LocationsBy Nicoletta Ghisu, Youth Economic Empowerment Specialist and Pernille Jægerfelt Mouritsen, Green Growth Analyst
Beyond barriers: how access to finance can unleash SMEs’ potential in the Arab States region
August 28, 2025
Small and medium-sized enterprises (SMEs) are critical drivers of economic growth, job creation, and innovation in the Arab States region. Yet many face persistent barriers to accessing finance, limiting their ability to scale, innovate, and contribute to inclusive and sustainable development
Global wealth stands at US$463.6 trillion. Just 1 percent of this - approximately US$5.4 –6.4 trillion - would be sufficient to achieve all 17 Sustainable Development Goals (SDGs)1: eradicate poverty, protect the planet, and secure peace and prosperity for all. 2. While financial resources exist, their distribution remains uneven, and access to finance continues to constrain SMEs in several countries in the Arab region.
While the regions’ businesses brim with innovation, a remarkably strong will to expand, and a drive to create decent jobs and impactful products, they face significant challenges when it comes to receiving investments. Nevertheless, some initiatives and SMEs demonstrate that a challenging context does not have to determine the future of a business.
“Supporting and empowering SMEs is a key component of any inclusive growth agenda, especially in the Arab region where micro, small and medium sized enterprises make up an estimated 96 percent of all businesses. Their prevalence underscores just how fundamental they are to building inclusive and sustainable economic growth. SMEs not only drive job creation and innovation but also promote social inclusion by hiring vulnerable groups- and help diversify economies.” Mary Kawar, Regional Hub Manager, Regional Bureau for Arab States
Unlocking SME Growth and Employment Through the Green Growth and Jobs Accelerator
The Green Growth and Jobs Accelerator (GGJA) is a UNDP initiative that demonstrates how targeted support can help SMEs overcome barriers to financing, even in contexts of geopolitical volatility and economic instability. With the right capacity building, mentoring, and access to external experts and networks, growth-ready SME can secure investments and expand their businesses.
Funded by the Danish-Arab Partnership Programme (DAPP) of the Ministry of Foreign Affairs of Denmark, the GGJA is part of UNDP’s Arab States’ Bureau Youth Empowerment, Engagement and Knowledge Portfolio. Launched in 2024, the accelerator supports established entrepreneurs and SMEs in Egypt, Jordan, Morocco, Tunisia, and from 2026 also Algeria, in accelerating business solutions and green growth of their businesses to create decent jobs for women and youth – and provide access to finance.
Financial Ecosystem and Unemployment in the Arab States Region
Small and medium-sized enterprises (SMEs) are vital to the Arab States region’s economic resilience, job creation, and green growth ambitions. They form the backbone of the region’s economy by contributing up to 40 percent of GDP3 and accounting for more than a 96 percent of all businesses, while serving as the primary driver of job creation. In Morocco, for example, the OECD Economic Survey 2024 for Morocco highlights that: “SMEs account for the vast majority of businesses in Morocco and play a key role in job creation and economic diversification"4. Similarly in Egypt, Tunisia, and Jordan, World Bank data shows that the majority of jobs are created by MSMEs, which employ around 71 percent of private sector employees, with SMEs accounting for 32.7 percent and microenterprises 38.7 percent”5.
“Every day, we witness the drive and innovation of SMEs in Jordan, especially those working on sustainable solutions. Yet, despite their strong potential, access to finance remains one of their biggest barriers. Many of the entrepreneurs supported through the Green Growth and Jobs Accelerator have viable green business models with the potential to scale and create decent jobs. However, the financing ecosystem often remains risk-averse, and few financial products are tailored to early-stage or green-focused SMEs. Bridging this gap is not just critical for their growth, it’s essential for supporting a more inclusive, climate-resilient economy in Jordan and the region.” Aseel Kubbaj, Project Manager of GGJAP in Jordan, UNDP Jordan Country Office
Despite their critical role in job creation, economic diversification, and inclusive growth, SMEs continue to face significant challenges in accessing finance and navigating complex regulatory environments6- both barriers to growth.
The barriers SMEs face in accessing finance do not only impact business owners, but also exacerbate wider challenges to decent job creation in the region. These include skills mismatch, limited competition, weak integration into global value chains and high informality. Across Egypt, Jordan, Morocco and Tunisia, unemployment remains a persistent and acute challenge, particularly among youth where rates are often two to three times higher the national averages: high: 18.4 percent in Egypt, 41.4 percent in Jordan, 21.9 percent in Morocco, and 39 percent in Tunisia7. Gender disparities are equally pronounced, with young women facing unemployment rates as high as 46.4 percent in Egypt, 50.2 percent in Jordan, 22.1 percent in Morocco, and 36.2 percent in Tunisia8, reflecting deep structural inequalities in the labor market. Informality further compounds these challenges with 60-90 percent of all employed youth working without a contract or benefits such as social insurance or paid leave. These rates are often twice as high as those for adults (25 and older) reflecting worsening labor market outcomes over time9. As the private sector is concurrently facing significant barriers to growth, this makes it unable to generate sufficient quality jobs for rapidly growing and youthful populations.
The SME Finance Gap
Financial inclusion in the Arab States region – measured by both access to and use of financial services by SMEs – trails behind other regions. Even when compared with countries of similar income levels, Arab economies underperform in providing SMEs with adequate financial access10. Comparing the Arab States region to Asia and Pacific, Europe, or Latin America and the Caribbean, the SME lending compared to the total bank lending lacks demonstrably, as it also evident in Figure 2, where both Latin America and the Caribbean is well above and Asia and Pacific boast double the amount of SME lending compared to the Arab States region.
