MIDDLE EAST & NORTH AFRICA
DEVELOPMENT OF SMES EXPORTS
THROUGH VIRTUAL MARKET PLACES
CONCEPT NOTE- OCTOBER 2013 –
REVISED VERSION (JANUARY, 2014)
THE WORLD BANK
FINANCE AND PRIVATE SECTOR DEVELOPMENT GROUP
MIDDLE EAST AND NORTH AFRICA REGION
2
TABLE OF CONTENTS
I.
INTRODUCTION AND CONTEXT ................................................................................... 7
A.
Regional Context ........................................................................................................... 7
B.
Sectoral and Institutional Context ................................................................................. 8
C.
Alignment with Countries National Strategy .............................................................. 11
D.
Alignment with the Transition Fund Objectives ......................................................... 15
E. Complementarity with other projects.............................................................................. 17
F.
II.
Justification for the World Bank as Executing Agency and Partnership with ITC ........ 19
PROPOSED PDO/RESULTS ......................................................................................... 20
A.
Proposed Development Objective ............................................................................... 20
B.
Key Results ................................................................................................................. 21
III.
PROJECT DESCRIPTION ............................................................................................. 21
A.
Project context ............................................................................................................. 21
B.
Project components ..................................................................................................... 30
C.
Project Financing......................................................................................................... 34
IV.
KEY RISKS AND MITIGATION MEASURES ........................................................... 36
V.
IMPLEMENTATION ..................................................................................................... 36
A.
Institutional and Implementation Arrangements ......................................................... 36
B.
Financial Management, Disbursement and Procurement ............................................ 38
C.
Monitoring and Evaluation of Results ........................................................................ 39
D.
Sustainability ............................................................................................................... 39
VI.
TEAM, TIMELINE AND BUDGET ............................................................................. 40
ANNEX 1: RESULTS FRAMEWORK ............................................................................................ 41
ANNEX II. ECONOMIC VALUE (FOR THE CASE OF TUNISIA) .................................................... 45
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Development of SMEs Exports through Virtual Market Places (“The
VMP Project”)
Proposal Outline
The project aims to increase the volume of exports by exporting and export-ready
SMEs through Virtual Market Places and create a business-enabling environment
for e-commerce. The project is of multi-country nature and the beneficiary countries are
Jordan, Morocco and Tunisia. The project will work with Trade Support Institutions
(TSIs) that provide support to enterprises in their export diversification efforts, access to
business intelligence on foreign markets, as well as coaching and capacity building of
SMEs to use Virtual Market Places (VMPs) to increase their exports using new and
innovative export channels.
Implementation
Arrangements
The Project will be run as World Bank Executed Project with the technical support
of the International Trade Centre (ITC). The implementation arrangements include
the involvement of trade support institutions (TSIs), business associations and relevant
civil society actors across the three countries.
Program
Objective
This is a pilot project which aims at achieving two major objectives:
- Increasing SMEs exports ‘through existing Virtual Market Places;
- Supporting institutional reforms to create an enabling environment for ecommerce.
SMEs from the Arab region are not significantly present and active on existing Virtual
Market Places. This is mainly due to (a) lack of export management skills and
knowledge of e-commerce potential, (b) insufficient access to business intelligence and
trade information, and (c) limited access to financial resources to penetrate and develop
new markets.
As the access to internet and new technologies has become more affordable in the
region, the project will allow SMEs to benefit from the advantages of electronic
platforms to access new markets and thus reduce geographical barriers.
In line with national development priorities, it is expected that growing exports will
result in job creation particularly for women and youth. This is supported by the fact
that beneficiary countries have seriously engaged in new development policies and
programs aiming at diversifying export markets and expanding trade.
The project will also support the policy change to improve the business environment for
e-commerce policies and regulations in the region need to be further elaborated and
modernized to take full advantage of e-commerce (f.e. e-payments, risk insurance
systems, e-customs).
Fit with transition
The higher-level objectives to which the project contributes are aligned with three of the
Fund Objectives
Transition Fund Objectives: i) Competitiveness and integration by facilitating and
reducing trade barriers hindering SMEs access to export markets, and ii) Inclusive
development and job creation, by generating new business opportunities which impact
SMEs growth and job creation. It is aligned as well with the type of innovative activities
the Transition Fund intends to finance.
Timeframe
The project will be implemented over a period of 3 years which will result in
4
significant change, ensure sustainability and achieve meaningful impact.
Overall Budget
Summary
Program
Components
The amount requested is US$ 3 million over the 3 year program period. This will be
split across the 4 program components and 3 target countries.
Component I. Institutional Reform (US$ 0.3 million)
The new Export Development Policies being implemented by the beneficiary countries
involve the resolution of number of bottlenecks such as access to Virtual Market Places,
e-payment, logistics, access to finance and export guarantees, quality control, etc. In
order to tackle these issues, the three countries plan to implement inter-ministerial
committees. These committees will also tackle the business processes related to the
public administration that can be offered online such as e-customs and the submission of
digital documentation.
As describe above, the weak presence of SMEs from the Arab region on VMPs is due to
the many barriers SMEs are facing in integrating new technologies as a key driver of
their business and in transacting business online. Some major impediments relate to
inadequate e-payment systems, lack of risk insurance systems, and inefficient trade
facilitation processes that result in high transaction costs directly affecting the
competitiveness of SMEs.
The project, aims at supporting inter-ministerial committees in each beneficiary country
that will lead the transformational reforms to create a conducive environment for ecommerce. The inter-ministerial committees will form a platform for public-private
dialog to drive and support policy and institutional change and structural transformation
to promote e-commerce The committees will work with TSIs and SMEs to assess what
obstacles and difficulties that SMEs are facing in developing their e-commerce activities
and design appropriate solutions to alleviate those barriers.
The practical experience and case studies will be used to raise awareness of policy
makers towards the critical issues. Working through the required institutional
mechanisms, the project will provide technical assistance to change the existing policy
framework, eliminate existing administrative barriers, and to institutionalize new
processes to support and facilitate e-commerce.
Component II: Capacity building of SMEs (US$ 1.35 million)
Under this component, beneficiary SMEs, that are already exporting or assessed to be
export-ready, will benefit from capacity building activities and direct coaching to
acquire new skills and competencies in e-commerce. Selected SMEs will be registered
in one to three different VMPs, advised on how to make the best use of their presence on
these VMPs and coached on how to concretely deal with the inquiries coming from the
first potential buyers through the VMPs.
Component III: VMP Partnerships, Business Intelligence and Certification
(US$ 1.02 million)
This component will reinforce the capacity of TSIs to provide business intelligence and
trade information to enable the SMEs to benefit from opportunities offered by the
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VMPs. TSIs will play a key role in monitoring SMEs’ activity on the VMPs and
assessing benefit and impact on export development. To ensure the best use of the
VMPs, some high-performing/ firms will be offered premium accounts in VMPs so they
gain greater visibility from potential clients and will serve as a role model for others.
Component IV: Project Management (US$ 0.27 million)
This component will finance management and supervision activities at two levels: the
Regional Implementing Agency (RIA) and the Project Implementing Units (one by
country).
6
Executive Summary
Jim Yong Kim’s speech, October 1, 2013: “We will be bold. We will take risks –smart risks.
And by that, I mean we will invest in projects that can help transform the development of a
country or a region – even if it means we might fail.
[…] We are also expanding our group of partners to include those which are pioneering new
business models. In just a few years, Alibaba has fostered the creation of growth of over 6
million small and medium enterprises in China […]. This is an example of a transformational
business model.”
In line with this inspiring speech, the MNSFP department has prepared an innovative project
aiming at unlocking the so far untapped economic growth potential of regional SMEs.
The World Bank found out that i) improving export capacity skills in export-ready SMEs, and
ii) actively promoting their products and services through global virtual Market Places such as
Alibaba.com would significantly increase their revenues, leading to more job creation, market
diversification and increased integration to the global economy.
The development objective of this 3-year project is to provide capacity building to
approximately 600 SMEs selected in Jordan, Morocco, and Tunisia (200 companies in each
country)). It is expected that a relatively high return in terms of economic value will be
achieved since one dollar spent would yield a US$ 4.1 return1 in additional revenues for
beneficiary SMEs. The project has been designed as a pilot. It can be easily expanded to other
beneficiaries (such as West Bank and Gaza or Egypt).
Project partners are: the Ministry of Trade of Jordan, the Ministry of Trade of Morocco, the
Ministry of Trade of Tunisia, the International Trade Center in Geneva and the World Bank.
Advanced discussions on the design of this project have already been held with Alibaba.com.
This project has been prepared with the active participation of the beneficiary countries
(at the highest Ministerial level). In addition, prior to the project appraisal and during the
finalization of the concept note two surveys have been distributed among SMEs with the
support of trade authorities, chambers of commerce and sector associations. Almost 300
companies provided feedback.
1
See Annex II.
7
I.
INTRODUCTION AND CONTEXT
A. REGIONAL CONTEXT
1.
The transition countries (Egypt, Jordan, Libya, Morocco, Tunisia, Yemen) in the
Middle East and North Africa (MENA) region have been facing similar challenges in
terms of economic inclusion and growth, competitiveness, and job creation. These
challenges were made even more salient as the Arab Spring unfolded across the MENA region.
2.
Growth in the MENA region was affected by the Arab Spring, together with the
economic contraction in the Euro-zone (the region’s largest trade partner) and high
international food and fuel prices. After having contracted by 2.5 percent in 2011, regional
average growth recorded a 3.8 percent recovery in 2012, led by 4.6 percent in oil exporting
countries, while oil importers recorded a slower recovery of 2.6 percent. Growth started to
slowly recover in 2012 in transition countries, except in Morocco, which was affected by weak
agricultural production. As a consequence of slower growth, unemployment rate in most of the
transition countries increased further since the beginning of the Arab Spring in December
2010. It is estimated to have reached in 2011, 19 percent in Tunisia and almost 13 percent in
Jordan. Unemployment remains the most critical concern, as it constituted a major aspect of
social discontent that triggered the Arab Spring.
3.
Inflation remained relatively subdued in the MENA region with an average of 4.5
percent CPI increase in 2011. In particular, social tensions forced the transition countries’
governments to maintain high levels of food and fuel subsidies that have relatively limited the
pass-through of the international prices on domestic prices. Egypt, Jordan, Morocco and
Tunisia, started to raise domestic fuel prices as the subsidies reached unsustainable levels. In
addition, most of these countries have put in place large fiscal stimulus packages and social
safety net programs to mitigate the effects of lower growth and in an attempt to relax social
tensions. Hence, the average fiscal deficit in the region has widened from 1.8 percent of GDP
in 2011 to 4.7 percent in 2012, led by higher fiscal deficits in oil importing transition countries.
Consequently, public debt in some countries has reached unsustainable levels, with almost 80
percent of GDP in Egypt and about 66 percent in Jordan in 2012. Moreover, high international
food and fuel prices and weakening European demand contributed to the deterioration of
current account deficits, notably in Jordan, Morocco and Tunisia. On the other hand, oil
exporters benefited from high international oil prices, providing them with relatively
comfortable external positions, except for the conflict countries.
4.
Further, capital and FDI inflows continued to fall since 2011. As a result, many
countries continued to draw down their international reserves, such that Tunisia and Egypt are
close to the critical level of 3 months of imports. Egypt, Jordan, and to a lesser extent Morocco
and Tunisia are expected to use the IMF and donors supports to avoid further decrease of
reserves. Relatively sound macroeconomic policies before the Arab Spring in the transition
countries provided some room to cope with these challenges over almost two years, but the
8
continued tensions on both fiscal and external positions have eroded their margins to maneuver
further.
5.
Political uncertainty and social tensions will continue to weigh on economic
performance of the transition countries in 2013 and beyond. Growth in the region is
projected to slow down to 3.4 percent in 2013, led by lower growth in oil exporting countries.
