DEAD SEA — Experts on Thursday pointed to inadequate funding as the main cause inhibiting the growth of Jordanian small businesses into larger ventures.
Describing small-and medium-sized enterprises (SMEs) in the Kingdom as a “static” sector despite its huge magnitude, they lamented the “inflexibility” hindering its development.
“The sector is rigid. Small businesses remain small due to the lack of funding,” Omar Razzaz, chairman of the King Abdullah II Fund for Development, told a conference on the role of the private sector in supporting the economy.
Speaking at the conference entitled “Private Sector Led-Growth: promoting entrepreneurship, MSME development and job creation in Jordan”, he stressed the need a “structural” unemployment problem indicating that economic growth in Jordan is not accompanied by a decline in unemployment rates among citizens.
“It is one of the paradoxes of our economy,” Razzaz said.
Participants at the event, organised by the Jordan Enterprises Development Corporation (JEDCO) in cooperation with the “Mubadara” parliamentary initiative, listed access to finance, tax rates and lack of guidance and training as the main challenges facing micro, small, and medium enterprises (MSMEs).
“Citizens with innovative and applicable ideas are discouraged from implementing them due to banking requirements in terms of guarantees, interest rate and repayment period,” JEDCO Chief Executive officer Yarub Qudah said, calling for establishing a national fund to support SMEs.
Mohammad Amaireh from the Central Bank of Jordan revealed that a credit bureau will be established at the bank this year to provide information to banks on accredited entities that provide partial funding to SMEs in order to cooperate with them.
With small- and medium-sized enterprises (SMEs) representing nearly 97 per cent of the total private sector businesses, participants discussed ways to come up with an applicable national strategy that identifies funding and coordinating entities.
According to Luis Abughattas, European Union (EU) programmes team leader at JEDCO, Jordan along with other countries that need economic reforms, suffers from growth slowdown, sluggish productivity and relative high investment ratio, but not in tradable activities.
He noted that countries should prioritise developing capabilities at the social and company levels in order to overcome the aforementioned challenges.
The conference provided an opportunity for representatives of the public and private sectors, the EU and international organisations working in the area of financing and development to discuss best practices to promote entrepreneurship and present a draft on the national strategy and regulations governing SMEs.
