Sector overview: What is missing in the entrepreneurship sector?

Despite prioritizing entrepreneurship for over 15 years, experts believe the country is not capitalizing on efforts to support the sector. (Photo: Pixabay)
AMMAN – The traditional pathways for job creation and growth in Jordan are at risk of not producing enough jobs in the future, according to economists.اضافة اعلان

World Bank (WB) Private Senior Specialist Ali Abu Kumail’s 2019 WB blog entry stated: “The government of Jordan has been encouraging entrepreneurship to shift these forecasts and accelerate the rates of job creation.”

However, experts and economists have been scrambling to provide solutions to maximize Jordan’s returns from the entrepreneurship sector for years, not only in terms of GDP, but in terms of employment as well.

Official interest in supporting entrepreneurship in Jordan dates back to the early 2000s.

It manifested in the establishment of many institutions over the years, such as the Queen Rania Center for Entrepreneurship (QRCE); in 2004, and the King Hussein Business Park; in 2010. As well as in Jordan’s climb on the WB Global Entrepreneurship Index; to 49 place, in 2018.

At a government level, Jordan became one of the first countries in the region to establish a Ministry of Digital Economy and Entrepreneurship, with its own Investment Department.

Yet, unemployment in the fourth quarter of the 2018 (Q4-2018) reached 18.7 percent, according to the Department of Statistics. Because of the COVID-19 pandemic that number increased to 24.7 percent in Q4-2020.

So, what is missing?

What is missing in the entrepreneurship sector to improve its yield nationally? According to economist and ex-banker Mufleh Akel, a lot is missing, and much of it is up to the government to provide. 

Entrepreneurship in Jordan remains an “individual phenomenon,” he told Jordan News.

“Whereas, the kind of entrepreneurship we need here in Jordan is of the macroeconomic scale. For it be an effective economic model, it has to be institutionalized on a national level,” Akel explained.

Entrepreneurial success requires an integrative ecosystem of high-quality education, knowledge bases, engines and incubators, venture capitalists, angel investors, and eased legislation, said the economist.

“And not just an ad-hoc combination of the above,” he warned.

“The role of the state is to facilitate legislation and funding, as well as quality education and capacity development, whereas the role of the private sector is to facilitate mentorship, venture capital, and angel investment,”

Most of these components are either mostly missing or are ineffectively present nationally, he said.

Looking at entrepreneurship historically, the economist took us back to when it first surfaced as a practice.

When the United States resorted to supporting entrepreneurship to overcome its economic crises and the Great Depression of the 1930s, the Truman administration significantly increased investments in infrastructure, as well as various other sectors of the economy, pumping money into the market.

However, things are not as easy for Jordan as it was once for the US, economically speaking.

The country’s Gross Public Debt to GDP Ratio in 2018 exceeded 94 percent, according to the Jordan Strategy Forum (JSF) Policy Brief Report of December 2019, and the General Budget shows current expenses are on the rise.

Combined, all of this strains the government’s ability to effectively invest in empowering the private sector.

This is why, according to Abu Kumail, the government has been trying to rely on the private sector to largely empower itself and entrepreneurs alike.

Officially, the ministry has been working with local and international partners, such as the World Bank, Plan International, J-Core; a platform of sector stakeholders, and the Jordan Strategy Forum, to identify aspects of improvement in the sector.

Plans and policies

Nael Adwan, director of the ministry’s Investment and Entrepreneurship Department, highlighted some of these aspects, starting with the absence of a sector-wide strategy in Jordan.

“There is no national strategy for entrepreneurship. Therefore, in 2019, the ministry published the ‘Business Facilitation Initiative for Entrepreneurial and Emerging Companies’ paper, and is currently working on the ‘National Policy for Entrepreneurship’, which prefaces the strategy,” he told Jordan News.

The policy covers legislation, investment infrastructures, knowledge bases, and other components of the ecosystem, Adwan said.

The other component include “dozens of incubators”, he added.

The policy and upcoming strategy will organize these elements into an effective ecosystem, to enable the sector to unleash its potential, Adwan said, adding that much of it will be assigned to private sector and civil society stakeholders.

Meanwhile, several official policies in the past few years were enacted to facilitate a variety of tax perks for start-up companies, small and medium enterprises (SMEs), and entrepreneurs.

These moves include zero-custom duties for some sectors. As well as zero-export tax and zero-foreign capital investment requirements, all targeting vital segments of the entrepreneurship sector, such as Information Technology (IT), in addition to the ministry’s “Access to Market Initiatives” such as the Matchmaking Program and the Expatriate Investor Network.

However, despite many enterprises having benefited from these measures, much of it remains inaccessible to a lot of entrepreneurs and start-ups in Jordan.

Access and information

To Muhannad Awamleh, who has been trying to get a unique fin-tech project he’s been working on with friends up and running for a while now, finding an angel investor and harnessing the support they need has proven quite difficult.

“I’ve met with a dozen investors so far, and I still haven’t found an investor who understands the value of our input into the solution we have developed,” Awamleh said.

On the other hand, the Companies Control Department does not properly educate people on the opportunities that are out there, he stated.

“When we went to register our company, no one told us that we were eligible, as an IT company, to benefit from the exemptions and incentives offered by other government entities,” the former Deloitt tax expert told Jordan News.

The opportunities the ministry is talking about are not effectively promoted to Jordanians and entrepreneurs, and whenever they are, they are either too small or too difficult to acquire. Not to mention the unfair competition, he added.

Knowledge, education, and entrepreneurship

There are efforts underway to enhance the competitiveness of entrepreneurs in Jordan through training and education sponsored by the ministry and its partners, Adwan underlined, which lies at the heart of investor Dina Saoudi’s concerns about the future of the sector, at least in part. 

Cofounder of Seven Circles and Empowering through, Saoudi has been working with entrepreneurs for a few years now, and has been able to foster the success of several entrepreneurial businesses in Jordan.

The ecosystem has a role, of course, she exclaimed, “that is to work together as stakeholders in the country to serve entrepreneurs while they identify and work on building their ventures.”

“Entrepreneurs must be diligent and self-reliant. If an entrepreneur is waiting to be saved ... then it’s no longer entrepreneurship, it is charity,” she added.

“Regardless of the ecosystem. I lived in the United States, San Francisco, for over 10 years, and Chicago for five, which is what you all define as a proper ecosystem where anybody can survive, right? But even there, entrepreneurs faced huge problems … an entrepreneur must believe that she or he is enough and to continue trying,” she underlined.

While the ecosystem is important to Saoudi, she suggested that the culture and the educational system are necessary for the success of entrepreneurs. 

“This is another pain that we have (in Jordan), which is our educational system and what we teach our children. In America, children are taught from a very young age to sell lemonade and cookies and to volunteer,” she said.

“My background is in Social Psychology. My job is to tell people the best environment to raise an individual to succeed, whether at home, at work, in a country or world,” she continued.

The environment in which an individual is raised, the societal culture — including parenthood and other components — needs to adapt to our modern day challenges, the businesswoman told Jordan News. 

An entrepreneurial environment creates individuals who are capable of pursuing their dreams no matter what, which Saoudi said is the key to empowering entrepreneurship in Jordan.

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