High unemployment will continue to keep high fiscal pressures, which would make harder the
trade-off between increasing social demand and fiscal reform (including subsidies)
implementation. Delayed reforms, however, would have substantial risks, notably in Jordan
and Egypt, by delaying the IMF and consequent donors’ financing supports. Moreover, in
addition to the Euro-zone crisis impacts, the US budgetary debate and the largest impacts on
the most trade dependent countries, including Egypt, Jordan, and Tunisia. Lower global
demand could trigger a decline in oil prices and earnings for oil exporting countries. Similarly,
possible continuous food price increases in 2013 could further weaken the MENA countries’
fiscal and external positions.
B. SECTORAL AND INSTITUTIONAL CONTEXT
A lagging integration to the global economy
6.
Non-oil exports growth has remained low in the MENA region. Exports from the
overall MENA region have increased considerably over the past two decades. The region’s
volume of total exports as a share of GDP grew from around 35 percent in 1990 to 39.2 percent
in 2000 and to around 53 percent by 2009. At first glance, this represents higher exporting
levels than in other regions. However, a closer look reveals the weight of resource-rich
countries, which account for almost 85 percent of all MENA exports, and whose exports are
mostly hydrocarbons. Manufactured exports are a smaller share of merchandise exports than in
any other region. Indeed, growing exports in the MENA region have been driven mostly by
hydrocarbons, whereas non-oil exports growth has remained low (Table 1).
9
Table 1. Export behavior in the MENA region
A lagging regional integration2
7.
In contrast with many regions (East Asia, Eastern Europe, Europe, Latin
America), there are relatively few economic links between MENA countries. The share of
intra-MENA merchandise exports to GDP varies between 1 percent and 22 percent (for the
transition countries, the average is approximately 7 percent). Despite many economic,
geographic and cultural features that favor cross-country links, past regional integration
attempts failed.3 Reasons of this failure are i) insufficient political commitment, ii)
administrative challenges on implementation and nontariff barriers, iii) narrow focus in terms
of preferential trade coverage, iv) low complementarity, and v) poor trade logistics.
High firm-level constraints
8.
While policy reforms are needed to further expand regional and global
integration, promoting new exports is also hampered by some firm-level constraints. In a
recent study4, it appears that uncertainty is the major factor constraining the discovery of new
export activities. These uncertainties are caused by the lack of information about demand in
specific markets and the price that new products or services can command. For SMEs, these
From “Trade Competitiveness of the Middle East and North Africa – Policies for Export Diversification”, The World Bank
2009.
3 There are many regional agreements for the development of trade activity between MENA countries: bilateral preference
agreements, the Pan-Arab Free Trade Area, the Arab Maghreb Union and the Agadir Agreement.
4 The World Bank, 2009. For an extensive review of MSME in the region and IFI support see “Catalyzing Job
2
Creation and Growth through MSME Development in Deauville Partnership Countries”, AfDB, 2013.
10
uncertainties are all the greater, as they have limited access to finance and limited skills,
including export skills. As a result, very few can afford to market their products abroad. In
addition, the incentive for first-time exporters to experiment an export activity may be reduced
by the possibility that imitators would appropriate part of their returns produced by the new
activity.
Large E-Commerce gap
9.
MENA firms are almost totally absent from the Virtual Market Places (VMPs).
Even though the use of social networks is very common, this is not the case for business
transactions. According to the analyst firm eMarketer, the aggregated share of the Middle East
and North Africa just made up 1.9% of global B2B e-commerce in 20125. The business and
trading culture in the MENA region is still very much focused on personal contacts and less on
the use of electronic tools despite their cost effectiveness.
Table 2. E-commerce Index
5
B2B e-commerce statistics are not available.
11
10.
At a country level, the situations are similar, with some differences related to the
geographic location, language and business environment. In Tunisia, the number of
merchant websites is about 600; however, there is no merchant website among the top 100
Tunisian websites. Currently, the development of e-commerce is slowed down by several
factors:
•
Lack of confidence in the use of e-commerce by consumers, especially when it comes
to e-payment;
•
Absence of a specific e-commerce trust label, like in Morocco;
•
Reluctance of banks to finance e-commerce projects, and
•
E-logistics are underdeveloped
11.
In Morocco, while the business environment for e-commerce has been improving over
the last few years and electronic payment methods are being diversified, e-commerce still
remains a marginal sales channel. Consumers distrust electronic payment and lack the
confidence to buy online, despite attempts to build trust with the eThiqa Trustmark lead by the
Confederation générale des entreprises du Maroc (CGEM), the employers’ union. For
example, according to the Centre Monétique Interbancaire (CMI), transaction volumes,
however, are increasing year by year, with a strong local drive. Moreover, the government has
made the development of e-commerce a priority and views the Virtual Market Places for the
Development of Export SMEs project as a useful contribution to that end.
12.
The situation of e-commerce in Jordan is paradoxical: on the one hand, there is still a
widespread reluctance to buy online; the number of e-shops is low. Online payment is poorly
trusted; as a result, “cash on delivery” is a successful payment method, as shown by e-retailers
like Jumia. Still, many SMEs do not have a website; if they do, it is most of the times not seen
as a serious marketing channel. On the other hand, there are national champions, including
MarkaVIP, which has spread across the region. The country has been among the first to realize
the potential of e-commerce, investing in 2008 into a “national e-commerce strategy”, one of
the few of its kind. Austerity measures, unfortunately, have led to the termination of the related
e-commerce action plan in 2012.
13.
Altogether, key stakeholders in all three countries interviewed clearly perceived the
benefits of e-commerce related tools, particularly with a sector approach. Henceforth, the need
for a coaching/capacity building exercise that focuses on one-on-one support complemented by
broad institutional reforms.
C. ALIGNMENT WITH COUNTRIES NATIONAL STRATEGY
14.
Each transition economy of the MENA region aims at supporting the enabling
environment to boost private sector development through export promotion.6 Efforts to
push the integration of South Mediterranean economies into the global economy but, mainly,
with the European Union started in the 1990s and evolved throughout since 2000. It was
6
Annex III contains a comprehensive institutional mapping per country as well as the country specific
institutional set up.
12
widely understood that trade liberalization following the signing of free trade agreements
would not be enough without specific policies and programs aiming at increasing private sector
competitiveness in export markets.
15.
It is worth mentioning that the targeted countries (Morocco, Tunisia and Jordan)
have adopted a series Export Development Policies at each time aiming at i) reducing
barriers to trade at institutional and policy level, and ii) reducing barriers to trade at
firm level. In particular:


In the mid-90’s, these three countries (and other like Egypt) signed free trade
agreements with the EU In this context, they implemented programs which focused on
the upgrading of their firms in order to improve their export capabilities.
In early-2000, Morocco, Jordan and Tunisia put the emphasis on the access to foreign
markets dimension with the implementation of targeted programs (JUMP in Jordan,
FAMEX in Tunisia, Morocco Croissance and Morocco Export Plus in Morocco).
16.
The economic downturn resulting from the Arab Spring prompted the
Governments of these three countries to deepen their access to market policies and
further expand their integration to the global economy. In this context, new programs are
being put in place to further i) remove certain constraints that affect the business environment
(institutions, regulations, etc.), ii) encourage companies to become more competitive (cost,
quality, innovation), and finally, iii) transform export ready SMEs into regular export SMEs.
17.
When it comes to e-commerce, governments around the world have recognized the
importance of their role in removing barriers and in enabling e-commerce. This is also the
case of Tunisia, Jordan and Morocco, where, within the context of modernization and
deepening of policies and institutions, specific task forces have been put in place to
comprehensively address barriers to e-commerce. This is part of a major effort to increase the
international presence of their companies and a pillar of the overall program of trade related
reforms.
2011
1995 -2009
Production and
Quality
Uprgrading
Programs
1999-2011
Access to Market
EDP I and II (WB
Program) 1300
SME’s
A2M++
Access to
VMP
13
18.
The proposed project will support the current policy change. In particular, it will
support their effort i) to promote new exporters (SMEs) through VMPs, as new promotion
channel, and ii) to tackle the various issues that impede the deepening of access to foreign
markets (through the support to their inter-ministerial committees).
Morocco
19.
Key areas of priority on the economic front in Morocco include strengthening the
competitiveness of the economy, improving the investment climate, support to SMEs, and
encouraging exports. The FY10-13 Country Partnership Strategy (CPS) discussed by the
Bank’s Board of Executive Directors in January 2010 focused on three pillars: growth,
competitiveness and employment.
20.
The on-going World Bank program in support of greater competitiveness is being
strengthened: the MSME Development Project and the First Economic Competitiveness
Support Program DPL approved by the World Bank Board of Executive Directors on June 28,
2012 and March 12, 2013 respectively, and the Capital Market Development and SME Access
(FY14) currently under preparation, will provide a package of support to better target
economic governance and improvements to the investment climate and the financial sector that
support greater private sector development, innovation, trade and the related job creation that is
expected to come about. The international trade agenda is being prioritized, supporting
Morocco to take advantage of recent openings to boost trade and integration with its regional
neighbors, the EU and USA, as well as deepen its global integration with other regions.
21.
From an institutional stand point, the Moroccan Center for Export Promotion (MCEP),
a semi-autonomous agency under the authority of the Department of Foreign Trade (Ministry
of Industry, Trade and New Technologies). MCEP is responsible for export promotion of
industrial products, food, services and all products not covered under a legislative or regulatory
provision by other agencies or organizations. It also coordinates the participation of Morocco
in international trade events (MCEP counts in its portfolio 5,300 exporters). The Kingdom of
Morocco has devised a national strategy for development and export promotion: "Maroc
Export Plus", which aims at tripling the volume of exports, increase growth and create 380,000
additional jobs by 2018.
Tunisia
22.
The current government has prepared a socio-economic development strategy. The
strategy seeks to consolidate the aspirations of the population as expressed in the revolution
and pave the way for a stronger economic growth and jobs creation, through reforms to
improve competitiveness, export diversification and innovation as Tunisia confronts
heightened international competition. It is worth noting that strengthening the business
environment and deepening trade integration is one of the four driving objectives of the FY1314 Interim Strategy Note (ISN) discussed by the Board in July 2012.
23.
In practice, Tunisia promoted export activity through two Export Development Projects
(EDPs), financed by the World Bank. The first one (2000-2004) addressed two key issues for
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the development of exports: i) the simplification of export procedures and the setting-up of an
electronic window for faster processing of trade documents (TTN) and ii) the easing of access
to export markets for firms (matching grant scheme and pre-shipment export guarantee). The
second EDP (2005-2012) further i) tackled issues of simplification of export procedures, ii)
eased the access to export markets for firms (through a revised matching grant and preshipment export guarantee) and addressed two new areas, iii) the digitalization of import
technical control procedures and iv) the setting up of an information point for Technical
Barriers to Trade (TBT) to allow Tunisia to meet WTO requirements. These two Bank projects
were implemented under the umbrella of the Center for Export Promotion (CEPEX). 7 Given
the success of these two projects, the new Government is contemplating a third EDP (a
Competiveness and Export Development Project-CEDP). CEDP will build upon the continuous
and strong dialogue on competitiveness and trade integration with the Tunisian authorities and
the domestic private sector and takes as a starting point achievements and lessons learned from
the previous projects.
24.
This operation and CEDP will be complementary as the former will help SME link to
the international markets and the latter will build upon and anchor more deeply the reforms
started under the previous EDPs with the intention of creating a more favorable export
environment and further encouraging competitiveness.
Jordan
25. Jordan’s vision is to pursue a knowledge-based economy leveraging, the country’s
strong human capital base and creating jobs. The Government’s Executive Development
Program (2011-2013) underscores the importance of exports to Jordan’s economic future and
the role of education and skills development in tailoring the country’s human capital to the
needs of the private sector. Along these lines, the EDP emphasizes the need for an improved
enabling environment for business and investment.
26.
The Ministry of Industry and Trade (MIT) is responsible for trade and industry related
issues in the country. One of the main institutions in charge of promoting exports is the Jordan
Enterprise Development Corporation (JEDCO) under the leadership of the Ministry of Industry
and Trade, the Jordan Federation of Chambers of Commerce, the Jordan Chamber of
Commerce and the Amman Chamber of Industry. The board also includes representatives of
other public institutions and the private sector. JEDCO is highly respected among trade and
industrial partners in the country with many initiatives and partnerships with the private sector
as well as international organizations in the trade sector. The private sector is organized
through national and regional chambers of commerce. The Jordan Chamber of Commerce
(JCC) works with public and private stakeholders providing information, advisory and
promotion services. It is the umbrella organization for the 16 local chambers of commerce and
it is also a member of regional or international networks and organizations of similar nature.
