Figure 2: Assessment framework Dimension 1
Page enterprise policy has just started or is not yet completed, the delegation
of responsibility and the assignment of tasks and mandates are not yet well defined. This creates scope for overlapping of competences and potential policy inconsistencies.
By taking this approach, the MED countries could be divided into two groups.
• The first group is made up of countries with a relatively well-devel- oped institutional policy framework, in terms of delegation of re- sponsibilities, policy coordination, enterprise development strategy and task assignment. This group includes Israel, Egypt, Morocco, Tu- nisia and Jordan.
• The second group is made up of countries with an institutional
policy framework still in the initial phase of evolution, with open is- sues about policy coordination and assignment of tasks. This group includes Algeria, the Palestinian Authority, Lebanon and Syria. In both groups the weakest point is interministerial policy coordination. In Egypt, policy towards the private sector is driven by two key min- istries, the Ministry of Trade and Industry and the Ministry of Invest- ment, as well as a special purpose institution, the Social Fund for De- velopment, which is in charge of developing and implementing policy towards micro- and small enterprises. Each institution supervises the activity of a number of executive agencies. In particular, the Ministry of Trade and Industry is responsible for sectoral policies, but also for a number of horizontal policies, such as innovation and Euro-Med coop- eration, and plays a major role in steering the national competitiveness programme. There are no institutionalised mechanisms of policy coor- dination (besides high-level coordination conducted by the Cabinet of the Prime Minister), but there is in practice a significant level of cooper- ation. Across-the-board participation at the level of executive agencies ensures programme coordination. A similar situation prevails in Jordan where the Ministry of Industry and Trade is preparing an industrial pol- icy that includes provisions for all of the specialised executive agencies. Egypt is the only country in the region which has elaborated something close to a comprehensive enterprise policy strategy (the 2005 industrial development strategy) with significant private sector inputs. Though
its name emphasises its industrial orientation, the strategy covers a number of policy areas specific to enterprises, such as competitiveness, innovation, human capital development and regulatory reform. In Morocco, the Ministry of Commerce and Industry is responsible for SME policy as well as the implementation of the new sectoral develop- ment plan. Policy coordination is ensured at high level by the Ministry of Economic and General Affairs, and by a number of interministerial committees and commissions. Tunisia has a similar governance struc- ture, with a high-level National Commission for Investment chaired by the Head of State, in charge of setting policy guidelines and monitoring the achievement of policy targets.
Israel has traditionally adopted a pragmatic approach to enterprise policy, focusing on specific programmes, seeing government interven- tion as temporary and directed to addressing specific market failures. Consequently, Israel never developed a multi-year comprehensive pol- icy strategy. However, the Ministry of Industry, Trade and Labour uses yearly work plans to set policy targets and agendas for the implementa- tion of enterprise policy measures.
In Algeria, a country belonging to the second group, policy competen- cies for private sector development are split between the Ministry of Industry and Investment (responsible for the implementation of the national industrial policy and investment promotion) and the Ministry of SMEs and Handicrafts. Policy coordination is conducted at a high level but there is large scope for improvements.
The scores for Lebanon and the Palestinian Authority largely reflect the stalemate in government activity caused by armed conflict and political instability.
With regard to enterprise policy strategy, Morocco and Tunisia have gone far in setting policy guidelines, but these are reflected in a number of government-endorsed documents and not in a single strategy paper. Algeria, Syria and Tunisia operate all on the basis of five-year economic plans that include elements of a private sector reform agenda. However, the accent, in the case of Algeria and Syria, is very much on achieving quantitative targets and outlining investment plans, while in Tunisia quantitative targets are complemented by qualitative objectives.
