The microfinance sector in Jordan

Following the integration of the Microfinance Institution MFW (Microfund for Women) and Jordanian projects on MicroWorld, we now present you a report on the microfinance sector in the region.

In 1959, Agricultural Credit Corporation launched the first microcredit programs in the country. Today, the microfinance industries in Jordan, have reached such proportions and influence that needs to be organized within a legal framework.

They have the support of the government which under the direction and leadership of the Ministry of Planning and International Cooperation (MoPIC) has decided to make a market survey in early 2012 to assess the potential for new product development beyond enterprise credit which meets existing and evolving needs of poor and low income people.

Thus for that year, the country has registered over 200 000 clients and this is contributing in the reduction of unemployment and is helping to improve the standard of living of the low-income part of the population. There is a constant territorial expansion with an ever-growing number of agencies and field officers for each of the microfinance industries.

To prevent over indebtedness and to help maintain a good portfolio quality, there is a growing practice of client credit information sharing among the microfinance industries. There are five registered non-profit institutions and three commercial companies that are labelled microfinance institutions, whose sole activity is microcredit. With the success of microfinance industries operating in the Jordanian market, there are banks which have started to be interested in the potential of this business. Thus, there are several banks which have started to service this category of clients.
There is also one commercial bank, one donor agency and one governmental agency that disburse micro and small loans. Other than that, there are several NGOs and informal institutions that grant microloans. The annual growth rate of outreach was 28% between 2006 and 2010(1).
This means that there has been an increase in active borrowers from 76,830 to 203,579 and a total Gross Loan Portfolio of 111.6 million Jordanian dinars(2). There is a strong focus on women entrepreneurs who account for 71% of all clients.

To know more about Jordanian microfinance and women : click here.

The Jordanian government is participating actively in the promotion of this sector as it is conscious of the impact on development and the steady growth and benefits of microfinance on the economic and social arena. Products are designed and targeted towards specific parts of the population and can have a wide and immediate success. These products have been adapted country economy and has taken into consideration social structure and social protection. Gradually there is a concern for insurance coverage and this needs to be supported by small premiums paid in installment.

Consequently, microfinance has proved to be an effective and powerful tool for poverty reduction and the microfinance institutions show considerable diversity in their ability to reach poor populations. In Jordan, these institutions are playing a capital role in the financial sector.

The microfinance institution MFW is partner with MicroWorld to finance microentrepreneurs projects in Jordan.

To know more about MFW : click here.

Source: Market study about microfinance in Jordan, Mix Market

Tags : Jordan, microfinance, microfinance institution, MicroWorld, Middle-east, microinsurance, microcredit