SME’s – THE CONTEXT
Small firms are the lifeblood of a country’s economy
For example, in EU
Companies that are
SMEs
1
99%
Value added
58%
42
Jobs
66%
34
SME
Change in SME financing channels
Traditional
▪
Banks
▪
Guarantee schemes
▪
Friends and family
New
(as cited in the Economist, 16 August, 2014)
▪
Non-financial institutions
▪
Crowd funding
▪
Insurance companies
USAID JCP
Here in Jordan, USAID’s Competitiveness Program is trying something different
Source: USAID JCP ATF team, the Economist
1

OVERVIEW OF USAID JORDAN COMPETITIVENESS PROGRAM
“Jordan Competitiveness Program (JCP) is a fiveyear program that is funded by the US Agency for
International Development (USAID) and managed by Development Alternatives, Inc. (DAI)”
“The $45 million program will focus on increasing competitiveness initially in three “knowledge economy” sectors: ICT, Clean Technologies, and
Healthcare & Life Sciences”
“JCP aims to generate at least 40,000 well-paying jobs, increase foreign direct investment by $700 million and increase exports by 25% over the next five years”
2

financing
USAID JCP APPROACH
SECTOR FOCUS – selected three business sectors with highest growth and employment impact - ICT, Healthcare, and Clean Tech
MAPPED SOURCES OF FINANCING – angel/ VC, microfinance, leasing,
SME bank, and corporate bank
WORKFORCE DEVELOPMENT GAP ANALYSIS – demand and supply
Enabling environment interventions
Implementation plan
3

JORDAN’S ACCESS TO FINANCE CHALLENGES
Challenge 1
▪
Bank loans account for the majority of financing for the economy
▪
SMEs account for 10% of bank loans
Challenge 2
▪
Angel and VC funding is limited and focused on technology
Challenge 3
2 principal gaps for SMEs
▪
$50K-500K: early stage entrepreneur
▪
$500K-4,000K : growth capital to scale-up
Challenge 4
Demand side
▪
Investment/ financing readiness
▪
Awareness
▪
Deal flow
Supply side
▪
Limited investor pool
▪
High thresholds
▪
Unclear exits
▪ Bank’s criteria for collateral
▪
Interest rates
▪
Loan tenors
Source: USAID JCP ATF team,
4

Demand
Angel/VC Investing
• Investment readiness training and toolkit, business innovation center, and business plan competitions
SME Financing
• Awareness and match making sessions for Clean
Tech, financing readiness training, and export readiness for ICT
Supply
• Bootcamp for new investors, training for existing angels, angel investor network, and crowdfunding trials
• Facilitation of deals using existing financing schemes, improve bankability of clean tech/
ICT/ healthcare transactions, and bank product development
5

WORKFORCE DEVELOPMENT CHALLENGES
Demand
Supply
Skills gap
• Mismatch of skills of new graduates and the skills needed by companies; curriculum reform process does not keep pace with the rapidly evolving market place
• Lack of emphasis on new ideas, competitiveness and practical applications
Innovation gap
Information gap
• Weak career counseling and job placement services
• Centers of Excellence and Skills Development
Programs, Career Development Centers,
Entrepreneur Promotion and Internship
Support, Monitoring & Evaluation Systems
6