DRAFT CONCEPT NOTE

REGIONAL WORKSHOP ON SME’S DEVELOPMENT IN-AFRICA

Theme: “SMEs Promotion for Inclusive and Sustainable Growth in Africa”

Kinshasa, Democratic Republic of Congo

18 - 20 November 2013

Regional Workshop on SME’S development in-Africa

Theme: “SMEs Promotion for Inclusive and Sustainable Growth in Africa”

Kinshasa, Democratic Republic of Congo

18 - 20 November 2013

1. The Commission of the African Union envisages the holding of a Regional Workshop on SMEs Development in Africa, from 18 - 20 November 2013 in Kinshasa, Democratic Republic of Congo The workshop which will focus on industrial SMEs, is being organised within the framework of the Summit Decisions on AIDA and BIAT/CFTA and seeks to promote within the Member States of the African Union the establishment and growth of SMEs for industrial development, job creation and economic development .

Background

2. One of the daunting challenges faced by Africa today is how to manage its transition into a knowledge-based economy. Success in this task will ensure a competitive and dynamic African economy with more and better jobs and a higher level of social cohesion among its Members States. In a globally changing landscape characterized by continuous structural changes and enhanced competitive pressures, the role of SMEs has become even more important as providers of employment opportunities and key players in the wellbeing of local, national and regional communities.

3. In Africa, the SME sector is one of the most important industrial sectors capable of meeting the challenges of eradicating poverty. Generally, the SME sector accounts for nearly 90 percent of African economies. It is the largest source of employment, providing a livelihood for over three quarters of the working population, especially women. The sector is the backbone of almost every economy on the continent. However, the relative share of the sector in total output and exports is generally much lower as compared to other parts of the world.

4. For decades, the capacity and productivity of SMEs in most African countries has remained very low. This is due mainly to the inadequate public support to the sector. In order to promote and enhance the development of industrial SMEs in Africa, there should be an institutional framework whereby entrepreneurial capabilities could be upgraded. The institutional framework could facilitate an effective and efficient coordination of the value chain, starting from analyzing the market, standardizing the conditions, designing, training, and financing of the sector.

5. It must be acknowledged that the national and local environment in which SMEs operate are very different and so is the nature of SMEs themselves, including crafts, micro enterprises, family owned or social economy enterprises. Therefore, policies addressing the needs of SMEs need to fully recognize this diversity and fully respect the principle of subsidiarity. Since the sector does not require sophisticated technology and high level of training to develop, the right policy framework could promote their growth and development. African dynamic entrepreneurs are well placed to reap the opportunities from globalization and from the acceleration of technological change. The capacity of Africa to build on the growth and innovation potential of Small and Medium-Sized Enterprises (SMEs) will be decisive for the future of African economic growth.

6. SMEs have to manage growth and change in an environment where the pace, pattern, and organization of production have evolved fundamentally. Trade liberalization at the global and regional levels has created opportunities as well as challenges for the development of the SME sector. In the recent past, many African countries have implemented business reforms aimed mainly at reducing red-tape for the establishment of SMEs. In addition, the business environment for SMEs has improved considerably in many African countries according to the latest Africa – Doing Business Report 2009 of the World Bank.

7. Despite this encouraging progress, the continent still needs to take further significant measures to release the full potential of SMEs. In general, African SMEs still have lower productivity and grow more slowly than those in other parts of the world. In fact, the recent financial and economic crisis has reinforced the urgent need for Africa, considering the important role of SMEs in the economic growth of their economies, to continue to carry out economic reforms and create public support for the establishment and growth of industrial SMEs.

8. The Department of Trade and Industry of the African Union Commission therefore, endeavors to support the creation of an enabling environment for the development of SMEs as part of a strategy for the implementation of the Plan of Action for the accelerated industrial development of Africa.

Objective of the Workshop

9. The main objective of this workshop is to provide to policy makers of Member States of the Central and Western African regions of the African Union, a platform for exchange of information and best practices on SMEs’ policy issues and on industrial SMEs. Invited participants are expected to brainstorm on some of the key issues relating to the creation of an enabling environment for the development and growth of Industrial SMEs in Africa and to notably:

• Promote polices for the development and growth of SMEs in Africa
• Articulate a policy framework that aims at providing an enabling environment for the promotion of industrial SMEs based on African best practices.
• Develop a promotion strategy for Industrial SME’s in Africa;
• Exchange experiences and best practices Fostering a Public Private Partnership (PPP) approach in Africa;
• Assess the role of Government and the role of the private sector in promoting the industrial SMEs;
• Define measurable indicators to enable Africa to monitor achievement of SMEs in the share of industrial products in both national and continental GDP;
• Promote research and innovation as an essential means for SME’s growth and competitiveness;

Expected Outcome of the Meeting

10. The workshop is expected to provide broad rrecommendations on a policy framework, which aims at providing an enabling environment that promotes industrial SME’s based on African best practices.

Participants

11. The workshop will comprise of the following participants:

 One high level official from each of the Member States of the Central and Western region of the African Union;
 One representative of each of the following RECs having as area of responsibility, industrial SMEs: ECCAS, ECOWAS
 One representative of the Chair of the ESA Tripartite arrangement, notably the EAC
 One expert from the UNIDO
 One expert from the UNECA
 One expert from the UNCTAD
 One expert from AfDB
 One expert from the World Bank
 Representatives of Private Sector Organisations
 Commission staff.

Information

12. The following staff can be contacted for further information relating to this workshop:

• Mr. Francois Jean Noel, Head of Division, Department of Trade & Industry, P.O. Box 3243, Addis Ababa, Ethiopia, Tel + (251) 115182966, Email: : FrancoisJN@africa-union.org.

• Ms. Meaza Tezera, Communications Assistant (Partners Relationship), Department of Trade & Industry, P.O. Box 3243, Addis Ababa, Ethiopia, Tel + (251) 115182955, Email: Meazat@africa-union.org

Directorate of Trade and Industry
Commission of the African Union
Addis Ababa
October 2013