Small and Medium Enterprises in the Middle East and North Africa Region

Khaled Otman

doi:10.5539/ijbm.v16n5p55

Abstract

In the Middle East and North Africa (MENA) region, Small and Medium Enterprises (SMEs) are now widely recognized as engines of economic development. This paper discusses the importance of SMEs in the MENA economic area and identifies the challenges and barriers facing SMEs in MENA countries. In addition, this study analyses the effects of two &#39;black swan&#39; Coronavirus disease (COVID-19) phenomena and a decline in oil prices on the economy of MENA in 2020. The current study found that the most significant challenges were identified as lack of access to finance, lack of managerial expertise, inefficiencies of government, lack of a well-trained workforce, inadequate infrastructure, corruption and bureaucratic obstacles. Among these challenges, the lack of access to finance appears to be the major challenge and suggests that future research is required to identify the role of Islamic finance models in the financing of SMEs in MENA countries. This research provides all stakeholders with policy implications intended for enhancing the different features of SME improvement in the MENA region and generally in developing countries.

Highlights

SMEs have drawn a considerable deal of attention from researchers and policy makers around the world
The World Bank notes that up to 60 % of total jobs and up to 40% of gross domestic product (GDP) are provided by formal SMEs in emerging economies, and these figures would be substantially higher if informal SMEs were taken into consideration (Karadag, 2015; Ndiaye, Razak, Nagayev, & Ng, 2018)
The main aim of this study is to explore the following research questions, what is the role of SMEs in the Middle East and North Africa (MENA) region's economy, and what determines the main challenges affecting SMEs in MENA countries in developing countries

Summary

Introduction

SMEs have drawn a considerable deal of attention from researchers and policy makers around the world. The main aim of this study is to explore the following research questions, what is the role of SMEs in the MENA region's economy, and what determines the main challenges affecting SMEs in MENA countries in developing countries. Researchers and policy makers are interested in answering the question, what are the impact of the COVID-19 and the decline of oil prices on the economy of the MENA region, especially for SMEs?'. Despite the enormous academic interest these SMEs have created over the last few years, the literature on finance remains silent in analysing the vital role of SMEs in the MENA economy and in investigating the key challenges facing SMEs in developing countries, especially in the MENA region. It analyses the challenges that SMEs face in the MENA region in Section 4 and in Section 5 presents discussion and concluding remarks along with policy suggestions

Literature Review

International Context of Definition of SMEs

The Importance of SMEs for Economic MENA Countries

Key Challenges of SMEs

Lack of Finance

Innovation and Technology

Infrastructure and Government Support

Skilled Human Resource Insufficiency

Firms Characteristics

Poor Management

Findings

Discussion and Conclusion