Coming up with money to invest has always been an obstacle to setting up joint ventures, especially for small businesses. But in the Mediterranean region, this may become a problem of the past, thanks to a new network which plans to provide financial solutions, mainly to small and medium size enterprises (SMEs).
The service will be channeled through the Mediterranean Business Network (MED-BN), a regional economic system which seeks to link firms from across the region in a network to promote growth and multilateral cooperation among potential beneficiaries.
Participants in the four-month-old network include some of the largest European chambers of commerce, such as those of Milan, Lyon, Barcelona and Athens, which together represent around one million firms.
In terms of the Arab world, chambers of commerce and industry of Amman, Palestine, Beirut, Rabat, Tunis and Egypt are on board, while regional players like chambers in Malta, Cyprus, Istanbul and Israel are also taking part.
Through the network's finance project, defined as a top priority in its meeting in Milan last month, SMEs will be helped to correctly define their financial needs and obtain adequate resources.
All sectors will be considered for assistance, according to a network statement obtained by the Jordan Times, but emphasis will be put on high-return projects, mainly investments in the high-tech sector.
In order to help the project reach its goals, the network has outlined four bodies - a privately-organized fund, the network of organizations, banks and other financial institutions, and the fund partners - which will be involved in the scheme.
The network has decided to create a privately-organized fund to distribute financial resources to SMEs because their efforts extend to "areas characterized by a very low capital availability." As a minor shareholder in future investments, the fund will have the right to select entrepreneurial ventures based on projected rates of return.
The planned $50 million fund will act as a venture capitalist, with an average investment length of four years.
The fund will maintain the right to insert new managerial personnel in investment projects it takes part in to ensure that planned growth objectives are reached.
Fund partners, according to the statement, will be multinational banks operating in the Mediterranean basin. The World Bank Group, European financial investment companies, as well as international commercial banks are potential participants.
The organizers believe the presence of the World Bank would be vital, since it would be an international guarantor that could lure private banks to become partners.
The MED-BN members will be in charge of promoting the fund and stimulating the demand for resources by encouraging joint ventures.
In other words, the network aims to "propose itself as a reference point, or a site where all financial information for businesses that intend to implement joint ventures investments could be found," says the statement.
The network will also help the SMEs in preparing business plans, and identifying the institutions to which they should address their requests.
Loan guarantee organizations could boost the financing project by making it easier for SMEs to obtain loans from banking institutions.
The network has already held meetings with the International Finance Corporation, part of the World Bank Group, which has shown interest in the establishment of a financial tool.
At the end of its July meeting, participants proposed that the Milan Chamber of Commerce be entrusted with the finance project.
The committee is expected to search for interested banks and possible fund managers, and define the characteristics of the joint ventures in order to realize the project.
MED-BN has three other projects in what it considers high-priority areas: Finance, e- commerce and training. ― ( Jordan Times )
By Rana Awwad
© 2000 Mena Report (www.menareport.com)
