This past week, I was able to participate in the second annual conference for the promotion of domestic SMEs (Small and Medium Enterprises) at the Meridien Hotel in downtown Amman. This conference represented the culmination of a year’s worth of cooperative work between the Jordan Chamber of Industry and the Confederation of Danish Industry. Consequently, attendees of the conference included local Jordanian SMEs, local government officials, and international business consultants/advisors.
Given that over 96 percent of Jordanian businesses would fall into the SME category (meaning that they employ less than 500 employees), the importance of maximizing the potential of this business sector is paramount to any long-term plan of promoting Jordanian exports and market welfare. For this reason, the theme of the conference focused on the establishment of stronger bilateral relations between the Jordanian private and public sectors. Despite the fact that they comprise such a large proportion of the Jordanian GDP and employment, the nature of many of these businesses makes it so that they are difficult to regulate and consequently provide legal protections for. Additionally, because so many of these SMEs are so tightly connected to their proprietors, there is little legal difference between the finances of the owner and those of the company—something that is crucial in limiting individual financial liability and promoting a more entrepreneurial spirit among SMEs.
With the ultimate goal of strengthening these legal protections and promoting a friendlier economic environment for these businesses, the conference hosted speakers who spoke to the need to promote better dialogue between regulatory ministries and SMEs. These included advisors from Canada, the United States, and Germany. Though each extolled different benefits of a strong SME sector, all emphasized the need to establish private trust in the public sector through the creation of equitable tax policies and the elimination of state corruption.
Also of particular note was the repeated and stated need for a greater entrepreneurial spirit among younger Jordanians as a means of combatting youth unemployment as well as regional security. Youth unemployment in Jordan, despite the fact that 97 percent of the youth population is literate with a high college graduation rate, is estimated to be above 25%. With recent estimates also suggesting that over 35.8 percent of the population is under the age of 15, the need to combat escalating youth unemployment is paramount. One potential solution to this problem would be a concerted effort to promote a stronger entrepreneurial spirit amongst young Jordanian college graduates—whereby instead of simply looking to find well-paid and prior-established (and rapidly dwindling) jobs, college graduates would be more comfortable striking out on their own to establish new businesses and ventures. Should such a long-term cultural shift occur, it would have widespread benefits both for the reduction of youth unemployment en masse as well as reducing the potential for youth radicalization among the heretofore disenfranchised.
Such a concerted effort, as some speakers suggested, would include better legal protections for SMEs in the event of bankruptcy, more responsive public officials through better public-private dialogue, and smarter loan practices among Jordan’s many established traditional banks through a renewed focus on venture capital. Although certainly not a silver bullet for the many long-term problems facing Jordanian SMEs, this certainly holds some promise.