Innovative Approaches for the Financial Inclusion of MSMEs in Jordan - Kopie

98 % of companies in Jordan are MSMEs, defined as companies with fewer than 100 employees. While MSMEs employ around 70 % of the workforce in the private sector, their access to finance is inadequate: only 10 % of all bank loans are granted to MSMEs, which is a low figure even by regional standards. As a result, MSMEs often finance themselves through their own resources, limiting their growth potential and thus their need for additional employees. In particular, women-owned businesses often lack access to finance and are disadvantaged when applying for loans. Women, some of whom work informally from home, typically access financing only through smaller loans with microfinance institutions rather than commercial and usually higher bank loan amounts. Alternative financial products and services, such as leasing, factoring, or alternative credit scoring offer opportunities to improve the financial inclusion of MSMEs. However, the regulatory environment in Jordan not sufficiently developed to exploit their potential. The lack of understanding of MSME specifics on the part of financial intermediaries, as well as a lack of trust in financial service providers and sometimes insufficient financial literacy at the client level, mean that the majority of MSMEs effectively exclude themselves from formal financial services and use informal, often riskier sources of finance. The project Innovative Approaches for the Financial Inclusion of MSMEs in Jordan (I-FIN), commissioned by the German Federal Ministry of Economic Cooperation and Development (BMZ) and implemented by the Deutsche Gesellschaft für internationale Zusammenarbeit (GIZ), aims to improve access to innovative financial services for growth-oriented micro, small and medium-sized enterprises (MSMEs). The project has been commissioned in November 2021 and runs until October 2025, with a total commissioning value of 10,000,000 Euro. Its political partner is the Central Bank of Jordan (CBJ), building on several years of successful partnership between GIZ and CBJ in the areas of financial inclusion, digital financial services and remittances. The project is structured in four action areas: In order to improve the insufficient access to finance for MSMEs, the project has designed the following four outputs: - Output 1 aims to strengthen the Central Bank of Jordan's capacity to create an enabling environment for innovative MSME financing. - Output 2 aims to strengthen financial intermediaries with regard to the provision of innovative financial services for MSMEs. - Output 3 aims to develop and adapt qualification offerings on innovative financial services for growth-oriented MSMEs to increase their knowledge and foster the usage of such products. - Output 4 aims to improve the access to financial services for women-led businesses. The assignment is embedded in the overall activities of the project. The contractor will carry out activities related to Output 2 and Output 4 and provide selective inputs in the other Outputs as well. To ensure sustainability, I-FIN plans to collaborate closely with national partner organizations, including the CBJ (AA 1), selected financial services providers such as banks, microfinance institutions, credit companies, leasing companies and crowdfunding companies, payment service providers as well as specialised fintechs involved in MSME financing (AA 2), as well as MSME training providers and accelerators (AA 3 and 4). Furthermore, the programme is embedded in the "Employment" cluster of GIZ in Jordan, creating synergies e. g. with the GIZ-implemented projects "Employment-oriented MSME promotion" and "Improving Access to Remittances and other Financial Services through Digital Solutions in Jordan (DIGI#ANCES)".