Launch of the Jordan Human Development Report 2011, “Jordan Small Businesses and Human Development”

24 May 2011

imagePart of the audience in the launch event

Jordan Human Development Report 2011 entitled "Small Business and Human Development” was launched on the 24th of May 2011, under the patronage of Her Royal Highness Princess Basma bint Talal, Honorary Ambassador for Human Development for UNDP, who made the keynote speech. Speech on behalf of the government was made by His Excellency Dr. Jafar Hassan, Minister of Planning and International Cooperation. Mr. Luc Stevens, Resident Coordinator of the United Nations and Resident Representative of UNDP in Jordan also had a speech during the launch.

The launch was held at King Abdullah II School for information technology at the University of Jordan, and was attended by representatives of ministries, national institutions, research centers, academic institutions, international organizations working in Jordan, diplomatic missions, donors, civil society organizations, representatives of private sector, especially small and medium enterprises, and the media.

The report explores the role of Micro, Small and Medium-enterprises, as an agent for sustainable human development in Jordan. It consists of eight chapters: Introduction on Human Development through Enterprise, Jordan’s Human Development Progress, MSMEs and Equitable and Inclusive Growth, MSMEs and Social Progress, MSMEs and Empowerment, the Role of Microfinance in Empowering the Less Advantaged, MSMEs and Sustainable Development, and a recommendations chapter.

The report, which was prepared by a consortium of consultancy firms, highlighted the crucial role played by micro, small and medium enterprises in the promotion of human development in the country through four main pillars, namely: economic growth which is inclusive, equitable, and pro-poor, social progress, participation, empowerment through microfinance, and environmental sustainability.

For the purpose of this report, the technical committee of the report, consisting of a number of specialists in Jordan, identified the enterprises according to the number of employees; Small enterprises are those with less than 20 employees, medium enterprises: 20 to 99 staff, and Micro-enterprises, are those companies that have benefited from micro-credit programs.

The analysis of the report is based upon a questionnaire distributed to 1,500 SMEs and 113 micro-enterprises to generate primary data in addition to secondary and macro data, international rankings and best practices to provide a comprehensive view of the impact of MSMEs on human development in Jordan.

The report shows that MSMEs represent 60% of the total private sector employees and 37% of total employed in Jordan. Most MSMEs work within the formal sector and are registered. It also shows that 79% of MSMEs owners hold secondary school degrees, or above, with 42% of MSME owners holding a Bachelor’s degrees, and it also shows that 77% of employers are aged between 21- 50 years.
The report argues that while MSMEs are engaged in various economic activities, including trade, services, manufacturing, and agriculture, trade and services are the most dominant accounting for 85% of MSMEs activities. Analysis of the Report survey shows that goods and services provided by the MSMEs are sold within the one governorate, and while almost a quarter of MSMEs receive over 40% of their inputs from their own governorates, only 4% of MSMEs are exporters. Collaboration between MSMEs is small, with only 22% of enterprises surveyed are members of any type of professional association.

The Report shows that men tend to start an MSME for increased income and self esteem, while women start MSMEs for a variety of reasons, such as family responsibilities and flexibility. Regarding empowerment, findings show that entrepreneurs who started their own business increased their assets, in terms of home and land ownership, by 21% and 20%. Nonetheless, lower wages and the absence of social security in MSMEs enterprises make them vulnerable and therefore less advantageous from a ‘well-being’ perspective. 23% of MSMEs surveyed employees are between 19-25 years of age, and young SMEs owners account for 5% of all SME owners.

The Report highlights the fact that only 18% of management positions in the private sector are held by women, and the majority of female-owned enterprises are very small enterprises, employing 5 people or less. The Report also shows that Microfinance can help to start productive micro enterprises. Environmentally, the two major issues impacting the behavior of MSME owners are funding, and that business owners are not fully aware of standards regarding environmental policies.

The Report concludes with a list of recommendations including the need for increased coordination among the different institutions serving the sector to ensure an efficient allocation of resources. The need for promoting the growth of professional associations among entrepreneurs, as well as encouraging cooperation among MSMEs, in order to further increase their export potential.

On the government’s part it is recommended to increase the Ministry of Labor inspectors’ visits to follow up its implementation through site visits to employers’ sites, in order to assess the working conditions and the fair implementation of the provisions of the law, especially minimum wage provisions. It is also prudent for the government to work towards moving the firms out of the informal sector, into the formal sector, thus allowing MSMEs to take advantage of the benefits of the formal sector. A Review is also needed for the tax law, and an independent tax bracket for MSMEs, could be considered. In addition to expanding the current support mechanisms at the regional level to ensure that MSMEs located in the poorer governorates do not migrate into the more developed governorates.

In order to help disadvantaged people attain their independence through training, grants and low interest loans for the poorest sectors of the population, it is recommended that support to micro-enterprises be increased through micro-finance schemes. Also, more venture capital micro-capital funds focusing on women and youth entrepreneurs are needed in Jordan. It is also recommended that female entrepreneurship is promoted through increasing funds, loans and programs that encourage investment in MSMEs. Last but by no means least, environmental considerations should be served through the provision and inclusion of training programs for all MSMEs-related activities to ensure long-term sustainability.

The Report attracted a lot of attention in the local Media before, during, and after the launch. Two interviews with UNDP Country Director, and UNDP staff were published before the launch in the widely read Arabic and English Newspapers.

The launch was covered in the main news on Jordan television, and other local satellite TV stations. On the next day all newspapers Arabic and English covered the launch. Different news agencies covered the event including Petra, Reuters, and BBC.