The Mediterranean Middle East and North Africa 2018

Chapter 5. Entrepreneurial human capital development

Abstract

This chapter examines human capital development initiatives related to entrepreneurship and SME internationalisation in the MED economies. It focuses on three areas: entrepreneurial learning in upper secondary education (general and vocational); training for women’s entrepreneurship; and skills development for SME internationalisation. The analysis finds that although MED economies have improved their policy frameworks in this area, challenges remain – including the implementation of policies, data collection and analysis on training provision and evaluation.

Key recommendations are as follows:

Governments should build multi-stakeholder and cross-ministerial partnerships to ensure the efficient implementation of action plans for entrepreneurial learning that may belong under different national strategies (such as education, vocational training, employment, economic development, exports). This could include promoting entrepreneurship as a key competence as well as business skills. MED economies could build on project-based initiatives to a systemic approach providing entrepreneurial learning into the national curricula at all levels of education.

MED economies could move towards holistic approaches to supporting women’s entrepreneurship development rather than individual policy measures and actions. Holistic approaches could combine training with mentoring, coaching and networks set-up. Governments could also continue their efforts to produce and collect gender-disaggregated data to enable the design of policies tailored to the needs of entrepreneurial women.

All MED economies require more developed data on SME training, particularly in terms of export potential. One lead in-country institution should co-ordinate data and wider intelligence (e.g. good practice) to support the government in setting policy priorities and resource allocation.

The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.

One of the objectives of this interim assessment is to support the efforts of MED economies to develop more-entrepreneurial human capital as a lever to increase employability and reinforce competitiveness. Three targets have been identified in relation to the region’s potential, its demographic structure and its main challenges: 1) young people, who constitute an important part of the overall population (ranging from 36.8% in PA to 20.9% in Tunisia); 2) women, in consideration of their particularly low levels of participation in the labour market in the Arab region (ranging from 16.6% in Algeria to 26.6% in Tunisia); and 3) SMEs with potential to internationalise as a means to foster innovation.

Building entrepreneurship as a key competence is the next challenge for policy makers and schools.

Youth employability remains a top priority for the region. Improving the employability of young people and promoting entrepreneurship through education is one of the possible solutions to the problem of high youth unemployment (between 25% and 40%) and the growing phenomenon of young people “not in education, employment or training” (NEETs). Recent data shows that NEETs represent around 30% of young people aged between 15 and 24 in Egypt, Morocco, PA and Tunisia, and 20% in Algeria and Lebanon. High NEET rates have a negative impact on employability, future earnings and access to quality jobs. Education and training have a key role to play in developing an entrepreneurial culture of young people to find a job more easily and to contribute to the economic growth and competitiveness of the countries.

This section looks at how entrepreneurial learning is being promoted in upper secondary education, both in general education and vocational education and training (VET). Particular attention is given to entrepreneurship as a key competence that employers increasingly seek in this fast-changing world. It describes where countries stand in terms of policy dialogue and partnership, as well as implementation of entrepreneurial learning in schools, including school-enterprise co-operation.

Progress since 2014

The assessment shows that entrepreneurial learning is still too focused on the development of business skills, such as financial literacy and business plans. More awareness-raising for school directors, teachers, student associations, parents associations and policy makers is necessary to ensure understanding on the need to develop entrepreneurship “as a key competence”. This focuses on cultivating an entrepreneurial attitude characterised by a sense of initiative and agency, pro-activity, a forward-looking attitude, courage and perseverance in achieving projects (European Commission, 2018). Research shows that, by enhancing such attitudes, youth will have a higher chance of successful participation in society as active citizens and will better manage their lives in an increasingly complex world (European Commission, 2017).

Since 2014 all the MED economies have included entrepreneurial learning across different socio-economic policy documents:

• Tunisia has a separate entrepreneurial learning strategy, while Morocco clearly targets the promotion of entrepreneurial learning in its Strategic Vision of the Education System and in the Vocational Training Strategy 2021. In the other economies, entrepreneurial learning features across different strategies – for example, national development plans (Algeria), educational or youth strategies (Lebanon and PA), or economic strategies (Egypt, Israel and Jordan).

Because entrepreneurial learning has no single policy “home”, it is important to build structured national partnerships to ensure that the various policy areas are aligned. Unfortunately, this is missing in most of the MED region. These national partnerships should include a wide range of stakeholders – including representatives from ministries of education, employment, and economy; civic society; social partners; employer’s organisations; teachers and youth organisations; entrepreneurs; and donors – to properly drive (and then to monitor and evaluate) country initiatives for entrepreneurial learning. In this respect, action plans that establish how to integrate entrepreneurial learning into formal and non-formal education and training need to be established.

• Lebanon is currently working on a multi-annual action plan to integrate entrepreneurial learning into the national education system, including a budget estimate and a clarification of the roles and responsibilities of the different partners involved.