The funding gap is particularly stark given the critical role that SMEs play in the region. Yet, only 17 percent of Jordanian SMEs have a bank loan or line of credit, and the share is even lower in Tunisia at just 15 percent- despite SMEs being essential for job creation and income generation in both countries. These challenges are also observed in the results from the Green Growth and Jobs Accelerator where providing access to finance is one of the major challenges for the project. Despite the Accelerator’s dedicated focus on upskilling the SME’s understanding of the financial ecosystem and providing focused pitch trainings – helping them refine their pitch decks, presentation skills, and investor engagement - securing access to finance remains a persistent challenge. To address this challenge, the Accelerator also integrates dedicated Impact Measurement and Management (IMM) sessions and clinics into its core offering. These activities equip SMEs with practical tools to measure, manage, and transparently report their social and environmental impact in line with globally recognized SDG Impact Standards. By embedding IMM into the accelerator process, the project helps SMEs to better articulate their value to investors and stakeholders, demonstrate alignment with the SDGs, and bolster their credibility when seeking external finance. This focus on impact not only responds to the growing demands of impact-focused investors, but also enhances SMEs’ strategic decision-making, strengthens business strategy, and ultimately hopes to increase their chances of securing vital finance. Through tailored coaching and hands-on workshops, the Accelerator empowers businesses to transform impact data into a compelling narrative, aiming to make them more investment-ready.
An integral part of the Accelerator is investor mixers where SMEs meet with potential finance providers to present their business and discuss financing opportunities.
Although SMEs graduating from the GGJA’s first cohort in November 2024 collectively secured a total of 11.1 million USD in total access to finance, this figure may sound more impactful than it truly is. Of the cohort’s 80 SMEs, only 20 (25 percent) obtained any financing, meaning that 75 percent did not secure access to funds. Moreover, one of the most successful SMEs received USD 8.45 million alone, leaving just USD 2.65 million to be shared among the remaining 19 SMEs. Achieving even these results required significant efforts to engage the regional financial ecosystem and included dialogues with 115 capital providers, ranging from angel investors, commercial banks, venture funds, and development finance institutions. From these dialogues, only between 10 - 30 percent resulted in actual investments. These figures underscore the broader challenges SMEs face in accessing finance in the region and highlight the importance of engaging a wide and diverse pool of capital providers to improve investment outcomes.
“We had the opportunity to participate in Shark Tank Egypt, thanks to the support of UNDP’s Accelerator, which became a turning point for us. Securing a deal with all five sharks gave us not only funding but access to critical resources that helped fast-track our goals. We're now on track to reach our 2026 milestones, two years ahead of schedule." Essam Shaaban, Founder, Al-Fares, Participant in UNDP’s Green Growth and Jobs Accelerator
Who Gets Funded?
Patterns of SME financing in the Arab States region reflect the broader unemployment and equity challenges. Diving deeper into the statistics of the access to finance gained by the SMEs in the first cohort of the Green Growth and Jobs Accelerator reveals both progress and persistent disparities among different groups of entrepreneurs. While among this cohort, women-led SMEs account for 44 percent and youth-led SMEs for 56 percent of those securing finance - suggesting a relatively balanced outcome. However, equity remains uneven across specific financing instruments. Only 12.5 percent of private equity recipients are women-led SMEs, and 37.5 percent are youth-led, indicating that these groups still face significant barriers in attracting private investment. In contrast, grant financing is distributed equally, with women- and male-led SMEs each receiving 50 percent, and half of all grant recipients being youth-led. For awards, the picture is more favorable, with 67 percent of recipients being women-led SMEs and 83 percent being youth-led. For loans, although the data set is small, women and youth each make up 50 percent of recipients. Encouragingly, the project strongly supports the region’s green transition: 84 percent of all SMEs gaining access to finance are green businesses11, rising to 87.5 percent among those securing private equity. The trend is even more pronounced for loans, where 100 percent of recipients are green SMEs, and for awards, where 83 percent of recipients are green businesses. These figures highlight both the challenges and the opportunities in advancing inclusive, youth- and women-driven, and environmentally sustainable entrepreneurship in the Arab States region.
Creating Jobs to Improve Lives
At the heart of the Green Growth and Jobs Accelerator is the mission to generate meaningful employment opportunities for women and youth – the groups disproportionately affected by high unemployment and underrepresentation in the Arab labor market. “Meaningful employment” refers to decent jobs that meet UNDP standards of decent work, ensuring fair and equal wages, safe working conditions, and social protection.
Enhancing access to finance is not just a matter of business growth; it is a critical enabler for SMEs to expand operations, innovate, and create jobs that can transform lives and communities. Without adequate financing, even the most promising women- and youth-led enterprises are unable to scale, invest in new technologies, or reach new markets.
I have participated in many acceleration programs and the Green Growth and Jobs Accelerator is one of the most remarkable. I particularly benefited from the program’s investment readiness support which was one of the most important milestones for Wildyness. Thanks to the know-how shared in the program, we have become investment-ready and got the chance to receive funding opportunities such as the Spark program. Although the funding has not started yet, the acceptance itself is a great step forward, all thanks to UNDP and the Accelerator team.”
Achraf Aouadi, Founder, Wildyness, Participant in UNDP’s Green Growth and Jobs Accelerator
By bridging the finance gap and equipping SMEs with the tools and networks needed to attract investment, the Accelerator directly addresses one of the region’s most persistent barriers to inclusive growth. This approach ensures that the benefits of green growth and entrepreneurship are accessible to all, helping to lay the groundwork for a more equitable and resilient future in Algeria, Egypt, Jordan, Morocco, and Tunisia.
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