Study finds correlation between microfinancing practices, economic growth

AMMAN — The results of a study into the microfinance sector presented by the Jordan Microfinance Network (Tanmeyah) on Monday show the sector’s commitment not only to abide by the best global practices and rules but also to take into account the social dimension of business, according to Tanmeyah Chairman Ahmed Al Hussein.

The study, supported by the European Union, explores several aspects of the sector, such as the market gap between supply and demand, informal lending practices, social performances of the microfinance sector and an evaluation of its business environment.

“Raised awareness on microfinance practices is improving the living standards and business practices of target groups in all the Kingdom’s governorates,” said Hussein at a press conference on Monday.

According to the study, supporting entrepreneurship through microfinance “contributes to achieving economic growth rates that positively affect poverty and unemployment”.

The study also covered structural challenges that negatively influence the “formal” microfinance sector and limit its development and growth.

Government taxes, informal lending practices in firms not registered with the Ministry of Industry, Trade and Supply and individual lending practices have had “the most negative impact on clients”, according to study results.

Also at the press conference, representatives of the Central Bank of Jordan (CBJ) discussed its role in “supervising the work of companies and ensuring the quality and efficiency of financial services provided by the CBJ and the financial sector in general”.