In comparison with the countries in the region, Jordan has managed to attract 3% of the total FDI
coming into the MENA region. Jordan's GDP accounts for 0.8% of the combined MENA GDP. This
indicates that Jordan has become a favorite destination for many investors. However, Jordan still can
position itself as an important hub on the global investment map, and a regional investment incubator
for financial services, renewable energy and information technology, like those countries that
managed to position themselves as regional hubs for service exports. By comparison, other regional
hubs for services exports, such as Ireland and Singapore, achieve much higher levels (142% and 252%
of GDP respectively compared to Jordan’s 80% of GDP).
1.3.4 Entrepreneurship and Small and Medium Enterprises
Jordan is a country of entrepreneurs and start-ups. According to the World Bank, 10% of working age
population are startup owners and
micro, small and medium enterprises represent more than 98% of
total establishments in Jordan.
The high level of entrepreneurship in Jordan may be due to the weak growth of jobs created by large
companies, the decline of employment in the public sector institutions after the privatization program
and government policies
aimed at reducing the public budget deficit and rationalizing
the public sector
in recent years.
Nevertheless, the new business and SME segments of the private sector have experienced modest
growth in recent years. Net growth in the number of non-agricultural economic projects was only 1.3%
per year over the period 2006-2011. The lowest growth rate was that of enterprises that employ less
than 5 workers, at just over 1% per year, compared to 4% per year for enterprises that employ 10-19
workers, 20-49 workers and more than 100 workers.
Entrepreneurs and startup owners in Jordan face several difficulties in starting their business or
expanding their scope and objectives. The most important challenges they face are the lack of
specialized funding programs, high costs of funding, inflexible funding conditions that are not aligned
to the needs and capabilities of small and medium enterprise owners, the administrative and
procedural difficulties related to business registration and high indirect taxes and fees for the
registration and licensing of businesses.
Jordan Enterprise Development Corporation (JEDCO) provides several financial and technical support
programs for SME. In 1994, the Central Bank established Jordan Loan Guarantee Corporation to
provide guarantees for SME loans and increase their access to appropriate funding. The Bank
contributed in providing a special fund for industrial finance managed by the Corporation because of
the importance of this sector within the small and medium enterprise sector. Nevertheless, the small
capital of the company and the limited funding available to the Fund remain the biggest obstacles to
expanding the umbrella of the guarantees provided, at affordable and competitive commission rates,
by commercial banks or other financing institutions that provide funding. In addition, the Central Bank
provided several initiatives and funding programs to increase economic sectors’ capacity, notably
renewable energy, industry, tourism and agriculture, and particularly SME, to access needed funding
through banks, to 5% of total credit facilities provided by banks, and offered credit lines from foreign
sources for the same purpose. In spite of these efforts, SME sector still faces several challenges, due
to the lack of technical support, training, guidance and funding programs.
As illustrated below, this has created the so-called “missing middle” in the structure of the economy.
A significant decrease in the number of firms is observed when businesses reach the size of 10 or
more employees. Ninety-six percent of firms in Jordan are “micro” firms, with less than 10 employees,
accounting for just 8% of total company revenues. Large firms of 100 employees or more make up
0.4% of all firms and account for 75% of total revenues.
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