Cablegate: Pep-Mena Donor Meeting October 20 2005

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 03 PARIS 007737

SIPDIS

SENSITIVE

STATE FOR WHA/CAR, EB/IFD/ODF, NEA, AND EUR/WE

STATE PASS USAID FOR LAC

BRUSSELS FOR USEU

BRUSSELS FOR USEU

GENEVA FOR TEHRAN

E.O. 12958: N/A
TAGS: EAID ECON PREL HA FR
SUBJECT: PEP-MENA DONOR MEETING OCTOBER 20 2005

NOT FOR INTERNET DISTRIBUTION

SUMMARY
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1. (U) At the The annual PEP-MENA (Private Enterprise
Partnership for the Middle East and North Africa) meeting
was held in Paris October 20. , bBoard members outlined to
donor countries the progress of the first year of the PEP-
MENA program, and presented success stories from each of the
program's four pillars. Though initially funded for a three-
year period, participants were clearly thinking about the
need for longer-term funding to meet the program's ambitious
goals. END SUMMARY

Background and Purposes
-----------------------

2. (U) Econ Assistant and intern attended the annual PEP-
MENA (Private Enterprise Partnership for the Middle East and
North Africa) Donor's Meeting October 20 at the World Bank
in Paris. The meeting was sponsored by board members of PEP-
MENA, which was organized in October 2004 by the
International Finance Corporation (IFC), a branch of the
World Bank.

3. (SBU) PEP-MENA is a technical assistance program, with
a specialist staff of 40, operating across 18 countries in
the region (Egypt, Jordan, Oman, Morocco, Algeria, Tunisia,
Lebanon, Syria, Bahrain, Kuwait, Saudi Arabia, United Arab
Emirates, Afghanistan, Iran, Iraq, West Bank, the Gaza
Strip, Yemen). Its budget is $100 million, and it is the
largest program yet of its kind. The donors are Japan,
the US, Canada, the UK, France, and Holland as well as the
Islamic Development Bank and the Government of Kuwait.
France signed a donor agreement implementing its pledge of
$2.6 Million on the occasion of the conference. The IFC has
invested $20 million of its own funds, and has currently
mobilized 65% of the target funding.

4. (SBU) The program aims to use the IFC's proven
experience in providing technical assistance to address
regional issues such as very low levels of FDI due to narrow
domestic industries, the prevalence of state-run industries,
expensive and uncompetitive exports, poor infrastructure,
political instability and religious fundamentalism. The PEP-
MENA program seeks to encourage private enterprise and
business entrepreneurship in order to strengthen the
private sector, to attract more FDI and to create economic
growth and employment.

The Four Pillars
----------------

5. (SBU) Pillar I provides assistance to small and medium
enterprises (SMEs) to enhance their competitiveness and
improve their access to domestic and international markets.
Five different programs are currently running 18 projects.
For example, the Entrepreneurship Institutional Development
program is running a project in Afghanistan in partnership
with Kabul University, which seeks to strengthen
entrepreneurship through curriculum development and capacity
building for education and training institutions. With a
budget of $25,000 the sustainable business Skills Training
Initiative will prepare students to embark on SME
entrepreneurship. Similar projects are planned in other PEP-
MENA countries in the upcoming year.

6. (SBU) Pillar II is designed to build Financial Markets'
institutional capacity through strengthening the region's
banks, fostering the development of specialized lending
institutions and improving their capacity to do leasing.
There are 7 programs with a total of 29 projects, including
the Egyptian Microfinance Project, which provided $64,000
over 12 months to the Bank Misr in Cairo. The project
conducted loan officer training and successfully disbursed
13,000 loans for a total of $6 million, with nearly full
repayment. The bank used a local consulting company to
demonstrate the capabilities of Egyptian businessmen.

7. (SBU) Pillar III aims to provide technical assistance to
MENA country governments seeking to increase efficiency and
discourage corruption. In collaboration with the Foreign
Investment Advisory Service, PEP-MENA surveys and provides
solutions to reduce regulatory, legislative and
administrative barriers to business and investment. It
sponsors 5 programs, including the $900,000 Alexandria Start-
Up Simplification project. The IFC worked with Egyptian
government over 18 months to facilitate new business start-
ups, job creation and capital investment.

8. (SBU) Pillar IV provides advisory, technical assistance
and capacity building services to governments to encourage
private sector participation in services that were thus far
handled by the state itself. Current privatization projects
currently underway are the Algiers Airport in Algeria, the
privatization of the National Electric Company in Lebanon
and Pakistan, as well as seminars in Jordan and Algeria to
inform the public and private sectors on how to successfully
complete privatization.

9. (SBU) PEP-MENA addresses also the issue of gender
equality, particularly through its SME Pillar. Despite high
levels of women's education in the MENA region, women have
very low employment levels. PEP-MENA, through its Gender
Entrepreneurship Markets (GEM) Program seeks to encourage
women's participation in the private sector by providing
support to women entrepreneurs, women-owned SMEs and
financial institutions. GEM currently has a budget of US
$2.7M within PEP-MENA.

The Future of PEP-MENA?
-----------------------

10. (SBU) Several participants commented that three years
was not sufficient to have a lasting, positive impact on the
region. It is clear that the PEP-MENA Board is going to
push for an extension of this program in the future.
The long-term issue of recruitment was also raised. They
need more able, experienced businessmen and women with
regional expertise in the Middle East and North Africa.

COMMENTS
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11. (SBU) PEP-MENA is a highly ambitious project with
potential to aid the Middle East and North African. Its
emphasis on private enterprise, privatization reform,
creating entrepreneurial culture, and improving corporate
governance appears to appears be a step in the right
direction. The board is excited about the progress that has
been made thus far in the first year, but is concerned that
that more than three years will be needed to make a lasting
impact. Whether donors will be willing to continue to
contribute to the program over the longer term is still
unclear.

HOFMANN

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