7
Created in 1973, the CEPEX is a governmental institution operating under the Ministry of Trade and Handicraft. CEPEX
largely focuses its activities on country image building and marketing activities Services offered by EPAs usually fall into four
broad categories: i) country image building (advertising, promotional events …), ii) export support services (exporter training,
technical assistance, capacity building…), iii) marketing (trade fairs, exporter and importer missions…); and iv) market
research and publications.
15
The different sectors and professions8 are organized in specific associations, some of which are
very active in export promotion activities either bilaterally with other countries or through
JEDCO.
27.
Jordan export promoting policy relies on three main initiatives: the Euro-Jordanian
Action for the Development of Enterprises, the National Fund for Enterprise Support and the
Jordan Upgrading and Modernization Program. Jordan is preparing a National Exports Strategy
that will target certain sectors. It is expected that the project will be aligned with the strategy.
28.
Euro-Jordanian Action for the Development of Enterprises (EJADA): This EU funded
program intends to facilitate the integration of Jordan in the future Euro-Mediterranean free
trade area through modernization and upgrading of Jordan's industry, improving the
competitiveness of the SMEs. A wide range of instruments have implemented for this purpose,
including components such as training, technical support, financial support, strengthening of
SME associations, and export promotion.
29.
National Fund for Enterprise Support (NAFES): NAFES was created in 2001, as a joint
effort of the Higher Council for Science and Technology, Ministry of Finance, and Japan. The
aim is to help SMEs to become more competitive domestically and internationally. Program
activities include consultancy for and training in market analysis and sales support.
30.
Jordan Upgrading and Modernization Program (JUMP): JUMP is an independent
national program managed by a committee headed by the Minister of Industry and Trade, with
equal representation from both the Government and the private sector. The objectives include
enabling enterprises to face increased national, regional, and international competition,
increasing market shares and developing new non-traditional export markets. Among the wide
range of services offered, specific trade-related services include assistance to market research,
marketing plans, marketing and export promotion. The different programs have been recently
merged and will be now administered by the Jordanian Enterprise Development Corporation
(JEDCO), which has a predominant role in export promotion and development. The Royal
Scientific Society (RSS), the major institution in support of innovation and technological
change, continues to offer testing and certification services to private enterprises.
D. ALIGNMENT WITH THE TRANSITION FUND OBJECTIVES
Support to policy, institutional changes and structural transformation
31.
The proposed project will support the policy changes that have been adopted in
the aftermath of the Arab Spring. Trade and globalization have no doubt resulted in
8
Specific associations exist for: agricultural and oil producers, stones and garments and textile exporters. The
engineering profession is one of the most relevant and numerous professional associations in the country
regulating and monitoring the services delivered by these professionals. Engineering services are often exported to
other countries in the region which lack the necessary skills in the sector. In the IT sector, both in providing
services and software development is worth mentioning the information and Communications Technology
Association of Jordan (INTAJ).
16
increased jobs and wealth in Tunisia Morocco and Jordan, but up until now it has only been the
few largest players who have been able to take full advantage of globalization. If a small
business wishes to participate in the global economy it is largely relegated to providing an
intermediate product to a large multi-national supply process. The three countries intend to
create the enabling environment that would put SMEs on a same footing as large companies.
Access to VMPs would be one of the pillars of this new strategy to the extent that they are a
parallel model for trade as they enable businesses of all sizes to trade directly with buyers
around the world. A technology enabled small business can maintain a local presence and
contribute to its local economy while increasing its revenue by reaching out to a global
customer base. As mentioned in the prior section, Morocco, Jordan and Tunisia engaged in a
new Export Development Policies aiming at deepening access to foreign markets for their
firms. These policies include new exporters (export-ready SMEs) and new channels (such as
Virtual Market Places VMPs) in addition to the traditional trade promotion tools (such as
organization of trade fairs).
32.
The proposed project will also support the institutional changes that result from
the new policies. Because these new policies involves the resolution of number of bottlenecks
such as e-payment, logistics, regulatory environment, access to finance and export guarantees,
quality control, etc., the three countries plan to implement (or have already implemented in the
case of Tunisia) inter-ministerial committees.
33.
The project is designed as a pilot aiming at validating the new export development
policies9. Approximately 600 SMEs will benefit from this project. The impact of this pilot will
be measured through indicators such as percentage of increase of export activities among the
beneficiary SMEs. Moreover, the countries will assess the efficiency of each of the
components and make adjustments (if needed) before scaling up the project to a wider range of
SMEs. SMEs will be selected according to criteria detailed later in the concept note. After the
pilot phase, the project can be scaled up following the same process of selection and coaching
to satisfy the high demand already identified during field missions organized as part of the
preparatory phase.
34.
The proposed project will directly support Morocco, Jordan and Tunisia (or one
country) new policies. In particular, it will support their effort i) to promote new exporters
(SMEs) through VMPs as new exporting channel and ii) to tackle the various issues that
impede the deepening of access to foreign markets (through the support to their interministerial committees).
Alignment with fund objectives
35.
The higher-level objectives to which the project contributes are aligned with three of
the Transition Fund Objectives: i) Competitiveness and integration and ii) Inclusive
development and iii) job creation.
1. 9 The project is also aligned with the MENA TF objectives in terms of the type of projects eligible. In
particular, -‘the Operations Manual mentions in its paragraph 15 “Eligible technical cooperation can include, inter
alia, piloting implementation of key reforms”.
17
36.
Integration and Competitiveness. E-commerce is a fundamental strategy to fast-track
trade integration and VMPs are relevant to integrate SMEs into international markets. In
concrete terms, the VMPs will enable beneficiary SMEs to have a business link to buyers from
all over the world. In general, the participation in e-commerce has a positive impact in the
internal organization, innovation, and business information. Through this project, which
focuses on the access to global markets through Virtual Market Places, it is expected that
beneficiary SMEs will implement new strategies and adopt new business models which will
improve their competitiveness and enable them to penetrate new markets using business
intelligence that will be supported by the project as well. (See sub-component 3.2). Recent
findings10 show that the potential gains from increasingly moving to online trading world are
substantial exporters and importers of all sizes, in particular in developing countries. Ecommerce helps sellers and buyers overcome traditional trade impediments and makes distance
less relevant for online sellers with a positive impact on trade flows. Integrating SMEs from
the MENA region in electronic commerce platforms will increase competitiveness of these
companies and generate benefits regardless of their location. In general, new sellers using
marketplaces capture market shares faster than in the offline world. Traditional trade patterns,
related to geographical closeness, specific trade agreements or colonial heritages are overcome.
In terms of integration, online sellers sell to more countries than offline sellers11. This in itself
guarantees the sustainability of the project since SMEs will have incentives to either continue
using this tool or, in view of other online SMEs success, more firms will innovate and upgrade
their skills to enter online trading tools.
37.
Inclusive Development and Job Creation. By enabling over a thousand SMEs in
transition countries to reach out to buyers worldwide, the project will generate new business
opportunities, translating into accelerated growth and further job creation. Beyond the direct
impact, job creation will also derive from the development of value-chain businesses that
gravitate around exporting SMEs (logistic, shipping, export consultancy, insurance, finance,
etc.). Since the project has a special focus on youth and women, through the profiling of SMEs
with potential, it will facilitate the access of non-favored segments of the population into
international markets. Overall, studies show that the increase digitization of the economy,
including indicators such as the ability of users to incorporate digital services into their
business, fuels a 0.75 percentage point growth in GDP per capita12. If digitization increases by
10 point, it leads to a 1.02 drop in the unemployment rate (worldwide figures). The effect is
larger in emerging markets. In addition, growing trade volumes using online systems reduce
transactions costs, increasing net revenues for the sellers and allowing for the allocation of the
benefits into the improvement of process, capabilities, and employment at firm level.
E. COMPLEMENTARITY WITH OTHER PROJECTS
38.
The complementarity of this project with others is strong. Other projects financed
by the Transition Fund and other initiatives such as the IFC-World Bank MSME TA Facility
10
Olarreaga and Schropp (2013).
Mayer and Ottaviano (2007).
12
World Economic Forum, 2013 “Digitization for Economic Growth and Job Creation”.
11
18
for the MENA region have as objective to support SMEs or MSMEs as well as entrepreneurs
mainly through the provision of financing to address firm-level bottlenecks. If the SMEs
receiving support to engage in VMPs succeed in conducting e-commerce, they will need
additional finance to scale up production and/or upgrade technological or human resources
skills at all levels. However, the project differs from others, such as the Jordan’s SME Growth
Program on its specific focus on i) upgrading skills to conduct e-commerce and the focus on
VMPs, and ii) addressing institutional constraints to create an enabling business environment
for e-commerce. Other projects, such as the Morocco Microfinance Development, aim at
strengthening microfinance institutions and improving the regulatory environment under which
they operate without addressing SMEs development at micro level. Therefore, while not crosscutting in terms of addressing firm-level constraints but basically focusing on a few, it seeks to
enhance expertise to use available technological platforms to expand export markets. The
surveys conducted prior and during the design of the project confirm SMEs need and desire to
acquire this expertise. This operation will ultimately benefit Micro and Small enterprises.
39.
This project will also build on the work undertaken by the ITC in Jordan,
Morocco and Tunisia in the framework of Enhancing Arab Capacity for Trade program
(EnACT). This program, funded by the Canadian International Development Agency (CIDA),
was implemented from 2009 to 2013, and focused on developing the full export potential of
five countries: Algeria, Egypt, Jordan, Morocco and Tunisia. The EnACT program assisted
SMEs in target industries to export to international markets, and to create employment in the
post Arab Spring context. In addition to strengthening TSIs and creating trade intelligence
systems, the program strengthened the capability of SMEs to understand and meet the
requirements of targeted export markets and built relationships with potential buyers for
sustainable exports.
40.
While the program focused on four main objectives: i) improving business intelligence,
trade policy and export strategy, ii) strengthening the capacity of trade support institutions to
promote export competitiveness, iii) developing markets and supporting small and mediumsized private sector companies (particularly in handicraft sector), and iv) creating opportunities
for women and young people.
41.
42.
The EnACT program puts a special emphasis on raising awareness about web
marketing and e-commerce solutions as affordable and efficient tools to conduct business
particularly for women and youth, and other vulnerable groups. Working in close partnership
with TSIs, , ITC, through the EnACT programme, strengthened the capacity of beneficiaries
to leverage the Internet to promote, market and sell products and services throughout the region
and beyond, with a special focus on social media and free and open source software. ITC has
developed a series of web marketing and e-commerce capacity building modules, which are
supported by online diagnostic tools.
43.
EnACT helped to strengthen the capacities of sector specific TSIs enabling them to
offer targeted advice to SMEs. The programme focused on mentoring and coaching approach,
aimed to adapt SMEs products to market requirements, improve marketing and promotion
strategies, participate effectively in trade missions and exhibitions to meet buyers, and increase
their visibility through e-commerce applications.
19
44.
As a result, beneficiaries SMEs were empowered as to access to new sales channels.
Examples include a small handicraft company owned by a Tunisian businesswoman, which
joined “Dinos”, a Japanese online retailer. EnACT has also enabled Jordanian artisans to be
connected to the Louvre Museum in Paris, which resulted in $130,000 of initial orders. This is
being maintained to date through regular orders. In Algeria, the Carpet Maker Association of
Ghardaia benefited from coaching on social media as a way to reach new clients.
45.
The programme was designed as to support national priorities in term of job creation
for women and youth. In fact, the programme enabled more than 500 SMEs to benefit from
training on social media as affordable and efficient tools to conduct business, from which 200
were women-owned companies. Furthermore and in association with Amadeus Institute,
EuroMed Capital Forum and Maroc Export, EnACT granted its first Youth Entrepreneurship
Prize in Export to Outsourcia, a Moroccan company.
