IFC, World Bank release report highlighting issues facing Kingdom’s private sector

AMMAN — The International Finance Corporation (IFC) and the World Bank launched a joint report titled “Jordan’s Country Private Sector Diagnostic” (CPSD) on Tuesday, highlighting the constraints as well as the opportunities facing the private sector in Jordan.

The report considers three sectors: Tourism, logistics and information and communication technology (ICT). The report looks at the potential of these sectors for greater private sector contribution to the Jordanian economy, as well as the obstacles they face from general or sector-specific policies and regulations.

The report stated that the pandemic has underscored the important role that digitalisation, strong ICT infrastructure, and supportive services have in creating a resilient economy and business continuity. E-commerce and logistics capabilities are also a potential post-pandemic growth sectors.

According to the report, tourism, which had been experiencing a rebound in Jordan over the past few years, is one of the sectors hardest hit across the globe by the COVID-19 crisis. In Jordan, the sector accounts for about 19.2 per cent of the gross domestic product (GDP) and 32 per cent of exports. 

The report indicated that economic growth in Jordan averaged only 2 per cent since 2016. Per capita income in 2019 was 10 per cent below its level a decade ago, the report also added. 

“Under those conditions, boosting the private sector’s contributions to productivity is perhaps the only sustainable path to growth for Jordan given the fiscal constraints and limited economic policy levers to stimulate growth,” the report said.

The CPSD outlined some of the most important challenges faced by private activity, which include: High business costs, policy unpredictability and investment risks, excessive labour market segmentation and shortcomings related to market competition.

IFC’s Country Manager for the Levant Region Abdullah Jefri indicated that there is a global uncertainty around the COVID-19 pandemic, which is affecting the global economy. 

“It is important now to recover from the impact of the pandemic while maintaining the gains of economic reforms, without losing site of the private sector agenda,” Jefri told The Jordan Times during a virtual interview.

Jefri noted that Jordan has done much better than many other countries in the region regarding the pandemic, which is “a very good sign and an indication that there are great opportunities in Jordan for more growth”.

According to Jefri, cross-border trade with Jordan’s neighbours has always been an important element of economic activity in the Kingdom.

Jefri also noted that tourism is an important factor for the Jordanian economy, with the report identifying that the tourism sector has great potential for the country, particularly in adventure and medical tourism.

“Jordan’s recovery will rely on tourism picking up again. Hopefully, once the impact of the pandemic starts subsiding, global tourism should go back to how it was before… We hope that Jordan can capitalise on this opportunity and capture a bigger share of the tourism market,” Jefri said.

He noted that the two challenges Jordan is facing are the climate change impact and the economy’s inability to generate enough jobs for a growing population of youth.

According to Jefri, the recommendations of the CPSD complement Jordan’s Five-Year Reform agenda, which includes a set of policy reforms sequenced over five years to deliver on the government’s jobs, youth and growth agenda. 

“We are very proud of this effort; as this report can be a powerful tool in supporting reforms in the country,” he concluded.