Israel

MSME development policies and programmes in Israel

Small and medium enterprises (SMEs) constitute the overwhelming majority of companies in Israel. As of 2016, there were 541 722 businesses in Israel and 99.5% of them were SMEs which employed up to 100 workers each *1. 95% of bank credit to SMEs is provided by five major banking groups. The government has adopted a series of measures for enhancing competition in the banking industry and lowering SME financing costs. A Credit Data Law improves data accessibility with a new central database, a Law raises competition in credit card markets, and a state-guaranteed SME fund was set up to expand credits available, a Law regulates P2P lending, and the enacted crowd-financing regulations for R&D firms and SMEs.*2 The Ministry of Industry and Trade, established The Israel Small and Medium Enterprises Authority in partnership with Government ministries, economic organizations and the public to promote and implement policies, to coordinate all of the institutions and bodies engaged in encouraging small and medium-sized businesses, to establish local, regional and professional support centres for entrepreneurs and businessmen and to support and guide them in their activities and to initiate the establishment of funds and other financial instruments to assist these businesses.*3

MSMEs supporting measures to mitigate the COVID-19 pandemic crisis

Early February 2020, the Government took measures for economic support to the real economy while the CBI supported the system liquidity (bond purchase and reduced regulatory requirements). Israel package included extending tax deadlines and relief, extension of licenses, flexibility in the employment market, grants for Small Business fixed expenses, payments of public arrears to SMEs and promoting local procurement. Early March, the Finance Ministry increased the special SME loan facility by NIS6 bn for the extension of working capital loans, banks committing to nine days approval process. In March, special aid grant for self-employed and extended unemployment benefits for the youth were enacted. Since April 2020, the Government is considering “exit” measures.*4 READ MORE

Small Business Act Coordinator and MED MSMEs’ working group

The National Small Business Act coordinator – SBAC in Israel is Mr Nir ben Aharon, Head of Policy and Research Unit of the Small and Medium Size Business Agency at the Ministry of Industry, Trade and Labor. Mr Ben Aharon is in the process of forming the national working groups for both access to finance and SME internationalization to coordinate in the implementation of the MED MSMEs programme activities.

The Working Groups (WG)

In order to ensure that the regional level activities integrate the national priorities on the two specific topics and translate into impact at the country level, the Programme implementation will rely on the establishment - under the coordination of the SBA Coordinators - of at least two working groups in each of the partner countries, one for MSME Access to Finance and one for MSME Internationalisation.

These working groups are formed of relevant policy makers, regulatory bodies, public agencies, representatives of the private sector and – when possible – representatives of the national legislative body; the EU Delegation representatives and relevant development partners will be invited to participate to the working sessions. The working groups will not exceed 15 members of which at least one third will be women.

The working groups are responsible for:

Providing a consultative input on the technical deliverables.

Assisting in the production of the national roadmaps for implementing the tools developed at regional level.

Facilitating the collection of relevant programme information at national level.

Facilitating the mobilization of stakeholders, programmes, resources and instruments that can gear up the implementation of the road maps at country level.

Resources

EU delegation

*1 https://www.oecd-ilibrary.org/industry-and-services/financing-smes-and-entrepreneurs-2019_85fa989e-en
*2 https://www.oecd-ilibrary.org/sites/c6018ad5-en/index.html?itemId=/content/component/c6018ad5-en
*3 http://www.israelbusiness.org.il/startingyourbusiness/assistingcenters/smallbusiness
*4 https://www.imf.org/en/Topics/imf-and-covid19/Policy-Responses-to-COVID-19