Presentation on theme: "SMEs: Improving Growth and Containing Unemployment Munther Sharé President of Jordan’s Economic & Social Council JLGC - SME Conference November 24, 2014."— Presentation transcript:
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 Less than 100 Small Medium Central Bank of Jordan 2011 Classification Assets Value (JD) Sales Revenue (JD) # of Employees Small< 1 million 5-25 Medium1-3 million 21-100 And must not be: Public Joint Stock Co.; Insurance; Financial Intermediary.
Classification Paid Capital (JD) # of Employees Micro< 30,0001-9 Small30,00010-49 Medium30,00050-249 Large30,000250 + SME’s Classifications in Jordan Ministry of Industry and Trade classify SME's based on the number of employees and the paid capital
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.
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
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 in Jordan
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).