Connecting MSMEs to international markets to create jobs in North Africa

The challenge

Young people in North Africa are confronted with high rates of unemployment as their countries struggle to generate the economic growth needed to employ a demographic bulge of labour-market entrants. Improving business competitiveness in labour-intensive sectors and connecting micro-, small, and medium-sized enterprises (MSMEs) to export opportunities would support job creation and inclusive growth. At the same time it would reduce incentives for irregular migration.

North African countries have large and established diaspora populations living and working in lucrative potential markets, notably Europe. While the development policy community has tended to focus on financial remittances, there is also scope – albeit underexploited – for diaspora communities to share skills and help build transnational business networks.

Linking up with potential cross-border customers and suppliers is not straightforward for MSMEs, for reasons ranging from poor access to finance to limited management expertise. For handicraft artisans in North Africa, even operating in domestic markets can be difficult. They frequently do not know how to price their products appropriately and, because they typically lack access to markets, are vulnerable to intermediaries who capture the bulk of the gains from their work.

The response

ITC is working with MSMEs in the handicrafts sector in Egypt, Morocco and Tunisia to help them enhance business skills and connect to foreign buyers. Artisans and entrepreneurs were trained to price products, standardize quality, improve packaging and meet market trends for the colours and materials that buyers would be seeking.

In Tunisia, 30 prospective exporters worked with ITC to prepare for major European trade fairs. In Morocco, 20 companies sought to learn more about export markets, with special emphasis on Spain. In Egypt, ITC supported 20 young designers and artisans, 80% of them women, to collaborate on home décor concepts and develop homeware products to offer to prospective buyers.

The training activities involved entrepreneurs from the North African diaspora in Paris. The purpose of doing so was two-fold: to leverage their market knowledge and skills for participants’ benefit and to lay the groundwork for cross-border business networks.

ITC supported the training work by facilitating the participation of 44 MSMEs – 17 from Morocco, 20 from Tunisia and seven from Egypt – at the Maison et Objet Trade Fair, a major furniture industry trade fair in Paris, and the Ambiente Trade Fair in Frankfurt. At both, ITC arranged business-to-business (B2B) sessions for the MSMEs with prospective buyers.

The results

The project has resulted in €373,000 worth of total sales for the Moroccan and Tunisian MSMEs – already 50% more than the project’s total funding – with promising leads for future transactions. The bulk of these sales occurred through the B2Bs organized during the trade fairs in Paris in September 2017 and Frankfurt in February 2018.

Tomorrowland, a Japanese retailer of high-end clothes, accessories and home décor, placed a test order of 11 carpets from Centre 3T after meeting personnel from the Tunisian MSME at the Paris trade fair.

‘We love their handmade product with natural colours,’ said Akiko Ono, Tomorrowland’s Paris representative. The company, which plans to sell the carpets in their shops, was ‘delighted to discover that artisans are receiving new know-how through ITC,’ she said.

Other buyers at the Paris B2B meetings, including Le Club 55, Minelli, Salt and Lemon, and Caravane, also expressed interest in the products sold by the MSMEs in the ITC-supported delegation. Minelli, a French shoe and accessory brand, ordered 500 baskets from a Moroccan company. Salt and Lemon, a home-décor and accessory shop based in the French territory of Reunion, placed an order for 2,000 foutas, a type of thin, patterned towel, from a Tunisian company. Tunisian firms also met and initiated deals with buyers from Lebanon, Luxembourg and the United States.

At Ambiente, Tunisian MSMEs confirmed sales of €43,000, with additional transactions worth €150,000 under negotiation. Interested buyers included Nature & Découverte, a French retailer, and Kusiner, a Danish carpet maker, for products including foutas, olive-wood table sets and interior decorative items.

The training activities have bolstered participants’ business and marketing skills while introducing them to new markets – and to each other.

‘Thanks to the training provided by ITC, artisans can now price their products appropriately,’ said Sonia Latrous, director of marketing at the National Office of Tunisian Handicraft, who supported the workshop and shared insights on using e-commerce to reach markets. ‘They also learned about packaging and labelling, and meeting market trends and quality requirements.’

Many Egyptian participants have banded together under the label ‘Artisans from Egypt’ and are working to market their joint catalogue of home-décor and home-textile products to international buyers. The catalogue was presented to buyers in Spain, France and Germany through B2Bs organized by the ITC project team. The artisans’ work has attracted the attention and support of the Bank of Alexandria, or Alexbank, a major Egyptian bank, that has sponsored the travel of seven artisans to meet prospective buyers in Europe.

‘Alexbank is proud to have started supporting a group of young promising Egyptian designers in the ambit of a plan aiming at enhancing the Egyptian handicrafts sector by widening their chances to access the export markets,’ said Laila Hosny, who heads the bank’s corporate social responsibility and sustainable development office. She indicated that the bank looked forward to offering its trade finance expertise to the designers.

The future

ITC is finalizing a Handicrafts Export Guide to provide artisans with practical information about exporting their products.

A capacity-building workshop is scheduled in Algiers ahead of the project’s March 2018 conclusion.

ITC is developing follow-up projects in Algeria, Egypt, Morocco and Tunisia that will also use B2B meetings and capacity building to stimulate trade deals and job creation.