Heba Helmy SME Specialist

SMEPol Project

Mr. Samer Sayed IT Specialist Mr. Samir Amin Abdel Meguid Head of Giza OSS Mr. Amr Saeed Shash Senior Officer

Social Fund for Development

Mr. Mahmoud Abdel Hamid Officer, Research and Monitoring Dept., SEDO

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