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[SharonB]

FWIW: Need to set up special fund to finance SMEs
Senior Business Reporter
Underlining the need for nipping the financial shortfall challenge faced by fledgling yet promising business ventures at the policy level itself, a top banker suggested that the Middle East and North Africa (MENA) region nations could create special funds from their Sovereign Investment Funds towards financing new small and medium business entities.
“The Special Fund could be managed by a bank specialised in financing Information and Communication Technology and other potential business ideas. We need to create specialised windows within financial institutions that are willing to take a little more risk in financing start-up businesses,” said Torek Farhadi, Head, Investment Promotion Technical Assistance Programme, Islamic Development Bank Group yesterday.
In a keynote presentation on ‘Advancing innovation and entrepreneurship in the Middle East and North Africa” at the ongoing fifth MENA Inc workshop, he also floated the idea of a network of angel investors who could earmark special resources under the management of specialised underwriters, dedicating a portion of their investment resources to risk capital. “Ideally, a combination of both public and private funds can ensure that the convening powers of public institutions are also leveraged.”
He said traditional commercial banks invariably shied away from financing business ventures that had not proven themselves. Against this backdrop, specialised lending and financial teams, which can understand the potential of a product offered by innovative start-ups, were imperative.
Research showed that a large percentage of new businesses never made it beyond the first or second year of operations. “New businesses are very fragile and sheltering them in a business incubator gives them the strength to sail through the risky initial period and expand their businesses,” he pointed out.

http://www.bahraintribune.com/ArticleDetail.asp?CategoryId=0&ArticleId=175720