46.
The companies targeted were active in the engineering goods, processed foods, leather
products and handicraft sectors. They have been able to penetrate new markets in a sustainable
manner in Sub-Saharan Africa (Kenya and Uganda), Asia (Asia and Japan) and the Arab
region (Kuwait).
47.
The VMP Project will build on this 4 years work, especially on raising awareness of
web marketing and e-commerce solutions. It will consolidate and leverage material and
knowledge built through the EnACT programme and subsequently extends it to more SMEs as
a way to increase their visibility and increase their market share.
F. JUSTIFICATION FOR THE WORLD BANK AS EXECUTING AGENCY AND PARTNERSHIP
WITH ITC13
48.
The project seeks to increase exports from transition countries. It aims at building
capacity of SMEs in Jordan, Morocco and Tunisia on how best to utilize Virtual Market Places,
as means to reach new export markets.
49.
The implementation of the project requires the engagement and training of SMEs but of
and a variety of institutions and organizations, from governmental to civil society and private
sector. The goal of the project will be achieved through the targeting of SMEs and the
provision of individualized support in their first export transactions through the existing VMPs.
Also, the project seeks to have an impact on the behavior and attitudes of SMEs towards ecommerce and, through that, impact SMEs performance in export markets. For the project to
succeed, it is fundamental to get close to the small and medium enterprises which can be done
much easily through the sector associations and chambers of commerce, depending on the
country context. The corresponding government authorities will be involved at two levels: i) in
the National Steering Committee, ii) as hosts of the project implementation unit (PIU) as
needed.
13
http://www.intracen.org/
20
50.
Because of the complexity of legal and implementation arrangements and the variety
and number of stakeholders involved, countries agreed on the Bank acting as executing agency.
Therefore, there is no requirement to conduct project appraisal.
51.
The Bank will partner with the International Trade Centre (ITC), a specialized UN
Agency, based in Geneva. The objectives of the project are fully in line with ITC mandate
which is to enable small business export success in developing and transition-economy
countries, by providing, with partners, sustainable and inclusive development solutions to the
private sector, trade support institutions and policymakers. ITC capitalizes on strong regional
and international networks of policymakers, TSIs and SMEs. ITC work focuses on five
strategic objectives among which three are directly relevant for this project, which are: i)
Building awareness and improving the availability and use of business intelligence; ii)
Enhancing policies for the benefit of exporting enterprises, iii) Building the export capacity of
enterprises to respond to market opportunities. ITC’s support to the Arab region increased
exponentially over the last three years. The project will benefit from a well-established
network of key stakeholders that ITC has been working with over the last five years in Jordan,
Morocco and Tunisia.
52.
The World Bank has been an important partner for ITC for many years. Over the 3 year
period 2008-10, the World Bank’s Development Grant Facility (W2) provided a grant of $1.8
million ($600K per year) to enable ITC’s market analysis tools to be made free of charge to
developing and least developed countries. The program was positively independently evaluated
in 2012 and found to have achieved the objective of improving the quality and availability of
business intelligence for developing countries. In addition, The World Bank provided ITC with
a grant in 2009-10 of $400,000 to re-develop its WITS (World Integrated Trade Solution)
analysis application in a web environment. ITC completed the work and the platform forms the
basis of the now web-based WITS application – see https://wits.worldbank.org. On other areas
of collaboration, The World Bank together with ITC, UNCTAD and the African Development
Bank came to a collective agreement (an MOU has been in force since October 2011) to
collaborate on improving global transparency in trade, share trade related data and reduce
redundancies in their work in this area14.
53.
ITCs mandate and missions perfectly fit the project development objectives. Moreover,
ITC experience and capability was emphasized by all the countries’ counterparts visited by the
Bank during the preparation of the project.
II.
PROPOSED PDO/RESULTS
A. PROPOSED DEVELOPMENT OBJECTIVE
14
Jordan is preparing its National Export Strategy which ITC is supporting.
21
54.
The project’s development objective (PDO): This is a pilot project aimed at
increasing SMEs exports on the through Virtual Market Places and supporting institutional
reforms to create an enabling environment for e-commerce.
55.
Due mainly to their small size, limited resources, and the lack of skills, expertise
and support, the vast majority of SMEs are not able to export their products or conduct
market research to identify business opportunities. Also, SMEs face severe information
asymmetry issues: foreign buyers lack information about SMEs’ trustworthiness while SMEs
have very little information about foreign buyers’ expectations. Finally, due to virtually no
export activity for SMEs, domestic export-related value-chains (marketing, packaging,
advisory services, logistic, insurance, finance, translation, etc.) are under-developed. In
addition, the culture of e-commerce is not widely spread out throughout the region partially
due to the lack of trust and confidence in electronic platforms to conduct transactions. The
project will contribute to the reduction of these constraints to e-commerce, particularly,
through the introduction of quality certifications. It is expected a relatively high return in terms
of economic value since one dollar spent would yield a 4 dollar return (see annex II) in
additional revenues for beneficiary SMEs. The project has been designed as a pilot. It can be
easily expanded to other beneficiaries.
B. KEY RESULTS
56.
Key indicators are related to Institutional Reform, Outreach, Training and VMP access:
a) Institutional Reform
 Advisory services to set up effective mechanisms to create an enabling environment
for e-commerce
b) Exports Markets Accessed through VMPs
 Training and advisory of country partners and TSIs
 Training and certification of Export Advisors
 Actual export transactions in VMPs.
c) Partnerships, Certification and Business Intelligence
 SMEs capacitated to trade on VMPS and awarded with premium accounts on
VMPs.
 Effective roll out of a Business Intelligence Mechanism (Trade and Market
information provided to countries)
 National institution to serve as certification agency assessing SMEs compliance
with e-commerce requirements.
III.
PROJECT DESCRIPTION
A. PROJECT CONTEXT
22
57. Internationalization of SMEs in the MENA region faces common challenges to those
identified in other parts of the world. Some of the barriers are policy related while others are
very much firm specific and refer to lack of skills, lack of business intelligence and limited
ability to reach overseas customers. In addition, the firm-specific barriers are common to SMEs
across sectors. When it comes to the use of e-commerce tools, some of these barriers are
related to cognitive/perceptions regarding e-commerce which can be partially addressed
through the coaching of SMEs. Another set of difficulties are more related to the enabling
environment to conduct e-commerce and therefore, surpass firm-specific constraints. The
project will address both, firm-specific and institutional bottlenecks that hamper SMEs
internationalization through e-commerce and, more specifically, through trading on VMPs.
Table 3. Benefits of E-commerce
Direct Benefits from e-commerce
Online platforms (f.e. EBAY)
Competitiveness (large vs. small firms)
Increase in Exports
Gains from opening up to online trade
Indirect benefits from the Internet Economy
Jobs15 (MENA)
GDP16 (MENA)
Example
Close to 100% export – While around 40%
offline business from the same country of
origin include in Ebay export
Small and large sellers are almost equally
likely to export (offline SMEs are less likely
to export)
The largest actual welfare gains from lower
trade costs occur outside developed countries
since online costs are close to equal.
377,772 jobs
16.5 (US$billions)
58.
Hundreds of VMPs are already operating in the world. Some have been in
operation for years, other have started more recently. The most successful one is
www.alibaba.com, launched by a private firm in China in 1999. Today, this B2B website
serves a business community of more than 35 million registered users and the company's
shares are publicly traded. Other cross sector, global virtual market places such as
globalsources.com, ecplaza.net, and tradekey.com, are also noticeable. The project will select
between 15 to 20 VMPs according to their capability to maximize beneficiary SMEs’ export
activity.
59.
Trade over Internet enabled marketplaces, such as eBay or Alibaba, to be less
affected by geographical distances. Research shows that a 10 per cent increase in distance
reduces trade in eBay, for example, by only around 3 per cent, whereas it reduces traditional
exports by 18 per cent. The impact of technology is even more pronounced in the case of trade
from developing countries. A 10 per cent increase in distance results in no more than a 1 per
15
16
Booz and Company, 2011.
Idem.
23
cent decrease in technology enabled trade from developing countries 17. Put it differently, the
objectives, behavior and success of firms online brings different results and patterns from those
using more traditional trading channels.
Table 4. Volume of exports and number of markets (Offline vs. Online Sellers)
Chile
Share
of
Sellers
Exporting
Technologyenabled
business (%)
Traditional
firms (%)
Number
of
export
Destinations18
Technologyenabled
business
Traditional
firms
Indonesia
India
Jordan
Peru
Thailand
Ukraine
South Africa
100
100
97
100
100
100
100
100
15
5
12
25
14
75
12
19
29
36
31
27
25
42
36
30
4
n.a.
n.a.
4
3
n.a.
n.a.
4
60.
In general, technology-enabled businesses are mostly exporting companies while
traditional firms are not. Therefore, using the Internet and new technologies for business
transactions is seen as an effective tool for exporting.
Table 5. Good Practices
 Chile - Free Trade Agreement with US – Removing barriers for SMEs and e-commerce.
 Chile - Minimum threshold to have tax exemption from customs duties and paperwork
requirement: set at only USD100 minimum.
 Peru – Exporters reach 25 markets online vs. only 3 markets are reached by offline
businesses
 Peru – Minimum threshold set at USD200.
 Australia – Minimum threshold for payment of customs duties set at USD 1,000.
 Ukraine – Commercial sellers reach 37 different markets on average.
 Ukraine – Law on Electronic Documents – Electronic Declaration Forms.
 Ukraine – Modernization of Postal Service – top 25 countries en e-postal service
development.
Olarreaga and Schropp, 2013 “Commerce 3.0 for Development”, Geneva.
Idem. Data based on commercial sellers (annual exports>USD10,000) in 2012. Source for “traditional
exporters” World Bank EDD database (data not available for Indonesia, India, Thailand and the Ukraine).
17
18
24
 South Africa – Online sellers reach 30 markets vs. 5 offline sellers. Newcomers account for
27 per cent of sales on eBay.
 Thailand – online sellers reach 43 different countries.
 Overall – Small business tend to enter the global market by becoming a part of the
production process of a much larger firm or sell directly to customers.
Source: Olarreaga and Schropp (2013)
61. Currently, MENA firms are largely absent from these platforms and not visible for
the millions of e-buyers around the world. The number one VMP, alibaba.com, records over
9 million buyers (from USA -28%, Europe -21%, Asia -31%, Middle East -8%, and Africa 8%).19 The reasons (similar/different) refer to: i) production/trade capacity/competitiveness of
the countries, and ii) lack of culture of e-commerce, insufficient understanding of how markets
operate through e-commerce, access to business intelligence and exports and marketing
strategies, and iii) Logistics, customer relation knowledge, quality control and payments
constraints.
International, all
International, sector-
Local, all sectors
International, sector-
Regional, sector-focus
Local, sector-focus
International, all
International, sector-
International e-shop
62.
In addition, the absence of MENA firms in the VMPs, prevent them from having
critical market information on the nature and origin of the demand. Therefore, up to 40%
19
Alibaba Page Views: 7 million per day.
25
of the companies surveyed confirmed their need in obtaining information about business
opportunities and technical requirements and standards in the exporting markets as a priority to
succeed. Using VMPs statistics would be extremely useful to inform Ministries of Trade. In the
framework of this project, Alibaba kindly shared some enquiries statistics that shows that
China conducts the most enquiries for Jordan, Moroccan and Tunisian products reaching
between 7.5 to 11.5 per cent of enquiries. In Jordan, China is followed by India, United States,
Nigeria, UK and Egypt (between 8.7 to 3.7 per cent). In Morocco, US, Spain, UK and France
follow (between 7.4 to 3.8 per cent). In Tunisia, China is followed by Italy, Egypt, Turkey,
France and India (between 6.2 to 4.5%). When it comes to the products, potential e-buyers
show more interest in agriculture and food and beverage for the three countries with minerals
and metallurgy ranking also among the top five for Morocco and Jordan. These preliminary
statistics show that the potential export markets when it comes to VMPs are not mainly
concentrated in Europe and therefore, it is possible to increase market presence in new markets
using e-trade and, particularly, VMPs. One of the components of the project aims at having
wider access to this international market data.