Indicator W (10) AL EG IS LE JO MO PA SY TU MED 1.1.1. Delegation of responsibility for enterprise policy 2 1.5 4.0 4.5 2.0 3.5 3.0 2.0 2.0 3.5 1.1.2. Coordination with other ministries, stakeholders and civil society 3 3.0 3.5 4.5 2.0 3.0 4.0 2.5 2.0 3.0 1.1.3. Enterprise development strategies 3 2.0 4.0 3.5 2.5 2.5 3.0 1.5 3.0 3.5 1.1.4. Clear task assignment 2 2.5 4.0 4.5 2.0 4.0 4.0 1.5 3.0 4.0 Overall weighted average for 1.1. Institutional framework for enterprises 2.3 3.9 4.2 2.2 3.2 3.5 1.9 2.5 3.5 2.3
Table 5: Scores in Subdimension 1.1: Institutional framework for enterprise policy
(10) In all the tables, ‘W’ stands for the weight assigned to the respective indicator or subdimension. The weight is used to calculate the weighted average for each country’s
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b e t t e r l e g i S l a t i o n a n d a d M i n i S t r a t i v e S i M p l i f i c a t i o n
There is no single model for improving legislation and administrative procedures applicable to enterprises within a country. This requires ac- tion on several fronts (legislative, institutional and organisational) over a number of years and affects a considerable number of economic sectors. Legislative and administrative simplification is the outcome of regulatory reform. Policy coordination plays a considerable role, as does political commitment. As stated in the Charter, an effective way to work towards a high-quality business regulation environment is to structure government intervention based on a medium-term strategy, reinforced by a solid in- stitutional framework and supplemented by regulatory assessment tools. Although still very much in its infancy, regulatory and administrative reform is gaining momentum on the regional enterprise policy map, most evident in the recent efforts made to smooth company registra-
tion procedures throughout the region (11).
Israel’s efforts to simplify enterprise legislation and administrative pro- cedures revolve around several targeted strategies led primarily by the Ministry of Finance in cooperation with the Ministry of Industry, Trade and Labour and the Ministry of Interior. For example, in August 2005 the government established an interministerial committee to which private sector representatives were invited. The aim was to come up with a strategy for the simplification of business licensing.
Tunisia has also made good progress within this subdimension. A number of laws and provisions have been passed and several special units have been put in place to simplify administrative procedures, overlooked by a high-level coordination body at prime ministerial level. To date, in 80 % of the cases, administrative authorisations have been replaced by general requirements.
While Morocco has no enterprise sector simplification strategy, since 1999 it has examined 750 procedures and simplified 200 which affect enterprises.
Lebanon and Jordan have a solid institutional framework in place for legislative and administrative simplification, but it is not explicitly targeted to enterprise policy. In Jordan, this gap could be filled through the enterprise strategy that is currently under way.
In Lebanon, the Ministry of Economy and Trade, the Office of the Min- istry of the State of Administrative Reform and the Ministry of Finance have cooperated to simultaneously work on the review and simplifica- tion of current legislation. Redundant pieces of legislation and regula- tion have been identified, yet limited efforts have been made, with the exception of company registration.
In Syria, the Ministry of Local Administration is drafting a new law on the streamlining of procedures in local administrations. Furthermore, the Ministry of Industry’s current five-year plan contains a chapter on revising business regulations, and the Commission is embarking on a project with the same focus. The business environment is still heavily regulated, but these projects could bring some tangible benefits. Algeria and the Palestinian Authority do not have an institutional frame- work or a strategy to simplify legislation and administrative procedures for enterprises. Only ad hoc activity has taken place in this field: Algeria has a focus on company registration, while the Palestinian Authority has several donor-funded programmes.
c o S t - b e n e f i t a n a l y S i S o f n e W e n t e r p r i S e l e g i S l a t i o n
Systematic and consistent cost-benefit analysis should be applied when enterprise-related legal instruments are drafted, in order to optimise the efficiency and effectiveness of the instrument and ensure that it will achieve the intended objectives at minimum cost and with the fewest unintended negative consequences. This type of analysis greatly im- proves enterprise-related policy instruments and avoids unnecessary legislation and regulations.
Yet despite these benefits, systematic cost-benefit analysis is rarely ap- plied to draft enterprise legislation in the region. In fact, Egypt is the only country with concrete plans to apply comprehensive cost-benefit analyses to new enterprise legislation. Within the Errada programme (see box above), a forthcoming pilot project called the ‘Regulatory im- pact assessment development strategy’ will provide a clear-cut type of cost-benefit analysis for enterprise legislation.
(11) Company registration is covered in the next section of this report.