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Innovating in the Mediterranean for growth and jobs

Special edition no.15 : FEMIP


Economic change in Southern Mediterranean countries will occur more easily if it results in direct benefits for employment, particularly for young people. Existing schemes to fund innovative SMEs cover a wide range of needs but can still progress.




450,000 jobs have been consolidated in SMEs and intermediate-sized companies. This is the direct impact of fifty-three non-European private sector projects supported in various forms by the European Investment Bank (EIB) in 2014. Some 13,000 companies and 23,000 micro-businesses have benefited, or will benefit, from financing amounting to €3.28bn. Some 10% of this funding has been allocated in the Mediterranean area. The different forms of funding seek to cover the range of business needs from creation to growth. They reinforce and multiply the ways in which partners throughout the process can act, including incubators, seed and start-up funds, banking networks or capital investment funds for when businesses expand rapidly.

Consolidating the entrepreneurial fabric to boost employment is one of the keys to the future success of economic transition in the countries concerned. Indeed, such support should become more widespread. When EIB President, Werner Hoyer, spoke in early October about the Deauville Partnership which brings together the G7 states with the transition countries (Egypt, Tunisia, Morocco, Jordan, Libya and Yemen), he said, “The EU Bank stands ready to work with others through the Deauville partnership and other mechanisms to increase our engagement in favour of job creation and to free up supplementary resources for economic growth.” 

Maximising opportunities

For Alaya Bettaied, training represents a parallel challenge (photo Clean Tech Fund)
For Alaya Bettaied, training represents a parallel challenge (photo Clean Tech Fund)
Medium, small and micro businesses represent a particular target. Facilitating their access to funding remains a priority, but support can cover a wider area. For example, in September 2014, the EIB signed a partnership agreement with the Banque Tuniso-Koweitienne (BTK) and the organisation ‘Réseau Entreprendre’ in Tunisia. This agreement provides for the allocation of unsecured loans combined with “personalised coaching” from business leaders in the first few years to maximise the chances of success of the supported businesses. Skilled young people from the Maghreb countries still have high expectations, particularly in the digital sector, which the Mediterranean-world Economic Foresight Institute (Institut de Prospective Economique du Monde Méditerranéen - Ipemed) considers to be an “indisputable lever to boost the economies of the South” - funding permitting, of course!

Alaya Bettaieb, former Tunisian Deputy Minister for Investment and International Cooperation and founder of the Clean Tech Fund, has set up and now manages an incubator at the “Esprit” Engineering School. This was experiment he wanted to try in order to justify his wish to integrate his fund into the Tunisian incubation and acceleration ecosystem. He was able to measure this appetite for business creation at a “boot-camp” that attracted more than 400 applications! Of the sixty start-up companies selected in the first round, just six made it to the final stage to fine-tune their project and business model over a six-month period. “There are brilliant young people in our universities and those working in the Tunisian entrepreneurial ecosystem are aware of the need to work together to foster the emergence of a new generation of entrepreneurs and to supervise these young people to take the plunge and experience this adventure. Nevertheless, there is still a lack of early stage or pre-seed funding in Tunisia. They have to be given an opportunity and we need to create appropriate mechanisms to support them.”

Improving skills

(photo Clean Tech Fund)
(photo Clean Tech Fund)
For Alaya Bettaïeb, “Innovation also happens by alerting researchers to manufacturers’ requirements and manufacturers to researchers’ potential. With support from Europe, a process of reflection has begun in this respect. However, political will continues to fall short of bridging the gaps in a system to actively support innovation or the transfer of existing technology. As a result, the system remains incomplete and there is considerable lack of legal, technological and financial expertise for proper transfer and/or for market-orientated research, even though this could speed up the development of innovative solutions that the country needs.”   

Training represents a parallel challenge and companies are looking for qualified labour to sustain their business in the long-term. The Luxembourg Presidency of the Council of the European Union has therefore presented a youth employment and vocational training initiative in the Maghreb countries. The project has been developed with the Institut de la Méditerranée, authorities from the countries involved and European and international financial institutions. It aims to devote €150-200m over several years to improve skills in the least-qualified posts right up to post-doctoral students.

The Neighbourhood Investment Facility (NIF) is the key instrument

For the European Commission, the Neighbourhood Investment Facility (NIF) is an EU blending mechanism, aimed at mobilising additional funding from European Financial Institutions for partner countries in the Southern and Eastern Neighbourhood. Blending has demonstrated its strong leverage with more than EUR 5 bn raised over the past six years. Blending is used to support the private sector in the Neighbourhood region with improved access to finance, mainly through investment grants, guarantees, venture and risk capital operations targeting small and medium-sized enterprises as well as start-ups. Financing innovation forms part of these instruments. Through the promotion of experience sharing among stakeholders (European Finance Institutions, European Commission , EU Member States), the Neighbourhood Investment Facility has become an important instrument to scale up funding at European level and replicate successful experiences which have worked well in other regions. The “EU Initiative for Financial Inclusion in the Mediterranean”, which will be launched in early 2016, is a good illustration of this.





Monday, October 26th 2015



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