63.
The World Bank has designed and sent out a questionnaire to 60 institutions in the
MENA region. The recipients included Ministries of Economy, Industry and Trade, Export
Promotion Agencies and Chambers of Commerce. The survey was designed around twelve
questions aiming at assessing the respondents’ familiarity with the VMP concept (originally to
be created in the MENA region, for the countries of the MENA region) as well as the kind of
services (training, financial services, translation, business development coaching, etc.) needed
to facilitate the participation of the SMEs in a regional VMP20.
64.
The majority of the respondents, 88 percent, were familiar with the VMP concept.
All the respondents claimed that VMPs would be useful to businesses in their countries for
their export activities. They were quite unanimous about the type of impact VMPs could have:
regional integration, outreach of products beyond the region and competitiveness effects. In a
second survey21 conducted in the participating countries of this project, between August and
September 2013, SMEs in the three countries confirmed their interested in selling online but
cited lack of sufficient knowledge to maximize the use of this platforms. The SMEs surveyed
also emphasized the urgency of addressing business environment issues related to e-commerce
such as: security of payments or logistics. They see considerable value in obtaining VMP trust
labels as well as business intelligence support analytics to better target markets.
65.
The project aims i) to work with Trade Support Institutions (TSIs) that support
enterprises in their export diversification efforts, access to business intelligence on foreign
20
Among the 60 targeted institutions in the region and beyond, 17 provided us with their feedback (i.e. a 28
percent response rate). This figure does not allow us to draw conclusions that are rigorously statistically
significant. However, we can consider this exercise as a focus group with targeted stakeholders and we will
analyze their feedback as such.
21
Almost 200 SMEs at the time of finalizing this document had answered the survey. To conduct the survey, the
Trade authorities as well as private sector associations and chambers of commerce, had been very collaborative
and have distributed the survey among members and key partners.
26
markets and that can have strong multiplier effects, and ii) to create capacity and skills within
SMEs to increase their exports by using existing VMPs22.
66. The project will support the integration of approximately 600 SMEs from Morocco,
Tunisia and Jordan into several well-targeted VMPs23.
67. The project will target exporting companies and export-ready ones in order to ensure
that it will fully benefit selected SMEs and that they will be able to successfully engage
and conclude business transactions with leads through the virtual marketplaces.
Exporting companies refers to those who regularly exported over the last three years
(products), or at least during the last year (services). Export-ready companies are companies
that have either been exporting occasionally or have been identified by partner TSIs as being
able to do so in the near future. A target number of 200 SMEs per country will be selected
through an exclusively online expression-of-interest (EOI) form disseminated with the support
of partner trade-support institutions. This will be a first step to ensure a first-level of IT
literacy.
Overall Selection criteria include:
 Company profile (start date, size, turn over, number of jobs (segregated by gender),
product/services provided, financial situation, etc…);
 At least 20% of selected companies selected in each country will be owned by women
or young entrepreneurs;
 References of export clients available upon request;
 List of current export markets and export value in % of total sales;
 Brief summary of the companies’ export strategy (box);
 English-language skills available inside the company, and
 Availability of an export focal point inside the company
Further related questions will assess the “e-readiness” of candidates, including:




Existence of a website or web presence through social media;
Usage of the web to identify new export markets and export leads;
Awareness of virtual marketplaces (checklist of VMPs), and
Past experience with B2C or B2N e-commerce and/or virtual market places
The definition of criteria as well as the EOI process and the selection process will be conducted
closely with the partner TSI. The selection process will be flexible, while the selection criteria
will be carefully considered to ensure that the most promising SMEs are identified and are
strongly motivated to join. The process will ensure that the selected group is balanced in terms
22
See Chauffour, Jean Pierre. 2013. From Political to Economic Awakening in the Arab World. Washington, DC:
World Bank. The report emphasizes the role of the knowledge economy and how knowledge and innovation
strategies increase export competitiveness. It also signals the potential of trade in services in the region.
23
As an example, in Colombia, after 5 years, new sellers online have a much higher combined market share (22%)
than offline firms (13%). Overall, the capturing of market shares is faster in the online world.
27
of company size, gender, products/services, and distribution across different regions in the
country.
The selected companies are the direct beneficiaries of the capacity-building and businessdevelopment support that will be provided through the VMP. As part of this process, some of
the SMEs will get access to premium accounts on specific marketplaces. In return, beneficiary
companies are expected to actively take part and perform according to specific success
indicators as defined in the logical framework of the project. At the end of the first year
implementation, each company performance will be assessed in close collaboration with the
partner TSI.
In order to ensure a strong commitment from the participants, the companies that will achieve
poor performance will be taken out of the beneficiaries list and replaced with a new selected
group of applicants.

Youth/gender:
The project aims to support women and youth entrepreneurship in integrating into and
benefitting fully from the potential of existing Virtual Market Places, which is essential in a
region with a large young population and high unemployment rates of youth and women in
particular.
Knowing that in 2011, 87% of young Arabs gained more access to information technology and
communication compared with 79% in 200924, the project, by using new technologies, open
sustainable doors to job opportunities for young Arabs. Indeed, entrepreneurship can offer new
opportunities for women and youth to generate their own income, and help others as they do it.
The project will work directly with women-owned and youth entrepreneurs and ensure that the
benefits of the project accrue to them. The baseline will be confirmed at the beginning of the
project.
68. Alibaba is a global VMP which does not target a particular sector while other VMPs are
more specialized and constitute trade platforms which in some cases focus in one product.
Therefore, there are advantages in registering SMEs in both types of platforms. The project
could help by-pass barriers to inter and intra-regional trade such as: i) the non-tariff and other
policy barriers, including in some cases physical border closures, and ii) the personalization of
trade and related lack of trust and confidence in depersonalized exchanges.
During the missions carried out in the beneficiary countries, stakeholders recommended to
focus on certain sectors25, namely:



24
25
Agriculture and processed food, in particular in the halal and organics segments;
Services, in particular ITO/BPO and other business services;
Handicrafts.
Source: The Silatech index: Voices of Young Arabs, April 2011
The potential of some of these sectors has been emphasized during the missions. See also AfDB, 2013.
28
69.
In specific cases, the sectors may increase to respond to national trade strategies
provided the specific sector has potential from an e-commerce perspective.
70.
From a development outcome perspective, and in view of the countries' demographics
and business structure, the project will engage a large number of young entrepreneurs and
special attention will be given to women-led companies, reaching out to SMEs across regions
while taking into account disparity issues. The project focuses on a quality approach through
individual support and coaching to SMEs to ensure success.
71.
The project will create expertise on VMPs and an enhanced access to business
intelligence about foreign markets through experts who will train in country export specialists
as well as local institutions, which, later on, will train SMEs. By introducing this approach it
ensures that knowledge is transferred, used and evaluated throughout the life of the project and
capacity remains once the project closes.
72.
In each country, a small project implementation unit –PIU-, located in the main TSI,
will coordinate the project at country level and provide support to the International Trade
Center (ITC) which is the main partner of the WB for this project. Depending on the countries,
the project will also involve government agencies, chambers of commerce, business
associations and specific civil society organizations26 in order to ensure full outreach toward
the beneficiary SMEs. This public-private partnership approach is fundamental in ensuring the
success of the project as well as its sustainability once the project is completed. TSIs will
allocate staff to be trained as well as to, later on, engage them on coaching and registering
SMEs with EAs support27. ITC, in cooperation with the TSI, will instruct PIU on the criteria to
select potential SMEs and monitor their performance throughout the project to make sure they
actually engage in concrete business transactions. ITC will also engage with the TSIs in order
to build their capacities on how to better track information and alerts SMEs about markets,
opportunities, competitors, trends, risks and other key intelligence topics. This service will be
offered as part of TSIs portfolio. The information tracking will be made on the VMPs and
complemented by other relevant sources of information.
73.
The project will hire Export Advisors (EAs) already trained through various programs
in Tunisia, Jordan and Morocco28. The recruited EAs will receive specialized training on
VMPs. EAs will be recruited through existing networks or by contracting a firm to conduct the
hiring29.
74.
The project also envisages tackling the enabling environment for e-commerce by
addressing institutional constraints to help beneficiary SMEs better perform on VMPs. For
SMEs to profit from e-commerce, several institutional and regulatory aspects require attention.
For a detailed description see Annex 3 – Institutional Mapping.
For example, the Association of Women Entrepreneurs in Morocco (AFEM), one of the few initiatives in
Morocco focusing on the development for women’s entrepreneurship, has manifested its interested in having one
staff trained and engage in the project for the outreach of women entrepreneurs. In Jordan and Tunisia, other
associations have shown great interest in participating actively in the project.
28
However, none of the IFIs of the Deauville partnerships have projects on SMEs and trade in Morocco.
29
This could be the case of Jordan – The HR Company would not have any managerial or project implementation
responsibilities.
26
27
29
These factors are, broadly: legislation (regulatory environment), e-payment/banking facilities
and support, software services (security), telecommunications, delivery services (postal
services or alternatives) and traffic infrastructure. Barriers in one or more of these areas can
hamper the success of e-commerce efforts in general and online trade through VMPs in
particular and need to be addressed jointly. In Tunisia, Morocco and Jordan institutionalrelated barriers identified which affect low volume exporters or potential exporters using ecommerce platforms and channels are:
• Branding and Trust
• Logistical networks for the prompt and reliable delivery of products
• Lack of a supportive legal and regulatory environment
• Electronic payments and currency issues
• Insurance systems
• Connectivity (quality, speed, cost)
75.
In addition, complying with high standards in many of those areas will facilitate the
granting of trust labels to companies based on international standards and the implementation
of quality procedures associated to the use of the VMP label. This requires the implication of
the national institutions responsible for VMPs standards and assessments and the creation of
capacity within them. The capacity of national institutions responsible for standards and
assessments will be strengthened to understand VMP standards and assists SME’s to
understand and be aligned with VMP classical specifications.
76.
The scalability and sustainability of the project will be ensured through the good
selection of TSIs, advisors and SMEs and regular monitoring of the performance of each
key player. The project follows a “learning by doing” approach. The successful
implementation of the project directly depend on the selection of the appropriate trade support
institutions, the competent trade advisors and motivated SMEs that have the capacity to export.
Therefore, the selection process will be managed in a rigorous and systematic way. The project
will be implemented through the direct involvement of the TSIs; the hands on experience will
reinforce the competencies and capacity of TSIs to provide more effective support services to
promote e-commerce. As part of the implementation process, the methodological approach and
processes will be integrated as part of the services portfolio of TSIs. The TSIs will have a
multiplier effect reaching out to a wider group of SMEs and capacitating them to enter into ecommerce. As demand for such services increase, the TSIs will be able to customize its
services, to upgrade them and introduce a fee-based approach.
77.
Through the “learning by doing” approach, the TSIs will have access to a core group of
advisors that will be available as local experts to continue to support a larger group of SMEs.
The core group of advisors will be able to train other advisors and to support the TSIs in
providing high quality services to SMEs. The local experts will be engaged with ITC through a
process of continuous improvement. They will be certified through their involvement in the
project and by successfully completing all the steps of the training provided by ITC.
78.
The success of SMEs in generating new business transactions through VMPs will build
interest within the business community. The project will invest in communication and create
visibility with regard to all positive results and changes generated by the development of e-
30
commerce. Information sessions and awareness sessions will be organized by the TSIs to
mobilize more SMEs and encourage them to integrate e-commerce as new export channel.
79.
The project will build capacities of TSIs to ensure its sustainability. VMP trainings will
be organized through partner TSI and the latter will be equipped with a toolkit to advise SMEs
on how to use VMP for export diversification. Standardized training packages and
methodologies with an emphasis on local capacity building will ensure scalability and faster
deployments in other countries.
B. PROJECT COMPONENTS
80.
The project is articulated around four components: i) a support to the Institutional
Reform, ii) a support to a comprehensive and well-targeted capacity building program for
country partners and outreach; iii) the implementation of VMPs’ partnerships and business
intelligence; and iv) Management Support.
