0. IFC Bank Advisory Services – MIDDLE EAST & North Africa
TRANSFORMATIONAL ROADMAP FOR JLGC
Hermann Bender
November 25, 2014

1. World Bank Group commitment to Jordan
Assistance to JEDCO on the proposed “MSME Strategy for Jordan”
$3M Transition Fund for enhancing governance and strengthening the regulatory and institutional framework for MSMEs in Jordan.
Technical partner of private credit bureau selected (IFC)
Secured lending law for the establishment of a collateral registry (IFC)
Enabling Environment
Advisory Services to Financial Institutions
Technical assistance to JLGC on strengthening its risk framework and outreach in addition to up scaling its SME Business.
Technical assistance to Bank al Etihad on strengthening its SME operations
Series of trainings for Ejara Leasing Company on Sustainable Energy Finance
Support to MFI: Tamweelcom on risk management and new products
Support and Training to MSMEs
Supporting Jordan Institute of Directors on building its capacity to advocate improved Corporate Governance standards and rolling out training programs
In depth advice to two firms by assessing their corporate governance practices
Investment Activities
GTFP lines for four commercial banks
Loans to three Microfinance institutions
Equity and Subordinated Debt Exposures to a commercial bank

2. JLGC share in country MSME financing < 2% - however there is still an estimated $ 2B financing gap
SOURCE: Union of Arab Banks/World Bank Financial Flagship Report 2011; McKinsey-IFC MSME Database 2011

3. JLGC schemes outreach is lower than most MENA countries programs33
SOURCE: World Bank-A review of Credit Guarantee Schemes in MENA region

4. Outreach of Guarantee schemes in benchmark countries
Number of guarantees
issued in 2009
Outstanding guarantees in 2009
Average value of guarantees issued in 2009
Number
Per million people
Amount
in US$ Million
% GDP
in US$
Scaled by GDP per capita
Chile
60,000
1,800
1,000
0.6
10,000
1.0
Colombia
200,000
4,440
1,380
13,000
2.4
Hungary
31,000
3100
2,680
1.9
76,500
5.5
India
100,000
100
1300
0.1 10
Korea
200,00
5,000
50,000
5.0
125,000
7.0
Malaysia
14,000
400
2,000
66,000
9.4
Romania
6,600
285
700
0.4
80,000
Taiwan
220,000
8,000
12,000
3.5
3.0
Jordan
245 33 16
0.07
37,700
Average
1,082 80
142
0.32
75,000
SOURCE: World Bank – MENA Flagship Credit Guarantee Schemes

5. Key messages: JLGC Diagnostic
Background: IFC conducted a diagnostic mission followed by submission of detailed recommendations during Q4 2012, identifying a number of areas for potential collaboration
Technical Assistance: A detailed technical assistance road-map & project design was submitted and scope agreement was obtained during Q1, Project kick-off awaits formalization of financing mechanism & legal agreements
Current State: JLGC‘s contribution to market SME lending is currently low; multiple areas of deficiencies were identified and benchmarking with best practice schemes was performed
Competencies enhancement: Proficiency in 6 key areas of core competencies is required to achieve scale, sustainability and efficiency
Organizational implications: The recommendations proposed by IFC require commencement of a “transformation” agenda to achieve desired outcomes

6. JLGC would need to build strengths in six main areas.......
Organization & HR
Segmentation
Analytics & Systems
STRENGHTS
Delivery Model
Payment Rules
Risk Management

7. Prioritized Areas for Development
PHASE ONE: CURRENT SCOPE
PHASE TWO
Module One:
SME Market Demand Research
Module Two:
Product Development
(Segmentation &
Delivery)
Module Three:
Risk Management
Module Four:
Marketing & Outreach
(Delivery Model Enhancement)
Module Six:
Payment Rules
Module Seven:
Systems &
Analytics
Module Eight:
Organization & HR
Module 5: Implementation Support
Will be discussed & scoped after phase I delivery and finalization whilst providing adequate assurance that set key objectives are materialized and impact is being adequately assessed throughout the organization and with relevant stakeholders.
Transformation quick wins that would facilitate achieving the key areas’ respective objectives within a limited timeframe as shown in the project roadmap section
Objective
Objective

8. Project Status    Completed Ongoing 1 2 3 4 5 Market Research
Product Development
Risk Management 
Marketing Strategy & Outreach Plan
Implementation 
Nov 2013
Feb 2014
May 2014
July 2014
One year post delivery
Timeline
Meetings with JLGC team to learn about the current state of operations and to identify opportunities for product development.
Meetings with 11 partner banks to understand the lenders’ issues and the variety of business models used by the participating lenders.
SME Focus groups to be conducted by market research firm to identify segmentation approach for JLGC and banks. To be completed by early May.
Review of existing JLGC products
Reference to global guarantee schemes
Revise characteristics of current guarantee programs
Enhance the quality of JLGC services
Advise on current scheme/new products
Stay abreast of market development
Standardize and automate the credit guarantee application
Establish a risk management framework
Development of a risk inclusive culture
Expert based scorecard for SMEs
Based on Module 1 recommendations and outcome from market study. More focus will be on the desired outreach segments (customers, sector, geographies, etc.)
Review progress against plan and provide ad hoc consultancy support as needed on site
Support the resolution of implementation challenges as required
Monitoring & evaluation
IFC support
IFC deliverables
Executive Summary of Opportunities and Findings as a key input to Module 2. (Delivered and approved by Steering Committee)
Product Proposition Report. (Draft Report has been submitted to JLGC for review on March 11, 2014)
Existing Services Development/Enhancement criteria (Proposed DLP)
The following has been delivered and pending approval:
SME Risk management framework package
SME Banking Product Program based credit manual
Risk Scoring Model
The following has been delivered and approved:
Documented Marketing Strategy
Market outreach plan
Status update, findings and recommendations summary report for each visit 
Ongoing
Completed

9. Portfolio Performance
Description
FY11
FY13
No.
Vol. (In JD)
*Guaranteed loans during the year
447
8.1M
719
17M
*Outstanding Portfolio
819
14M
1,362
28M
Claims paid 16
649,921 7
169,340
* Excluding Real Estate and Personal Loans

10. Thank you for your attention
Hermann Bender
November 25, 2014