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2010 MENA Private Equity Association Annual Report

19 July 2011

FOREWORD

The declaration of the G8 of May 2011 pertaining to the Arab Spring states in its first article: «The changes under way in the Middle East and North Africa (MENA) are historic and have the potential to open the door to the kind of transformation that occurred in Central and Eastern Europe after the fall of the Berlin Wall. The aspiration of people for freedom, human rights, democracy, job opportunities, empowerment and dignity, has led them to take control of their own destinies in a growing number of countries in the region. It resonates with and reinforces our common values ».

Indeed, the wind of change that will embrace the region in the months and years ahead will be momentous and far-reaching. Those countries that have engaged in democratic transitions must resolutely work out economic and social programs that will address the pressing challenges facing their young population viz. unemployment, poverty, and inequitable distribution of income. The expectations of their youth are high, and unless a level of prosperity, or at least anticipation thereof, is achieved the prospect for democratic transition and consolidation may be in jeopardy. In order to accelerate economic growth they must resolutely embark on ambitious investment programs particularly in the labour intensive sectors of the economy. They must also work out intelligent schemes to promote private initiatives and professionalize the business environment in their respective markets. One of the virtues of democracy, if properly pursued, is that it promotes enhanced conditions for private entrepreneurship. In particular, Private Equity can and should play a crucial role in the MENA region as it contributes in the professionalization of the investment climate, the development of SMEs and the acceleration of job creation.

Bar a few exceptions Private Equity remains nascent in the MENA region. The industry remains, by and large, in its infancy throughout the region. The potential is therefore tremendous not only in the traditional areas of private equity such as venture, development or transmission capital but also in other segments of professional investments (e.g. Industry-specific investment funds).

The promotion of Private Equity in MENA will require setting up proper regulatory, legal, judicial and fiscal frameworks while enhancing human capital. It stands a better chance to prosper in those markets where stock exchanges are strong so as to facilitate the formulation and execution of exit strategies. With the right environment and support, private equity and venture capital can help facilitate a flourishing business environment, and will also ultimately contribute in the emergence of a new generation of highly professional and motivated entrepreneurs in the country.

Jaloul Ayed

Minister of Finance - Tunisia

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