World Bank: Startups Are the Real Job Engines
20 February 2015
Read by 1719 persons
To promote the growth of the private sector and job creation, Mena region countries need to strengthen their network of productive young companies.
Startups and innovative companies are the engines of job creation in the Mena region (Middle East and North Africa), but they are struggling to develop, due to the privileges granted to companies linked to political power, highlights a World Bank (WB) report, presented on Monday, January 26, 2015, in Tunis.
Entitled "Employment or Privileges: How to Unleash the Potential of Job Creation in the Mena Region", the report reveals that, in the Mena region countries, startups are the most productive and job-creating, but policies designed to protect certain companies close to power limit competition and hinder the growth and productivity of these startups.
Regarding Tunisia, the report qualifies as "connected companies", all those that belonged to the family of former President Ben Ali and whose assets were confiscated by the State after the 2011 Revolution.
The survey data highlights the privileges enjoyed in Tunisia and Egypt by entrepreneurs close to power and their negative impacts on the growth and job creation capacity of startups in both countries.
Between 1996 and 2010, young Tunisian companies created 580,000 jobs, or 92% of total net job creation, the authors of the report point out, adding that 64% of companies with political connections are active in sectors subject to restrictions on foreign direct investment (FDI).
These privileged companies also benefited from a disproportionate influence on their respective sectors of activity. Indeed, 39% of sectors, which include at least one connected company, require obtaining an agreement and authorization from the government, compared to 24% for sectors without companies with political links.
The Mena region needs to strengthen its network of productive young companies in order to promote the growth of the private sector and job creation, but the rules in force tend more to protect these well-established privileged companies than to encourage new businesses, the report further emphasizes.
In the Mena region, on average 6 limited liability companies (SARL) are created each year in the region for 10,000 working-age people.
"For Tunisia, there are 1.2 companies created for 1000 working-age people, a figure to be compared to the results of countries like Chile, which has 3 companies created for 1000 people, or Bulgaria which creates 4 companies for 1000 working-age people per year", said Abdoulaye Sy, who presented the report.
The countries of the region will only be able to meet the needs of an increasingly educated and numerous workforce by reforming their policies protecting privileged companies, conclude the authors of the report.
Concretely, this involves highlighting reforms aimed at reducing the scope of privileges, a task that will have to be carried out by a strong public administration whose agents are recruited on merit, they emphasize, while recommending the implementation of these reforms in a transparent and open environment, which allows citizens to be informed of government action and gives them the opportunity to contribute to policy development.
I. B. (with Tap).
Kapitalis.com
Posted online February 20, 2015.
Startups and innovative companies are the engines of job creation in the Mena region (Middle East and North Africa), but they are struggling to develop, due to the privileges granted to companies linked to political power, highlights a World Bank (WB) report, presented on Monday, January 26, 2015, in Tunis.
Entitled "Employment or Privileges: How to Unleash the Potential of Job Creation in the Mena Region", the report reveals that, in the Mena region countries, startups are the most productive and job-creating, but policies designed to protect certain companies close to power limit competition and hinder the growth and productivity of these startups.
Regarding Tunisia, the report qualifies as "connected companies", all those that belonged to the family of former President Ben Ali and whose assets were confiscated by the State after the 2011 Revolution.
The survey data highlights the privileges enjoyed in Tunisia and Egypt by entrepreneurs close to power and their negative impacts on the growth and job creation capacity of startups in both countries.
Between 1996 and 2010, young Tunisian companies created 580,000 jobs, or 92% of total net job creation, the authors of the report point out, adding that 64% of companies with political connections are active in sectors subject to restrictions on foreign direct investment (FDI).
These privileged companies also benefited from a disproportionate influence on their respective sectors of activity. Indeed, 39% of sectors, which include at least one connected company, require obtaining an agreement and authorization from the government, compared to 24% for sectors without companies with political links.
The Mena region needs to strengthen its network of productive young companies in order to promote the growth of the private sector and job creation, but the rules in force tend more to protect these well-established privileged companies than to encourage new businesses, the report further emphasizes.
In the Mena region, on average 6 limited liability companies (SARL) are created each year in the region for 10,000 working-age people.
"For Tunisia, there are 1.2 companies created for 1000 working-age people, a figure to be compared to the results of countries like Chile, which has 3 companies created for 1000 people, or Bulgaria which creates 4 companies for 1000 working-age people per year", said Abdoulaye Sy, who presented the report.
The countries of the region will only be able to meet the needs of an increasingly educated and numerous workforce by reforming their policies protecting privileged companies, conclude the authors of the report.
Concretely, this involves highlighting reforms aimed at reducing the scope of privileges, a task that will have to be carried out by a strong public administration whose agents are recruited on merit, they emphasize, while recommending the implementation of these reforms in a transparent and open environment, which allows citizens to be informed of government action and gives them the opportunity to contribute to policy development.
I. B. (with Tap).
Kapitalis.com
Posted online February 20, 2015.
