Startup Lending in Jordan: Successes, Lessons, and Opportunities


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Rafael Pilliard Hellwig and Alessandro Baroni

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Placeholder Image Local Enterprise Support Activity (LENS)
(Rafael Pilliard Hellwig)

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Local Enterprise Support Project (LENS)

Tags: Micro finance institutions (MFI) Micro finance Micro enterprises Development finance Economic growth and development

ABSTRACT: The USAID Local Enterprise Support Project (LENS) is a five-year activity that helped create new loan products for micro- and small enterprises (MSEs) in Jordan, mainly through micro-finance institutions (MFIs). A telephone survey with 1,567 loan recipients from one such product shows that the intervention generally achieved its desired development outcomes. The start-up loan product created clear financing opportunities for some 1,806 businesses prior to FY19. However, the program did unwittingly extend credit to individuals who used the funds for debt repayment and consumption rather than business purposes. Furthermore, of the 62% of loan recipients that started a business, only a third survived two years. Still, the opinions of entrepreneurs were, on balance, considerably more positive than negative, and the program made important contributions on social metrics. For example, a decent portion of credit reached MSE target groups, including 87% to first-time loan recipients, 89% to women, and 12% to vulnerable communities in poverty pockets. The program helped 94% of businesses form business linkages (primarily through new customers) and allowed 94% of businesses to increase their revenues. And finally, net employment ostensibly increased by 552 stable job opportunities for entrepreneurs who were previously unemployed.

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