Practically all economies have made progress in the promotion of entrepreneurial learning in upper secondary education since 2014. However, entrepreneurship as a key competence is not yet embedded into the national curriculum framework for upper secondary education (general and VET) in any of the MED economies. The European Entrepreneurship Key Competence Framework, known as EntreComp (European Commission, 2018) is a useful tool for understanding and developing entrepreneurship as a competence.

• In Egypt, the IMKAN1 pilot project in the Luxor governorate borrowed from the framework for reforming the curricula and formulating entrepreneurial learning outcomes for VET schools.

• In PA, the Palestine Polytechnic University, winner of the 2017 ETF good practice award for promoting entrepreneurship key competences in VET, is raising awareness amongst the wider higher-education community by using the entrepreneurship key competence framework (EntreComp).

There are several good practices where entrepreneurial learning is being implemented in general and VET schools at the secondary level. The challenge now is to move towards a systemic approach by inserting entrepreneurial learning into the national curricula at all levels of education. Good examples of entrepreneurial learning promotion include:

• In Jordan, My Entrepreneurial Project (MEP) is fostering creativity, teamwork, and initiative for young people to stimulate entrepreneurship and self-employment as a career choice. INJAZ2 is an active partner in the region, offering opportunities for secondary-school students by creating practical business experiences.

• Tunisia has started a project across the whole VET system. This includes the production of a national Entrepreneurial Learning Charter to set this policy area as a priority. As part of an integrated approach, Tunisia is also putting in place a curriculum development and in-service and pre-service teacher training – including integrating entrepreneurship as a key competence.

• Israel has developed guidelines for teachers on how to enhance entrepreneurial learning in the classroom.

However, despite the fact that national policies are underlining the importance of school-enterprise co-operation in all MED countries, there is poor data on the number of upper secondary schools (including VET) that have established structured partnerships with enterprises. The collection of data on school-enterprise co-operation is key to adapting policies, setting targets and motivating enterprises and schools to set up common projects. The assessment shows that, in general, school-enterprise co-operation is more prominent in VET. The challenge is to extend this co-operation to the general education system.

For further action

MED economies need to build national partnerships to implement the entrepreneurial learning policies recommended since the last assessment. These partnerships, which should build on concrete action plans, should include representatives from the ministries of education, employment, and economy; civic society; social partners; employer’s organisations; teacher and youth organisations; entrepreneurs; and donors. Countries need to continue making efforts to move from project-based initiatives to a systemic approach by inserting entrepreneurial learning into the national curricula at all levels of education. A strategic focus on entrepreneurship as a key competence is the next challenge for all education and training systems and apprenticeships should include opportunities for young people to develop entrepreneurship skills e.g. through working within the enterprise administration.

Momentum is growing in women’s entrepreneurship and requires a comprehensive policy response.

The Small Business Act for Europe (SBA) points to the impact of the gender gap on the low numbers of women entrepreneurs (European Commission, 2008). Modern policy thinking now recognises the complex undercurrents behind the low numbers of women entrepreneurs, and societal barriers limiting women's access to wealth and power. The EU’s SBA policy framework sets targets for raising the share of women entrepreneurs and their participation in business activities across all sectors of economy.

In the MENA region, there are substantial gaps in women’s participation in the labour market, self-employment and entrepreneurship, coupled with large gender differences in accessing better-paid jobs, managerial positions, and employment opportunities in general. Women’s participation in the labour force is as low as 25.33% (ILO, 2017); only 8.38% of firms have a female top manager, compared to the global average of 18.6 % (IFC and WB, 2017). Women in the region have limited support, primarily coming from the family and some business development support programmes (European Union, 2017).

While these inequalities are attributed mainly to external legal, cultural, and socio-economic factors, the skills and competences of women should be key to enhancing the abilities which they possess to the same degree as men. Entrepreneurial skills and competences enable women to escape the constraints of the social and economic silos they have traditionally occupied, to achieve work-life balance, and to create jobs and income for themselves and for others.

This section summarises the findings on women’s entrepreneurship development regarding 1) government policies and action plans; 2) evidence-based policy development, monitoring and evaluation, including data collection and partnership development; and c) measures to develop the SME-related skills and entrepreneurial competences of women. Overall, the current assessment identifies positive dynamics across all countries and much progress in terms of policy support for women's entrepreneurship since the last report.

Progress since 2014

In 2014, most of the MED countries – except for Algeria and Egypt – had ad hoc interventions in place. Since then, governments and their partners have joined forces, both at the policy level and through targeted initiatives in Israel, Jordan, Lebanon, and Tunisia:

• In Algeria, the government’s plan (2017) puts a strong focus on the development of women's entrepreneurship in rural areas.

• In Jordan, the Economic Growth Plan (2018‑2022) and the Strategic Plan for Empowering Women (2013‑2017) set targets that benefit this policy area.

