Scaling Up MENA SMEs

The public and private sectors in the Middle East and North Africa (MENA) have been developing programs to catalyze the growth of small-and medium-sized enterprises (SMEs), including startups. Businesses at every stage of development are important for economic growth. To provide optimum benefits at each stage, players should differentiate among the needs of the various SME segments. 

One segment deserving particular attention is “scale-ups” — SMEs with proven business models that are undergoing a rapid growth phase. Scale-ups represent on average 5 percent of SMEs, can be from any sector and of any age, and their founders have the potential to contribute significantly to the ecosystem they operate within. If provided with the right forms of support, scale-ups can grow rapidly, enrich the entrepreneurial ecosystem, and have a positive economic impact. 

Our research shows that successful scale-ups in the region generate on average 3.4 times more revenues and 8 times more jobs than other SMEs. Several countries have recognized the economic value of scale-ups and are developing tailored policies and programs for them. Similar initiatives in the MENA region could have a significant impact. 

Although superficially the type of support they need seems similar to other SMEs, scale-ups have different requirements given the unique phase they are going through. Our “scale-ups readiness index,” developed through interviews and research (see Appendix, page 35), assesses the maturity of the scale-ups ecosystems in five MENA countries: Egypt, Jordan, Lebanon, Saudi Arabia, and the United Arab Emirates (UAE). 

By studying the importance of scale-ups in the context of their local markets, we identified priorities for policymakers to improve their local scale-ups ecosystems across four growth pillars: business fundamentals, business propellers, demand creators, and country readiness. Within these pillars, we have recognized several priority areas, including access to financing, talent, foreign markets, large customers, and regulatory relief. Success also depends on mobilizing an ecosystem of private and public players to orchestrate growth initiatives.