Component I. Institutional Reform (US$ 0.3 million)
It is important that governments adopt policies, laws, and incentives that focus on promoting
trust and confidence among e-commerce participants and developing a national framework that
is compatible with international norms on e-commerce. This component aims at supporting
current discussions and to introduce policy and regulatory changes. This component will
support the creation of an inter-ministerial committee with private sector participations,
analytical and diagnostic studies with the objective of concretizing reforms in the enabling
environment for e-commerce. The objective of this component is to set up a framework is to
increase security and trust in online environments for e-commerce, which is fundamental for
the creation of the Internet economy with significant positive spillovers in other sectors. It
includes tackling the following aspects: e-payment, logistics, intellectual property, access to
finance and export guarantees, quality control, minimum thresholds for export duties and
paperwork requirements In order to tackle these issues, the three countries plan to implement
inter-ministerial committees. These committees will also tackle the business processes related
to the public administration that can be offered online such as e-customs and the submission of
digital documentation. Countries such as Jordan or Tunisia are more advance. Jordan has
drafted an e-commerce strategy highlighting the shortcomings in Jordan´s current regulatory
regime. This component will support the ongoing efforts to eliminate bottlenecks. These
reforms have already been implemented in OECD countries and need to be expanded beyond30.
81.
The committees will include31:
•
Ministry of Finance, Ministry of Trade, Ministry of IT or related;
OECD, 2013 “The Seoul Declaration An overview of Progress made and recommendations” on “Internet on the
Rise”.
31
The composition will vary from country to country as the corresponding authorities proceed with the
identification of actors.
30
31
•
•
•
82.
The Public Financial sector (banks), electronic payment and e-banking authorities
(Société Monétique), postal services (public and/or private) and the central banks
of each of the countries;
Private sector associations, chambers of commerce and other key stakeholders
such as representatives of commercial banks, and
The Service Providers: Consulting and developers of E-Commerce Website.
The budget will cover the expenses for:
•
Analytical work to be conducted to better understand the constraints and propose
action plan;
•
The organization of one knowledge sharing workshop (between the beneficiary
countries or/and with the participation of other countries);
•
For Tunisia and Morocco (if multi-country), the component will support the design
and support the creation of an observatory of e-commerce to track and support
SMEs integration in international markets using the Internet.
Component II: Capacity Building Program (US$ 1.35 million)
Sub-component 2.1: Capacity Building Program (US$ 0.1million)
83.
The creation of capacity at institutional level is critical to the extent that it will i)
increase Trade Support Institutions (TSI) buy in and ii) contribute to the institutional
sustainability of the project. ITC and World Bank will identify international VMP experts to
design and train the Project Implementation Unit (PIU) team and the country partners (Trade
Support Institutions, Civil Society Organizations and private sector association/federation).
The sub-component will cover the cost of the design and the delivery of a training program that
would enable country partners to fully understand the methods, techniques and dynamics of
VMPs to maximize the opportunities they offer to increase export and diversify markets.
84.
A group of national Export Advisors (EAs) will be recruited by the PIUs in each
country from the start of the project. Pre-identified existing networks of EAs will be utilized
for the recruitment. The selection process will guarantee that the EA teams include experts on
specific markets and products to ensure the maximum quality in their service to the SMEs. The
EAs will be selected according to the geographic distribution of the beneficiary SMEs. They
will be trained by the VMP experts (mainly on how SMEs can maximize their participation in
VMPs). Upon completion of the program, successful participants will be certified as VMP
Export Management Development Adviser.
85.
Regarding outreach, the component will support project country-based promotion plans
through media campaigns to present the project and, later on, to showcase successful projects.
In addition to this, special in-country networking activities will take place through federations,
chambers of commerce and professional associations to market the project and expand the
program.
Sub-Component 2.2: Registration and coaching of SMEs (US$ 1.25 million)
32
86.
Along with the outreach phase of the project, beneficiary SMEs will be registered in
one to three different VMPs, coached on how to make the best use of their presence on these
VMPs and coached on how to concretely deal with the inquiries coming from the first potential
buyers through the VMPs.
87. Under this sub-component, the Export Advisors will play a fundamental role. The will be
responsible to:








Match SMEs with one to three VMPs and register them;
Suggest to the PIU SMEs which could benefit from VMPs’ premium accounts (see also
sub-component 3.1);
Assist SMEs in the elaboration and the posting of the information (photos,
products/firm description, delivery, etc. in several languages);
Monitor the activity of the SMEs on the VMPs (e.g. make sure that all buyers’ inquiries
are adequately and timely answered by the beneficiary SMEs);
Coach the beneficiary SMEs in their first export transactions;
Enable SMEs to manage the after sales service issues (theoretical side);
Monitor on a regular basis and update the information made available on the VMPs by
the beneficiary SMEs;
Use competitive/business intelligence provided ITC.
Component III: VMP Partnerships, Business Intelligence and Certification (US$ 1.02
million)
Sub-component 3.1: Partnerships with Virtual Market Places (US$ 1.07 million)
88.
To ensure the best use of the VMPs, certain high-performing/potential firms will be
awarded premium accounts in VMPs so they gain greater visibility from potential clients. This
sub-component will cover the expenses related to the subscription of these premium accounts.
ITC will enter into partnership/agreement with VMPs in order to benefit from preferential rates
for Premium accounts.
89.
Also, the partnership/agreement with VMPs will allow the EAs, PIUs and ITC project
managers to have i) direct access in real time to the flow of information exchanged between the
potential buyers and the beneficiary SMEs32 and ii) direct access to data related to the visits on
the profiles and product pages of the project’s beneficiary SMEs, per country.
Sub-component 3.2: Business Intelligence Development (US$ 0.2 million)
90.
The VMPs are a unique source of data. They can inform on market trends, number of
visitors, keywords searches, categories browsed, buyers’ origin, preferences, number of
32
This is more efficient than the EA supervising each account directly while at the same time allows for
supervision and monitoring of SMEs behavior in the platforms similar to “hidden” customer techniques to asses
client customer orientation used in different sectors and industries.
33
inquiries by sector, etc. ITC will collect this data and integrate it with additional trade and
commercial data. This information will be disseminated quarterly to the WB, the TSIs, the
PIUs and the EAs. This subcomponent will cover the cost ITC’s staff and experts in charge of
this activity.
Sub-component 3.3: Certification (US$ 0.12 million)
91.
This component will cover the cost of one consultancy firm supporting one national
institution per country become an international certified agency legitimized to certify
companies systems and processes. Development of trust is essential in order to boost SME
trade operations. In each participating country, one partner institution will be selected and
trained according to relevant standards (i.e. ISO) to deliver certifications to companies of the
type of the “gold supplier” in certain platforms such as Alibaba.com. Conformity assessment
procedures recognized at national and eventually at international level will be put in place to
evaluate the compliance of the SMEs interested in using the label. This and other related
certifications will provide a stamp of quality and it will increase the confidence of potential
buyers regarding the particular SME products (quality of product) and processes (delivery
time, customer response, etc.). The partnership with VMPs (with Alibaba and others) will also
contribute to the creation of capacity of country institutional partners through the selection of
one country organization which can become the one single verification partner for VMPs.
Component IV: Project Management (US$ 0.12 million)
Sub-Component 4.1: Project Management (US$ 0.024 million)
92.
To ensure a swift and coherent implementation across the transition countries, ITC will
rely on PIUs (one in each of the beneficiary countries) that will be established and hosted by
the lead TSIs (one in each of the countries). This component finances management and
supervision at two levels: ITC and the PIUs.
93.
Under this sub-component, ITC will be tasked with management activities such as
ensuring the communication of results at project level and aggregates monitoring reports for
the Bank, organizing yearly regional meetings between TSIs and PIUs, preparing procurement
plans in coordination with the World Bank and conducts procurement and financial reporting
with support from the PIUs. ITC will coordinate with a Project Adviser (PA) based in
headquarter responsible for the day-to-day management of the project, coordination of ITC
inputs, advice and support to the PIU and main project stakeholders.
94.
The cost of the PIU will include the staff only, rental and essential office equipment
will be provided by the TSIs.
Sub-Component 4.2: Impact and Evaluation Assessment (US$ 0.03 million)
95.
This sub-component will cover the cost of an Impact and Evaluation Assessment. It will
take place at the end of the project to assess the export performance of companies within
VMPs vs. a sample of similar ones which have not joined the program.
34
C. PROJECT FINANCING
96.
The proposed Project is a grant financed by the MENA Transition Fund established by
the Deauville partnership for transition countries of the MENA region in the amount of US$ 3
million. The partner agencies (TSIs) will provide in kind support, mainly the provision of
office space and logistics.
97.
The Grant will be entirely managed by ITC without prior allocation to TSIs. The RIA
will be responsible for managing the Project funds and all related financial transactions.
Payments will be processed by ITC.
Cost by Component / over 3 years
Component 1. Institutional reform
(a) Morocco
(b) Tunisia
(c) Jordan
Transition
Fund
(USD) –
Initial
Proposal
300,000
100,000
100,000
100,000
Transition
Fund (USD)
Revised
Proposal
Country CoFinancing
(USD)
300,000
100,000
100,000
100,000
Component 2: Export markets accessed
through VMPs by SMEs
Sub-component 2.1- Capacity building and
outreach
Sub-component 2.2 Registration and coaching
of SMEs
3,100,000
1,335,000
200,000
100,000
2,500,000
1,235,000
Component 3:
a) Sub-component 3.1: VMP
Partnerships
b) Sub-component 3.2. Business
Intelligence Development
c) Sub-component 3.3.
Certification
1,820,000
1,500,000
1,020,000
700,000
200,000
200,000
120,000
120,000
In kind- to be
estimated
In-kind
support from
VMP
providers
35
Component 4. Project Management and
Evaluation
Sub-Component 4.1. Project Management
Sub-Component 4.2. Impact and evaluation
assessment
Bank supervision costs
Miscellaneous Expenses
Total Project Cost
540,000
270,000
510,000
30,000
240,000
30,000
200,000
100,000
5,760,000
42,000
n.a.
2,989,000
In-kind TBD
n.a.
36
IV.
KEY RISKS AND MITIGATION MEASURES
A. Risk Ratings Summary Table
Stakeholder Risk
Moderate
Regional Implementing Agency Risk
- Capacity
Low
- Governance
Low
Project Risk
- Design
Moderate
- Social and Environmental
Low
- Program and Donor
Low
- Delivery Monitoring and Sustainability
Moderate
- Other (Optional)
Overall Implementation Risk
Substantial
B. Overall Risk Rating Explanation
The overall risk for this operation is substantial due mostly to transition countries
context and the volatility of the political, security, and governance environment. However,
unless major turmoil occurs, it is not expected that changes in institutions/government
reshuffling will affect the project once launched.
98.
C. Risk Mitigation
99.
The project’s approach, mainly working through networks at country level, facilitates
its implementation even in the event of changes at government level. The moderate risk at
project design level will be mitigated by the partnerships with ITC and its presence and
knowledge in the three countries of both, trade institutions, and private sector associations.
V.
IMPLEMENTATION
A. INSTITUTIONAL AND IMPLEMENTATION ARRANGEMENTS
100. The Project will be implemented by a Regional Implementing Agency (RIA), the
International Trade Center (ITC), and Project Implementation Units (PIUs) to be set up in each
country and hosted by the main Trade Support Institutions (TSIs). The World Bank will carry
out the overall supervision of the Project.
101.
The institutional focal point for the project per country will be:
37



Jordan – Ministry of Industry and Trade
Morocco – Department of International Relations (DRCI) Ministry of Industry,
Commerce, Investment, Digital Economy – Delegated Minister for International Trade
Tunisia – General Directorate for E-Commerce – Ministry of Trade and Handicrafts
102. The project will be implemented in collaboration with the lead partner agency and
partner institutions in the participating transition countries. Since national TSIs have been part
of most countries national export strategy for a long time, the team deems that these would be
the most obvious partners for ITC in the implementation of the project. At country level, the
project will be under the oversight of an Oversight Committee (OC) to ensure the good
governance, timely delivery and provide the adequate reporting to the concerned government
agencies, the WB and the ITC.