• Women's entrepreneurship is now among the objectives of government investment in Lebanon, promoted both through the National Strategy for Women in Lebanon (2011‑2021) and the SME Strategy (2015‑2020).

• In Morocco, support for women's entrepreneurship is part of the government’s Plan for Equality (ICRAM 2012‑206).

• Countries have also set up multi‑stakeholder groups and platforms to co-operate in women's entrepreneurship; one example is a task force led by the Business Women Forum in PA.

The quality and scope of policy analysis has improved in the last years, strengthening the effectiveness of evidence-based policy and the monitoring and evaluation capacity of national governments:

• International organisations such as GIZ, through an EU funded regional programme, and UNIDO have developed research on women’s entrepreneurship in the MENA region (GIZ, 2017, and UNIDO, 2017).

• National governments have also undertaken studies on the topic. For example, a feasibility study by the Israeli Agency for Small and Mid-Sized Enterprises (2017) examined gaps between female and male entrepreneurs and factors preventing women from engaging in high-value-added sectors; and the Jordan Enterprise Development Corporation (2017) conducted a study titled “Women entrepreneurship in Jordan: women empowerment”.

In terms of providing training and support for women's entrepreneurship, governments and business-support partners are promoting entrepreneurial skills and competences of women across the MED region:

• In Egypt, through the Women's Strategy (2030), employability and digital skills are the focus of women's entrepreneurship support.

• In Tunisia, a rich supply of training programmes is a result of partnership between the government and women's entrepreneurship networks and associations promoting female entrepreneurs.

• In Israel, the government is gradually expanding the scope of women's entrepreneurship programmes from individual target groups to support measures based on a holistic view of women's roles and needs in entrepreneurship.

• The Moroccan government focuses on women entrepreneurs' access to technologies.

• In PA, the “Start‑up Palestine” initiative provides a good example of how access to finance and training could be adapted to benefit women entrepreneurs.

For further action

Policy attention to women's entrepreneurship should be further structured and consolidated, with built‑in policy partnership instruments, guided by a joint, holistic vision on the specific challenges and objectives across all policy areas impacting the state and spread of women's entrepreneurship. Governments should allocate their resources to the specific needs of women in starting‑up and growing their businesses, while continuing gender-neutral entrepreneurship support programmes. This should be accompanied by systematic evaluations of programme relevance, quality, efficiency and accessibility for various groups of populations.

Systematic data collection on women's entrepreneurship – to inform policy formulation, monitoring and evaluation, and policy improvement – remains an objective for the coming years, and needs to become a feature of the national strategy and budget planning processes. It should be underpinned by the availability of sex-disaggregated data in each country, and by the engagement of policy partners in the systematic monitoring and evaluation of public and private programmes that benefit male and female entrepreneurs.

It is important to ensure that support for the enhancement of skills and competences to boost women’s entrepreneurship goes beyond general gender-neutral SME training courses and targets women's specific needs: strengthening their self‑efficacy, ambition and creating gender‑sensitive entrepreneurship development ecosystems. Mentoring, coaching and support to the establishment of women-led businesses are valued highly by women entrepreneurs, due to their positive effects on business start-up survival and on confidence building among women entrepreneurs (Bekh, 2014).

Moving SMEs forward in international trade – the case for improved training.

SMEs working in international markets are more innovative, more competitive and generate more jobs (Love and Ganotakis, 2013; European Commission, 2010) but poor management and vocational skills are barriers to international trading and SME engagement in global value chains (WTO, 2016). Despite more developed trade-enhancing arrangements provided by bilateral, regional (e.g. the Agadir Agreement3) and multilateral agreements (e.g. Euro-Mediterranean Association Agreements4), SMEs in MED economies are still weak players in the trade tables (OECD et. al., 2014). The trade gap between the EU and the Southern Neighbourhood countries is particularly accentuated. EU exports to the region increased by just over 50% between 2006 and 2016, compared to a 25% increase from the region to the EU for the same period (European Commission, 2018).5

This section addresses training for SME internationalisation, particularly in terms of exporting (i.e. outward trade in goods and services). Training is considered in its widest sense and includes knowledge transfer and online learning across three areas to support SME export potential: 1) administrative requirements (e.g. technical and legal obligations for exporting); 2) vocational training (e.g. skills needed to adapt products and services to the demands of foreign markets); and 3) management development (e.g. business skills, foreign language proficiency).

Progress since 2014

Intelligence on training for SME internationalisation is weak across the region:

• More-developed data is available in Israel through the range of support institutions (e.g. foreign trade administration, export institute).

Policy instruments as enablers for training for SME internationalisation are generally well developed in all countries:

• These range from national development plans (e.g. Egypt, Jordan and PA) to SME and trade development strategies (e.g. Algeria, Egypt, Lebanon, Morocco) through to dedicated trade promotion activities (Israel).

