Middle East & North Africa development of smes exports through virtual market places

Complementarity with other projects

38. 
    The complementarity of this project with others is strong. Other projects financed by the Transition Fund and other initiatives such as the IFC-World Bank MSME TA Facility for the MENA region have as objective to support SMEs or MSMEs as well as entrepreneurs mainly through the provision of financing to address firm-level bottlenecks. If the SMEs receiving support to engage in VMPs succeed in conducting e-commerce, they will need additional finance to scale up production and/or upgrade technological or human resources skills at all levels. However, the project differs from others, such as the Jordan’s SME Growth Program on its specific focus on i) upgrading skills to conduct e-commerce and the focus on VMPs, and ii) addressing institutional constraints to create an enabling business environment for e-commerce. Other projects, such as the Morocco Microfinance Development, aim at strengthening microfinance institutions and improving the regulatory environment under which they operate without addressing SMEs development at micro level. Therefore, while not cross-cutting in terms of addressing firm-level constraints but basically focusing on a few, it seeks to enhance expertise to use available technological platforms to expand export markets. The surveys conducted prior and during the design of the project confirm SMEs need and desire to acquire this expertise. This operation will ultimately benefit Micro and Small enterprises.
    

39. 
    This project will also build on the work undertaken by the ITC in Jordan, Morocco and Tunisia in the framework of Enhancing Arab Capacity for Trade program (EnACT). This program, funded by the Canadian International Development Agency (CIDA), was implemented from 2009 to 2013, and focused on developing the full export potential of five countries: Algeria, Egypt, Jordan, Morocco and Tunisia. The EnACT program assisted SMEs in target industries to export to international markets, and to create employment in the post Arab Spring context. In addition to strengthening TSIs and creating trade intelligence systems, the program strengthened the capability of SMEs to understand and meet the requirements of targeted export markets and built relationships with potential buyers for sustainable exports.
    

40. 
    While the program focused on four main objectives: i) improving business intelligence, trade policy and export strategy, ii) strengthening the capacity of trade support institutions to promote export competitiveness, iii) developing markets and supporting small and medium-sized private sector companies (particularly in handicraft sector), and iv) creating opportunities for women and young people.
    
41. 
    
    
42. 
    The EnACT program puts a special emphasis on raising awareness about web marketing and e-commerce solutions as affordable and efficient tools to conduct business particularly for women and youth, and other vulnerable groups. Working in close partnership with TSIs, , ITC, through the EnACT programme, strengthened the capacity of beneficiaries to leverage the Internet to promote, market and sell products and services throughout the region and beyond, with a special focus on social media and free and open source software. ITC has developed a series of web marketing and e-commerce capacity building modules, which are supported by online diagnostic tools.
    

43. 
    EnACT helped to strengthen the capacities of sector specific TSIs enabling them to offer targeted advice to SMEs. The programme focused on mentoring and coaching approach, aimed to adapt SMEs products to market requirements, improve marketing and promotion strategies, participate effectively in trade missions and exhibitions to meet buyers, and increase their visibility through e-commerce applications.
    
44. 
    As a result, beneficiaries SMEs were empowered as to access to new sales channels. Examples include a small handicraft company owned by a Tunisian businesswoman, which joined “Dinos”, a Japanese online retailer. EnACT has also enabled Jordanian artisans to be connected to the Louvre Museum in Paris, which resulted in $130,000 of initial orders. This is being maintained to date through regular orders. In Algeria, the Carpet Maker Association of Ghardaia benefited from coaching on social media as a way to reach new clients. 
    

45. 
    The programme was designed as to support national priorities in term of job creation for women and youth. In fact, the programme enabled more than 500 SMEs to benefit from training on social media as affordable and efficient tools to conduct business, from which 200 were women-owned companies. Furthermore and in association with Amadeus Institute, EuroMed Capital Forum and Maroc Export, EnACT granted its first Youth Entrepreneurship Prize in Export to Outsourcia, a Moroccan company.
    

46. 
    The companies targeted were active in the engineering goods, processed foods, leather products and handicraft sectors. They have been able to penetrate new markets in a sustainable manner in Sub-Saharan Africa (Kenya and Uganda), Asia (Asia and Japan) and the Arab region (Kuwait).
    

47. 
    The VMP Project will build on this 4 years work, especially on raising awareness of web marketing and e-commerce solutions. It will consolidate and leverage material and knowledge built through the EnACT programme and subsequently extends it to more SMEs as a way to increase their visibility and increase their market share.
    

6. Justification for the World Bank as Executing Agency and Partnership with ITC¹³

48. 
    The project seeks to increase exports from transition countries. It aims at building capacity of SMEs in Jordan, Morocco and Tunisia on how best to utilize Virtual Market Places, as means to reach new export markets.
    

49. 
    The implementation of the project requires the engagement and training of SMEs but of and a variety of institutions and organizations, from governmental to civil society and private sector. The goal of the project will be achieved through the targeting of SMEs and the provision of individualized support in their first export transactions through the existing VMPs. Also, the project seeks to have an impact on the behavior and attitudes of SMEs towards e-commerce and, through that, impact SMEs performance in export markets. For the project to succeed, it is fundamental to get close to the small and medium enterprises which can be done much easily through the sector associations and chambers of commerce, depending on the country context. The corresponding government authorities will be involved at two levels: i) in the National Steering Committee, ii) as hosts of the project implementation unit (PIU) as needed.
    

50. 
    Because of the complexity of legal and implementation arrangements and the variety and number of stakeholders involved, countries agreed on the Bank acting as executing agency. Therefore, there is no requirement to conduct project appraisal.
    

51. 
    The Bank will partner with the International Trade Centre (ITC), a specialized UN Agency, based in Geneva. The objectives of the project are fully in line with ITC mandate which is to enable small business export success in developing and transition-economy countries, by providing, with partners, sustainable and inclusive development solutions to the private sector, trade support institutions and policymakers. ITC capitalizes on strong regional and international networks of policymakers, TSIs and SMEs. ITC work focuses on five strategic objectives among which three are directly relevant for this project, which are: i) Building awareness and improving the availability and use of business intelligence; ii) Enhancing policies for the benefit of exporting enterprises, iii) Building the export capacity of enterprises to respond to market opportunities. ITC’s support to the Arab region increased exponentially over the last three years. The project will benefit from a well-established network of key stakeholders that ITC has been working with over the last five years in Jordan, Morocco and Tunisia.
    

52. 
    The World Bank has been an important partner for ITC for many years. Over the 3 year period 2008-10, the World Bank’s Development Grant Facility (W2) provided a grant of $1.8 million ($600K per year) to enable ITC’s market analysis tools to be made free of charge to developing and least developed countries. The program was positively independently evaluated in 2012 and found to have achieved the objective of improving the quality and availability of business intelligence for developing countries. In addition, The World Bank provided ITC with a grant in 2009-10 of $400,000 to re-develop its WITS (World Integrated Trade Solution) analysis application in a web environment. ITC completed the work and the platform forms the basis of the now web-based WITS application – see https://wits.worldbank.org. On other areas of collaboration, The World Bank together with ITC, UNCTAD and the African Development Bank came to a collective agreement (an MOU has been in force since October 2011) to collaborate on improving global transparency in trade, share trade related data and reduce redundancies in their work in this area¹⁴.
    

53. 
    ITCs mandate and missions perfectly fit the project development objectives. Moreover, ITC experience and capability was emphasized by all the countries’ counterparts visited by the Bank during the preparation of the project.