SMEs: Improving Growth and
Containing Unemployment
Munther Sharé
President of Jordan’s Economic & Social Council
JLGC - SME Conference
November 24, 2014
Amman - Jordan
SME’s Definition and Features
• The term “SME” -- small and medium-sized
enterprises -- covers a variety of definitions
and measures.
• In OECD countries, employment is the most
widely used criterion for determining firm
size.
• SMEs are usually defined as firms with fewer
than 500 employees, although a number of
countries -- including those in the European
Union -- use a lower cut-off point of 250.
SME’s Classifications in Jordan
Third National Report on Human Development 2011
Classification
# of Employees
Micro
Small
Less than 100
Medium
Classification
Small
Medium
Central Bank of Jordan 2011
Assets Value Sales Revenue
(JD)
(JD)
# of
Employees
5-25
21-100
< 1 million < 1 million
1-3 million 1-3 million
And must not be:
Public Joint Stock Co.; Insurance; Financial Intermediary.
SME’s Classifications in Jordan
Ministry of Industry and Trade classify SME's based
on the number of employees and the paid capital
Classification
Paid Capital (JD)
# of Employees
Micro
< 30,000
1-9
Medium
30,000
Small
Large
30,000
30,000
10-49
50-249
250 +
Employment and Job Creation
• There is growing evidence that SME's play an
important role in the economic development
of any country.
• SME's provide the majority of new jobs and
produce much of the creativity and
innovation that fuels economic progress.
• In OECD countries, SME's represent ( > 95%)
of all enterprises; (60-70%) of the private
work force; provide (30-70%) of value added;
(15-50%) of exports.
SME’s in Jordan
• The economy depends almost entirely on
small and medium- sized companies to drive
its economy.
• About (98%) of all businesses in Jordan are
classified as SME's, two third of which have
less than (19) employees. Employs (60%) of
the labor force.
• SMEs contribution to GDP (50%).
Manufacturing companies (14%) of total
SMEs.
SME’s in Jordan
• Loans financing SMEs operations JD (2)
billion in 2012. (11%) of total banks loans.
• Faced with growing competition, Jordanian
SME's are trying to modernize their
technologies and improve their
competitiveness.
• Available funding from the government
and other donors encourages SME's to
move ahead with modernization activities.
SME’s in Jordan
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JLGC activities in 2013:
Guaranteed (719 loans)
Value= (JD 28.1 million)
Guaranteed (833 loans for export)
Value= (JD 94 million)
Banks claims for default (bad loans) JD 766 K.
SME's Challenges and Problems in Jordan
• Lack of sophisticated management, production,
and marketing skills.
• Lack of access to domestic and external
financing.
• Lack of business planning
• Meeting the requirement of export markets.
(Products' Specifications, Rules of Origin)
• Supply of educated and skilled workers.
• High competition from imported goods
(Quality and Prices).