• While particular emphasis is given across all countries to training on the legal obligations (administrative and technical requirements) for SME exporting, as well as management training (e.g. international marketing), the assessment highlights relatively little evidence across the region of the vocational training implications for exporting SMEs.

• There is little interface between SME internationalisation policies and the wider education and training policies. The PA export strategy highlights both the management and vocational skills requirements within a number of sector-specific export strategies. In Tunisia a couple of sector-driven projects help SMEs in their efforts to increase exports. However, as in all countries, the vocational training ecosystem is still loosely aligned with sector export interests.

Training in administrative or regulatory issues is widely available from sector associations, chambers of commerce and export development authorities. While there is little effort to innovate the learning process there are examples of interesting approaches to SME training:

• PA’s cluster-based training of SME managers in areas like market mapping and e-commerce encourages know-how exchange between SMEs from diverse sectors, is good practice.

• E-commerce in particular opens up export opportunities to the region’s SMEs and will require dedicated policy discussion and training support in all MED countries. In this regard, Jordan’s Inter-institutional Committee on e-Commerce is an important reference.

The assessment highlights good efforts in ICT learning applications, although more can be done:

• In Egypt the Centre for Distance Learning at the Foreign Trade Training Centre provides online courses on exporting.

• The Israel Export and International Co-operation Institute offers small exporters webinars, courses and other services and trains mentors to assist exporter companies.

• In Morocco webinars for harmonised standards are offered. 

For further action

More effort is needed across all countries to co-ordinate and cluster available data to help policy makers set priorities and allocate resources. This should include intelligence on the administrative requirements of vocational and management training for SME exports. With all countries having already established training commitments in key economic sectors, sector organisations will have an important role to play in terms of intelligence build-up and monitoring.

Given the demands of foreign markets for high-quality goods and services, vocational training needs to be more explicitly integrated into wider SME policies in all countries, particularly in those areas promoting SME internationalisation.

Given the widespread availability of ICT infrastructure, online training should be explored at the national and regional levels to enhance SME access to training – particularly for administrative and regulatory export-related training, which lends itself well to e-learning options.

The way forward

Overall, the MED economies have improved their policy frameworks for developing entrepreneurial human capital. The main challenges across the three sub-dimensions include the implementation of policies, cross-stakeholder co-operation, including all relevant public and private stakeholders, data collection and analysis on training provision and evaluation.

More particularly, this interim assessment puts forward the following actions for MED economies:

• Concerning entrepreneurial learning promotion, governments should build multi-stakeholder and cross-ministerial partnerships to ensure an efficient implementation of the action plan(s) that may belong under different national strategies. More reflection is needed on the development of entrepreneurship as a key competence. As a first step, awareness raising for policy makers, teachers, school directors, students and parents organisations with regard to entrepreneurship key competences would be necessary. EntreComp the European framework to promote entrepreneurial spirit can be a valuable tool to inspire policies and training measures at national level. At the same time, countries need to continue making efforts to move from project-based initiatives to a systemic approach by inserting entrepreneurial learning into the national curricula at all levels of education and by (re)training teachers.

• MED economies could move from individual policy measures and actions supporting women’s entrepreneurship development to holistic approaches built on hard evidence that goes beyond the social, gender equality agenda and that puts the policy discussions in economic context. Governments could also continue their efforts to produce and collect gender-disaggregated data to enable the design of policies tailored to the needs of entrepreneurial women – first of all being measures for skills development and support of women’s intention to engage in entrepreneurship. Skills and competences development measures should go beyond general SME training courses to include mentorship, coaching, network support and creation of women’s entrepreneurship enabling systems that foster growth and innovation of women-led and women-owned enterprises. Systematic monitoring and evaluation of public-funded programmes with involvement of policy partners would ensure the effectiveness and efficiency of the above policy measures, generate a solid stock of data, and underpin further policy improvements.

• More developed data on SME training, particularly in terms of export potential, is required in all countries. One lead institution in-country should co-ordinate data and wider intelligence (e.g. good practice) to help the government decide policy priorities and resource allocation. Further, trade and SME policies require alignment 1) to ensure training meets external trade interest and 2) to include a closer interface with the vocational training environment – particularly to address quality improvements in sectors with improved export potential. Innovation in both training design and delivery through better use of available ICT technologies will require more developed engagement of the training community and the export-driven private sector.

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Notes

← 1.  United Nations Industrial Development Organisation (UNIDO) initiative to support youth employability and entrepreneurship on upper Egypt.

← 2.  A youth-centred non-profit organisation established in Jordan in 1999 active in the European Union and worldwide, including in the Middle East, North-Africa and Pakistan.

← 3.  http://www.agadiragreement.org.

← 4.  https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=LEGISSUM%3Ar14104.

← 5.  Data covers trade in goods only.