Publish Date : 17-Sep-2013
The World Bank Group signed today an agreement to help increase lending to smaller enterprises in Jordan, part of an ongoing effort to spur economic growth in the kingdom and the region at large.
The two key agencies of the World Bank Group - the International Bank for Reconstruction and Development (IBRD) and the International Finance Corporation (IFC) - will support the Jordan Loan Guarantee Corporation (JLGC) as it scales up its lending operations. The JLGC guarantees loans between borrowers and banks, and many of its customers are micro, small, and medium enterprises that have struggled to obtain financing. The World Bank Group will help JLGC build its institutional capacity, increase its outreach, and develop new financial products tailored to the needs of entrepreneurs and small businesses.
"This partnership will enable JLGC to enhance its loan guarantee program to help more creditworthy firms get the financing they need to grow their business and contribute to the economic welfare of our country," said Mohammed Al Ja'fari, Director General of JLGC.
"Small and medium enterprises are an important vehicle for job creation and growth. Properly nurtured, SMEs can effectively contribute to the reinvigoration of the economic cycle in the Kingdom," Ferid Belhaj, Director of the World Bank Middle East Department, remarked on the agreement.
Belhaj noted that the agreement was part of a Bank-wide effort to streamline programs and products of its agencies to better serve the World Bank Group's drive for shared prosperity to reduce poverty.
Although smaller businesses form the backbone of most economies in the region, they often have trouble securing loans and other forms of financing. In the Middle East and North Africa, about a third of these firms report difficulty in getting finance, and in Jordan they only receive 10 percent of all loans, half the average other middle-income countries.
"A lack of access to finance remains a strong barrier to economic growth and job creation in the region," said Ahmed Attiga, IFC's Principal Country Officer in Jordan. "Enabling financial institutions to support smaller businesses will accelerate growth, alleviate poverty, and foster a dynamic and sustainable economy."
The initiative is part of a wider World Bank Group effort to support micro, small, and medium enterprises (MSMEs) across the Middle East and North Africa. That included the May launch of the $400 million MSME Facility, which will channel financing and guidance to these businesses.
It is also part of IFC's strategy in Jordan to encourage private sector development by improving the performance of the financial sector, supporting smaller businesses, and promoting private sector engagement in infrastructure projects.
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