Role of ITC














ITC will manage all funds and procurement for activities
open a Designated Account into which funds from the World Bank will be deposited
organize regular steering committee meetings to provide operational guidance
appoint staff and recruit consultants where necessary for project implementation (PIU) ,
Virtual Market Places experts, Export Advisors
ITC will coordinate the communication campaign and outreach
maintain and, where necessary, update the Operations Manual
monitor implementation with the support of the PIU
responsible for all the financial aspects of the project
ensure proper financial management of funds and compliance with World Bank’s
requirements when applicable;
ensure proper and appropriate procurement procedures
submit regular reports and disseminate findings
organize workshops
provide business intelligence
Set up partnerships with VMPs with the participation of the WB.
Role of the Oversight Committees
103. The role of the OCs consists of i) oversight and approve major directions and changes
in the program, ii) discuss and decide on any proposal/issues raised by the WB, ITC and/or
PIU, iii) facilitate the dialogue across institutions and organizations, iv) support the PIU in the
dissemination, communication and outreach of the project, v) jointly develop a scorecard to
monitor project implementation and results, and vi) support the inter-ministerial committee on
institutional reform by providing analysis and information on VMP and related overall ecommerce regulatory and institutional bottleneck.
104. Members of the OC are i) representatives from: Government (Ministry of Planning,
Ministry of Trade, Ministry of Finance, and Information Technologies), ii) representatives
38
from WB and ITC, iii) representatives of the TSI, iv) representatives of business associations
and sectors, vi) representatives from women and youth business associations, and vii) heads of
the PIUs.
Role of the PIUs
105. The PIUs will be a light structured support team at country level responsible for incountry project implementation and day to day management. Each PIU will be headed by a
Project Coordinator (PC), to be recruited by ITC and one assistant.
106. The PIUs will be hosted by the lead TSIs:
 Jordan – Jordan Enterprise Development Corporation (JEDCO) – Ministry of Industry
and Trade.
 Morocco – Department of International Trade Relations (DRCI) - Ministry of Industry,
Commerce, Investment, Digital Economy – Delegated Minister for International Trade
 Tunisia – Center for Export Promotion (CEPEX) – Ministry of Trade and Handicrafts
107. It is expected that the project counterpart institutions will provide in-kind contributions,
such as office facilities, support to the organization of workshops, and dissemination of reports
to concerned entities. The concrete in-kind contributions will be agreed during the inception
phase of the project. The main responsibilities of the PIU are:






selection and coordination of the EAs
outreach and communication campaign
monitor and make the final decision on the selection of SMEs that may qualify for
premium accounts
overall in-country M & E and reporting to the Oversight Committee
conduct day-to-day dialogue with country partners, and
Report to ITC.
B. FINANCIAL MANAGEMENT, DISBURSEMENT AND PROCUREMENT
108. In accordance with the United Nations Financial Regulations and Rules, the project will
comply with ITC internal and external auditing, accounting and inspection requirements within
the framework of the current WB-UN agencies standard arrangements33. The arrangement
between the WB and ITC will be similar to that envisaged under Special Conditions for UNDP
contracts (Supplements and amendments to the General Terms and Conditions of Contract for
Operational Consulting Services (03/2008)).
109. Financial Assessment. A financial assessment because UN financial management
procedures are considered acceptable to the Bank.
33
See Operations Manual.
39
110. Financial reporting. The FM Section at ITC will use the institutional accounting
system, to prepare consolidated semi-annual unaudited Project Interim Financial Reports
(IFRs) and the annual audited project financial statements. These reports will be prepared on a
cash basis, in US dollars, using the standard formats that will be agreed between ITC and the
Bank. ITC will also provide any additional reporting required by the Coordination Unit of the
Transition Fund.
C. MONITORING AND EVALUATION OF RESULTS
111. A monitoring and evaluation (M&E) framework is detailed in the Annex I of this
concept note. The framework is centered on the PDO and includes indicators to assess
accomplishment against it. Primary responsibility for results monitoring will fall on the RIA
with continuous follow up from the Bank. ITC will present an M&E report to the Oversight
Committees and to the World Bank on a semiannual basis and during regular implementation
support missions. The M&E will be disaggregated to account for country results.
112. A mid-term review will be carried out to assess, draw lessons from the project and
provide an opportunity to adopt any corrective action that may be required to ensure that the
project meets its development requirements. The M&E framework controls for all the key
indicators to assess the success or failure of the project. Through the regular monitoring based
on the feedback from export advisors, the PIU and ITC will be in a position to introduce
changes during the implementation phase. The assessment on the success or failure of the
project will be done on the basis of the indicators, mainly, SMEs in VMP, volume and value of
transactions as well as achievements on institutional reform component.
113. It is proposed to conduct an impact assessment at the end of the project. The impact
assessment would aim at assessing the impact on SMEs as member of the VMPs. Selected
beneficiary SMEs would be asked to provide data on i) the number of export transactions, and
ii) their turnover, to be compared with similar SMEs (in size, sector, etc.) that did not joined
the VMPs. The selection criteria to identify the “comparable” test group would be detailed in
the terms of reference for the impact evaluation 34. The cost of the project includes an impact
evaluation subcomponent and it is expected to involve DECTI.
D. SUSTAINABILITY
114. It is expected that SMEs may want to continue getting support from the EAs for
specific exports transactions on a regular or more punctual manner. The impact evaluation
outcomes will allow each CP to decide whether the support to the SMEs should continue on a
reimbursable mode (SMEs will pay the EAs directly for their services provided) or if EAs
services must continue to be partly of fully subsidized. In addition, sustainability will also be
granted through the training of specific staff in chambers of commerce and sector associations.
This was specifically requested by many organizations during the preparation phase of the
project.
For more details on the methodology see Annex 2 – Development Economics and Trade Integration Department
(DECTI), World Bank, June 2013.
34
40
VI.
TEAM, TIMELINE AND BUDGET
Preparation Schedule and Resources
.
Preparation Schedule
Milestone
Basic
Forecast
AIS Release
11/25/2012
Concept Review
12/20/2012
Actual
12/20/2012
Auth Appr/Negs (in
principle)
Bank Approval
date of RVP
approval
.
Sector Unit Estimate of Resources Required from Preparation through
Approval
Source of Funds
Preparation Expenses
to Date (USD)
Estimate of Resource Requirements (USD)
Fixed
Variable
100,000
100,000
Bank Budget
Trust Funds
.
Team Composition
Bank Staff
Name
Title
Specialization
Unit
Laurent Gonnet
(TTL)
Senior Financial
Sector Specialist
Financial Sector
MNSFP 319004
Natsuko Obayashi
Consultant
Djibrilla Issa
Private Sector
Development
Specialist
Hassine Hedda
Finance Officer
Steve Yu Wan
Operations Analyst
Marjorie Espiritu
Program Assistant
Syed I. Ahmed
Lead Legal Counsel Legal
LEGAM
Name
Title
City
Faouzi el Mufti
Consultant
Tunisia
Sonia Sanchez
Quintela
Consultant
Tunisia
MNSED
Private Sector
Development
MNSFP
Non-Bank Staff
Office Phone
UPI
41
ANNEX 1: RESULTS FRAMEWORK
Indicators by
Component
Unit
Baseline
Cumulative Target Values
2014
2015
Frequency
2016
Data Source/
Methodology
Responsibility
for Data
Collection
Description
(Indicator Definition,
etc)
PDO LEVEL RESULTS INDICATORS:
The proposed project development objective (PDO) is to (i) increase SMEs access and exports via Virtual Market Places, and (ii) support institutional reforms to create an
enabling environment for e-commerce in targeted countries.
Indicator 1: Registered
0
120
200
300
Quarterly
Statistics VMP
PIU
Number of
SMEs with at least one
Number
platforms/
transactions conducted
export transaction
Feedback from
by SMEs registered
completed via VMPs
surveys/M&E
Value of Exports
Database
increase since VMP
access
Indicator 2. Roadmap for
Yes/No
No
No
Yes
Bi-annual
Reporting by the
PIU - ITC
Roadmap document
the reform of the enabling
Oversight
endorsed by the OC
business environment for
Committee;
e-commerce in each
Ministries of
participating country and
Trade
integrated in national
commerce strategies
Indicator 3. SMEs
0
300
600
Quarterly
Captured by
PIU-ITC
Registration involves
registered in VMPs
Number
EAs and
opening of a VMP
monitored
account and uploading
through M&E
of product and contact
Database
information.
41
42
INTERMEDIATE OUTCOMES
COMPONENT I. INSTITUTIONAL REFORM
Indicators by
Component
Unit
Baseline
Cumulative Target Values
2014
2015
2016
Frequency
Data Source/
Methodology
Responsibility
for Data
Collection
Description
(Indicator
Definition, etc)
Workshops conducted
Number
0
1
2
3
Bi-annual
Reporting PIUITC
PIU-ITC
Output Delivered –
Workshop report
Analytical Work delivered
on key e-commerce topics
Number
0
2
3
4
Bi-annual
Reporting PIU –
ITC
PIU-ITC
Output delivered –
Workshop Report
COMPONENT II. EXPORT MARKETS ACCESSED THROUGH VMPS
Indicators by
Component
Unit
Baseline
Cumulative Target Values
2014
2015
2016
Frequency
Data Source/
Methodology
Responsibility
for Data
Collection
Description
(Indicator
Definition, etc)
Export Advisors Trained
Number
0
50
75
0
Bi-annual
Reporting PIUITC
PIU/ITC
Captures number of
EAs trained on
VMPs
Export Advisors Certified
Percent
0
50%
90%
0
Quarterly
Training
provider
assesses
performance
PIU-ITC
Percent of EAs who
receive certification,
out of total number
of trained EAs; Not
all EAs may end up
qualifying; target for
2016 expects 90% to
obtain it.
42
43
Indicators by
Component
Training program for TSIs
delivered (# activities)
Unit
Number
Baseline
0
Cumulative Target Values
2014
2015
2016
1
2
3
Frequency
Data Source/
Methodology
Responsibility
for Data
Collection
Description
(Indicator
Definition, etc)
Quarterly
M&E Database
PIU-ITC
# Training sessions
Report disseminated
and workshops
evaluations
# Number of
advisory services
provided
#SMEs satisfaction
with TSIs service
delivery
Description
(Indicator
Definition, etc)
COMPONENT III. VMP PARTNERSHIPS, CERTIFICATION AND BUSINESS INTELLIGENCE
Indicators by
Component
Collaborative partnerships
with VMPs
Newsletters published by
TSIs to roll out the
Business Intelligence
Mechanism
Unit
Baseline
Cumulative Target Values
Frequency
Data Source/
Methodology
Responsibility
for Data
Collection
2014
2015
2016
0
2
4
4
Quarterly
Project
implementation
reports
PIU
0
10
25
50
Quarterly
PIU and RIA
PIU and EA
Number
Number
MoU, Letter of
Intent or other
agreement-related
documentation.
