3 - 9 January 2002
Issue No.567
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Al-Ahram Weekly Online 3 - 9 January 2002 Issue No.567 |
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Consultancy has mixed results
Sherine Nasr looks at the successes and failures of a joint Egyptian-European programme which aimed at upgrading private sector performance
The new year marks the end of the Private Sector Development Programme (PSDP) which aimed at establishing stronger partnership between the Egyptian and European business sectors.
Source: EC-PSDP report
PSDP first saw the light of day in 1996, making it the first of many similar EU programmes that were developed in the Mediterranean region. Most of these were developed under the Euro-Mediterranean Partnership, which was established in Barcelona in 1995. Over its five-year life-span, the programme operated with a total budget of 45 million euros and worked with over 1,500 companies and 15 business associations in Egypt.
A group of European and Egyptian consultants recently presented a report on the programme, evaluating its strengths and weaknesses.
One major target of the programme was to strengthen the competitiveness of Small and Medium Sized Enterprises (SMEs) which are often regarded as the key driver of economic growth and which are still relatively vulnerable. Although the Egyptian economy had already undergone significant reform by 1996, the SME sector still faced a number of constraints including complicated legislative rules imposed by the government and difficulties in securing finance through the banking sector.
PSDP's major impact on this area was through providing consultancy services. Through tailored and integrated consultancy provided for individual businesses on a cost-sharing basis, many private sector companies managed to get professional advice on training, business upgrades, business collaboration, marketing and export development, information and data services.
As the first programme of its kind to be implemented in the Middle East, the PSDP was an entirely "demand- driven" programme in the sense that its activities and components could be adapted to the changing need and requirements of Egyptian companies and changes in the business sector.
Nevertheless, the programme did not provide any financial assistance to companies, neither in the form of grants nor soft loans. Many companies saw this as a major restriction since the availability of credit was one key constraint facing the SME sector in Egypt.
At the time of PSDP's inception, the concept of business consultancy was not common in Egypt. Experts were sometimes called in to provide specific solutions, but there was little perceived need for a long-term strategy or a marketing plan. The concept was so new that even when PSDP came around, it was difficult for the companies to develop a sense of what their demand for consultancy really was.
Another aspect of PSDP was "Marketing and Export Development," which addressed a poor understanding amongst Egyptian firms of the requirements of European customers and standards and the identification of export customers -- a major problem in the Egyptian economy. There have been some impressive results in this area over the final two years of PSDP.
According to the consultants' report, Egyptian companies have come to understand better the process of exporting their products. "Exporting is not about finding a customer who wants to buy an Egyptian product," says the report. "It is more about having the right company systems, analytical tools and marketing strategy, as well as the right quality standards. When a company has achieved this, it is then in a position to seek an export customer."
The PSDP's tailored consultancy services produced many different results with the programme's client companies. Some have developed successful business collaboration with one or more European partners, while others have managed to have many staff pass through the training activities provided under the programme.
The report was not all praise, however. It claimed that as a donor programme, the PSDP could have been more visible and could have had greater outreach. Because the concept of consultancy was new at the time, there was little demand for PSDP's services. There was a general scepticism in the Egyptian business community about the need for consultants to help upgrade companies or find buyers for products. Although the programme partially succeeded in creating a demand for consultancy, the report concluded that, "Egypt... is not ready to pay anywhere near 100 per cent of the cost of the services offered by PSDP. The consultancy profession in Egypt will continue but the market will have to adapt to lower fee rates."
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