The Strategic Importance of Supporting Small and Medium Enterprises

According to the Financial Awareness Promotion Platform (FINAPP), small and medium enterprises (SMEs) are considered one of the most important pillars of social and economic growth in Jordan, the region, and the world. These businesses contribute to diversifying economic sectors, creating job opportunities, developing skills, improving productivity, and fostering innovation. Additionally, SMEs attract investments and increase the flow of capital towards impactful projects, promoting economic stability and enhancing inclusiveness and social justice.

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Competitive Characteristics and Advantages

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SMEs are distinguished by several characteristics that give them a competitive advantage. Perhaps the most prominent of these is their flexibility in decision-making and their ability to adapt to rapid changes in the market. These businesses are also capable of responding quickly to work requirements, managing risks, and adopting new technologies and operational procedures. This agility allows them to keep pace with market trends, enabling them to develop and launch customized products and services in various fields, such as renewable energy and healthcare.

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Local Challenges

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Despite the growth of the SMEs sector in Jordan—where these businesses represent 99.5% of the total business sector and provide jobs for about 60% of the workforce—their contribution to the gross domestic product (GDP) remains under 30%, and their share of national exports is less than 10%. According to the Jordan Chamber of Industry, this modest performance is due to several challenges that hinder their operations, growth, and sustainability. These challenges include difficulty in accessing financing due to perceived risks and insufficient guarantees, a weak business incubation and facilitation environment, high operating costs, and a gap in leadership, management, and technical skills. These barriers restrict innovation, limit competition, and prevent SMEs from achieving satisfactory financial and profitability results.

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The Role of the Housing Bank in Supporting SMEs

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Addressing these challenges requires coordination between governments, financial institutions, and project and business incubators. The aim is to create a nurturing environment that enables entrepreneurial ideas and SMEs to grow and innovate, with a particular focus on underserved areas to ensure that support reaches all target groups.

Recognizing the strategic importance of SMEs, Housing Bank has actively participated in supporting these businesses by offering a range of services, financing solutions, and easy loan programs.

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The bank has established specialized departments to serve SMEs and has adopted several financing programs from the Central Bank of Jordan. It has also launched initiatives to stimulate the growth of SMEs, including easy loan programs and loan guarantee schemes in collaboration with a number of relevant parties.

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One of the most important initiatives launched by the bank is INHAD, which promotes self-employment and the establishment of productive projects. In partnership with the Business Development Center, this program provides multiple advantages to SMEs. Additionally, the bank introduced its Fast-Track service, offering loans with competitive options and easy terms, all processed in the shortest possible time. The bank also offers the Credit Report service, which facilitates access to financial services, as well as the Small Business Loan Program and the Startups Business Loan Program which support newly registered businesses, among others.

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Recommendations to Enhance the Role of SMEs

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To improve support for SMEs and enhance their role in driving inclusive growth and economic development, financial institutions should continuously develop new financing products that are tailored to the specific needs of SMEs. They should work to simplify the process for obtaining loans, reduce collateral requirements, and improve access to financing by supporting loan guarantee programs that help mitigate the risks associated with lending.

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For SMEs, it is important for these to focus on diversifying sources of financing by exploring various available options. Enhancing administrative and leadership capabilities is also key to ensuring the long-term sustainability and competitiveness of businesses. In addition, SMEs should place greater emphasis on marketing and exporting to expand their market share and contribute more significantly to the national economy.

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Additionally, it is also recommended to develop and provide training programs and initiatives that support innovation and improve the efficiency of SMEs.

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References

·???????? “Small and Medium Enterprises”. The Financial Awareness Promotion Platform. https://finapp.jo/?????-???????/???????-???????-?????????/???????-???????-?????????-?????/

·???????? “Small and Medium Enterprises Services”. Jordan Chamber of Industry. https://jci.org.jo/Chamber/Services/Sectors/80095