# product
(newsletter) delivery
by TSI main partner
43
44
Indicators by
Component
Premium Accounts
awarded – Certifications
Assessment body created
and operational
Unit
Baseline
0
Cumulative Target Values
2014
2015
2016
30
40
50
Frequency
Data Source/
Methodology
Responsibility
for Data
Collection
Description
(Indicator
Definition, etc)
Quarterly
Project
Implementation
Reports
M&E Database
and VMPs
Project
Implementation
Reports
ITC/PIU
Trust label
certificates
WB/ITC/PIU
Creation of
Conformity
Assessment body
Number
No
Yes/No
No
No
Yes
Quarterly
44
45
ANNEX II. ECONOMIC VALUE (FOR THE CASE OF TUNISIA)
M-1
M
M+1
M+2
M+3
M+4
M+5
M+6
M+7
M+8
M+9
M+10
M+11
M+12
M+13
M+14
M+15
M+16
M+17
M+18
M+19
M+20
M+21
M+22
M+23
M+24
M+25
M+26
M+27
M+28
M+29
M+30
M+31
M+32
M+33
M+34
M+35
Project
Seminar
National Project Oversight Committee
Training of
trainers
Reach out to federation / association
members
ITC
Federations / Associations
SME/EC/institution Training
Trainers (hired by ITC)
Trade Support Institution (designated
by the NPSC)
Indentification & Seletion of the Eligible SMEs
SMEs with the support of Export
Consultants
VMP integration of the Eligible SMEs
Export Consultants
Coaching
Communication Agency (hired by ITC)
Media promotion campaign
Certifying Agency
Training
Delivery of certificates
Assumptions
Project Activity Indicators
% SME recording
New SMEs in VMPs
SMEs in VMPs (cumulated)
SME in need of coaching (cumulated)
Export Consultants
Export Consulant deeds (coaching)
Wage / consultant / month
Add. VMP gen. revenus
SMEs revenus (cumulated)
#
$
%
$
Revenus
VMP revenus generated
%
Costs
PIU
ToT
Training
Promotion campaign
Gold membership
Integration cost
Export Consulant deeds
Annual
100%
#
50%
0.2
3
control
35,000.00
$
$
$
%
$
$
20%
60
60
30
300
20,000
50.00%
500
50
Total revenu (36 months)
Total future revenus
Launching costs (36 months)
Reccurent costs (36 months)
Reccurent future costs (coatching only)
4,706,625
12,600,000
250,000
3,131,250
-
Econ Value of the project
Costs
1 USD spent give a return (revenu) of
13,925,375
3,381,250
4.1 USD
15%
45
105
52.5
2,100,000
3,675,000
15%
45
150
75
15
450
1,500
0.0%
5,250,000
10%
30
180
90
18
540
1,500
0.0%
6,300,000
10%
30
210
105
21
630
1,500
0.0%
7,350,000
10%
30
240
120
24
720
1,500
0.5%
8,400,000
10%
30
270
135
27
810
1,500
0.5%
9,450,000
5%
15
285
142.5
28.5
855
1,500
0.5%
9,975,000
5%
15
300
150
30
900
1,500
0.5%
10,500,000
0
300
150
30
900
1,500
0.5%
10,500,000
0
300
150
30
900
1,500
0.5%
10,500,000
0
300
150
30
900
1,500
0.5%
10,500,000
300
150
30
900
1,500
1.0%
10,500,000
300
150
30
900
1,500
1.0%
10,500,000
300
150
30
900
1,500
1.0%
10,500,000
300
150
30
900
1,500
1.5%
10,500,000
300
150
30
900
1,500
1.5%
10,500,000
300
150
30
900
1,500
1.5%
10,500,000
300
150
30
900
1,500
2.0%
10,500,000
300
150
30
900
1,500
2.0%
10,500,000
300
150
30
900
1,500
2.0%
10,500,000
300
150
30
900
1,500
2.0%
10,500,000
300
150
30
900
1,500
2.0%
10,500,000
300
150
30
900
1,500
2.0%
10,500,000
300
150
30
900
1,500
2.0%
10,500,000
300
150
30
900
1,500
2.0%
10,500,000
300
150
30
900
1,500
2.0%
10,500,000
300
150
30
900
1,500
2.0%
10,500,000
300
150
30
900
1,500
2.0%
10,500,000
300
150
30
900
1,500
2.0%
10,500,000
300
150
30
900
1,500
2.0%
10,500,000
300
150
30
900
1,500
2.0%
10,500,000
300
150
30
900
1,500
2.0%
10,500,000
300
150
30
900
1,500
2.0%
10,500,000
300
150
30
900
1,500
2.0%
10,500,000
15%
-
-
-
-
-
-
42,000
42,000
47,250
47,250
49,875
49,875
52,500
52,500
52,500
52,500
52,500
52,500
52,500
52,500
105,000
105,000
105,000
105,000
105,000
105,000
157,500
157,500
157,500
157,500
157,500
157,500
210,000
210,000
210,000
210,000
210,000
210,000
210,000
210,000
210,000
210,000
210,000
210,000
210,000
210,000
210,000
210,000
210,000
210,000
210,000
210,000
210,000
210,000
210,000
210,000
210,000
210,000
210,000
210,000
210,000
210,000
210,000
210,000
210,000
210,000
26,000
6,000
20,000
151,000
6,000
121,000
6,000
118,500
6,000
113,000
6,000
117,500
6,000
122,000
6,000
126,500
6,000
98,750
6,000
101,000
6,000
71,000
6,000
71,000
6,000
71,000
6,000
141,000
6,000
118,500
6,000
118,500
6,000
96,000
6,000
96,000
6,000
96,000
6,000
96,000
6,000
73,500
6,000
73,500
6,000
51,000
6,000
51,000
6,000
51,000
6,000
141,000
6,000
118,500
6,000
118,500
6,000
96,000
6,000
96,000
6,000
96,000
6,000
96,000
6,000
73,500
6,000
73,500
6,000
51,000
6,000
51,000
6,000
25,000
25,000
90,000
30,000
-
67,500
22,500
-
67,500
22,500
22,500
20,000
45,000
15,000
27,000
20,000
45,000
15,000
31,500
20,000
45,000
15,000
36,000
20,000
45,000
15,000
40,500
20,000
22,500
7,500
42,750
20,000
22,500
7,500
45,000
20,000
45,000
20,000
45,000
20,000
45,000
90,000
45,000
67,500
45,000
67,500
45,000
45,000
45,000
45,000
45,000
45,000
45,000
45,000
22,500
22,500
-
-
-
90,000
67,500
67,500
45,000
45,000
45,000
45,000
22,500
22,500
-
-
45,000
45,000
45,000
45,000
45,000
45,000
45,000
45,000
45,000
45,000
45,000
45,000
45,000
45,000
45,000
45,000
45,000
50%
30%
20%
100%
700,000
200,000
50,000
350,000
60,000
10,000
420,000
Industry
Service
Handicraft
Total
Net Econ Value
1,890,000
12,600,000
45
46
ANNEX III. WORKFLOW AND ACTORS
46
47
ANNEX 3: IMPLEMENTATION ARRANGEMENTS
Jordan, Morocco, Tunisia: Export Development through Virtual Market Places
A.
Project Institutional and Implementation Arrangements
1. ITC will implement directly and with the support of country PIUs project activities
with oversight provided by the Oversight Committee and the World Bank. The selected
Regional Implementation Agency is the International Trade Center, a specialized trade
agency of the United Nations (ITC). ITC will be hired following WB processes on a single
source basis given their expertise. ITC strategic objectives are:





Building awareness and improving the availability and use of trade intelligence
Strengthening TSIs
Enhancing policies for the benefit of exporting enterprises
Building the export capacity of enterprises to respond to market opportunities
Mainstream inclusiveness and sustainability into trade promotion and export
development policies.
In addition to the complementarities with the WB work, ITC has also a broad knowledge and
experience of Morocco, Tunisia and Libya and have already designed and implemented
projects with the stakeholders that the projects is engaging.
ITC is in an ideal position to support project’s implementation.
ITC will:
 manage all funds and procurement for activities
 open a Designated Account into which funds from the World Bank will be deposited
 organize regular steering committee meetings to provide operational guidance
 appoint staff and recruit consultants where necessary for project implementation
(PIU) , Virtual Market Places experts, Export Advisors
 ITC will coordinate the communication campaign and outreach
 maintain and, where necessary, update the Operations Manual
 monitor implementation with the support of the PIU
 responsible for all the financial aspects of the project
 ensure proper financial management of funds and compliance with World Bank’s
requirements when applicable;
 ensure proper and appropriate procurement procedures
 submit regular reports and disseminate findings
 organize workshops
 provide business intelligence
 set up partnerships with VMPs with the participation of the WB.
47
48
2. The Oversight Committee (OC) will ensure the good governance, timely delivery and
provide the adequate reporting to the concerned government agencies, the WB and the RIA.
The role of the OCs consists of:







oversight and approve major directions and changes in the program
discuss and decide on any proposal/issues raised by the PIU
facilitate the dialogue across institutions and organizations.
support the PIU in the dissemination, communication and outreach of the project.
jointly develop a scorecard to monitor project implementation and results.
support the inter-ministerial committee on institutional reform by providing analysis
and information on VMP and related overall e-commerce regulatory and institutional
bottleneck and,
other relevant aspects of the project.
Members of the OC are:






representatives from: Government (Ministry of Planning, Ministry of Trade, Ministry
of Finance, Information Technologies).
representatives from WB and ITC.
representatives of the TSI.
representatives of business associations and sectors.
representatives from women and youth business associations.
project Coordinator (Country PIU).
The PIU will be a light structure (1 person paid by the project, the assistant to be
provided by the host institution) hosted by the designated agency in each of the
countries. The PIU will coordinate level the implementation of the project on a day-to-day
basis under the regular supervision of ITC. The PIU will be composed of one senior and one
junior staff whose main task will be to liaise with EAs, OC and ITC.
The responsibilities of the PIU are:








monitor the work of the Export Advisors
organize the outreach campaign
ensure adequate communication between EAs and SMEs
provide support to Chambers of Commerce, sector associations and civil society
organizations engaged in the project
report to ITC
fill the M&E framework and monitor the evolution on a quarterly basis
ensure that all financial aspects (payments, expenses) are adequately reported to ITC
to ensure timely payment of consultants and services by ITC
make the necessary logistical arrangements for the training events
48
49
B.
Experts
Two main types of experts will be recruited by the project.
C.

An expert on Virtual Market Places – Responsible for the delivering of training to
the main counterparts, export advisors and partners: TSI, chambers of commerce and
sectors associations and consultants.

Export Advisors – EAs will be hired using current networks of export advisors
already trained under previous technical assistance activities provided by donors.
Their role is fundamental in coaching the SMEs throughout the process from entering
to VMPs to transactions. The relation between the EA and the SMEs is fundamental
for the success of the project. An adequate incentive mechanism is been put in place
which will reward EAs based on performance. EAs will be assigned taking into
consideration sector expertise. The PIU will organize regular meetings of the EAs to
assess the progress in their activities.
Trade Support Institutions
The project will engage different types of country partners with the support of the PIU and
Export Advisors. The engagement of these TSIs will be done in a systematic manner and they
will be regularly informed of activities, training and workshops. The mission team met with
many of these organizations which show high engagement with the objectives of the project.
Main Trade Support Institution Partner – Public Institution per country responsible for of
trade and trade promotion. The PIU is based in the main TSI.
Other TSIs: Other TSIs include chambers of commerce, professional and business
associations including sector and even product specialized organizations. All these
organizations support very actively their members providing export support services and
information as well as a platform to engage in dialogue with the authorities. Using these
networks will facilitate the dissemination of information, the access to SMEs in remote areas
and a better qualitative understanding of the potential of SMEs in each of the sectors.
Besides the main partner institution, where the PIU will be hosted, the project will benefit
from the engagement with chambers of commerce, business and professional associations,
universities, business incubators and others. By doing so it will indirectly foster the
introduction of e-commerce and IT-related matters upstream in the educational curricula.
Many of them were engaged during the mission. This bottom-up approach will also facilitate
the dialogue with the country task forces in charge of the policy reform component.
Civil Society Organizations: CSOs around women, young entrepreneurs are also part of
network of actors that will be engaged in and support the project.
D.
Partnership Arrangements: Virtual Market Places companies
49
50
The project envisages awarding certain SMEs premium accounts in a limited number of
VMPs. It also envisages the access to data regarding the dynamics of SMEs per sector and
country within VMPs. Therefore, the WB and RIA have engaged in dialogue with some
VMPs to engage them throughout the process and obtain some partial sponsorship of the
premium accounts for SMEs with high export potential.
E.
Operations Manual
The Operations Manual of the project describes the guidelines for implementing project
components and has been adopted by ITC and will be adopted by the PIUs once they are
created. The OM specifies guidelines for: (i) roles and responsibilities of ITC and the PIU,
including supervision and reporting arrangements; (ii) role of the Oversight Committee (iii)
procurement; (iv) financial management: and (v) project monitoring and evaluation.
50