The European Bank for Reconstruction and Development (EBRD) is providing a US$ 20 million credit line to Bank al Etihad for on-lending to micro, small and medium-sized enterprises (MSMEs). The EBRD will also extend a trade finance line of $10 million to boost international and intraregional trade.
Access to finance remains a challenge for Jordanian MSMEs, despite the fact they account for 95 per cent of active firms in the country; MSMEs provide 70 per cent of total private sector employment and generate approximately 40 per cent of gross domestic product.
The EBRD is addressing these financial constraints by disbursing the equivalent of $20 million in Jordanian dinars to facilitate access to finance for smaller businesses, which have the potential to contribute significantly to economic growth and employment.
Dr. Heike Harmgart, EBRD Head of Office in Amman, said: “We are very happy to team up with Bank al Etihad in support of MSMEs, which we consider to be the backbone of the economy and a priority sector to develop. Trade is also an important catalyst for economic growth, especially in Jordan.”
Bank al Etihad General Manager, H.E. Nadia Al Saeed, commented: “MSMEs are instrumental in catalysing growth and driving economic development. As such, supporting these businesses is at the forefront of our priorities at Bank al Etihad. I would like to thank the ERBD for its interest in helping us advance Jordan’s dynamic MSME sector, and I am confident that our partnership will yield positive results for all parties involved.”
The EBRD will also extend technical assistance, reinforcing Bank al Etihad’s efforts to enhance MSME lending, develop specific products, and facilitate the transfer of international best practices, knowledge and skills. Through the $ 10 million trade facility to Bank al Etihad, the EBRD will offer cash advances for international and intraregional trade transactions. It will also issue guarantees in favour of global commercial banks, covering the political and commercial payment risks of transactions undertaken by Bank al Etihad.
Launched in 1999, the EBRD’s Trade Facilitation Programme (TFP) aims to promote foreign trade to, from and among the countries where the organisation invests. Through the Programme, the EBRD provides guarantees to international confirming banks, as well as short-term loans to selected banks and factoring companies for on-lending to local exporters, importers and distributors. The TFP currently includes over 110 partner banks in 23 countries where the EBRD works, with limits exceeding €1.5 billion in total, and more than 800 confirming banks worldwide.
Jordan became a member of the EBRD in 2012, and to date the organisation has committed US$ 336 million to 15 projects in the country across various sectors. Through the EBRD’s Small Business Support programmes, it has also initiated 67 technical assistance, capacity-building programmes that directly benefit Jordanian SMEs.