Study proposes roadmap for SME success

AMMAN — A recent study by the Economic and Social Council of Jordan (ESC), showed that establishing a governmental entity that serves as an umbrella for economic coordination, would positively affect Jordan’s small- and medium-sized enterprises (SMEs) sector.

Conducted in partnership with CARE International in Jordan, the study seeks to redefine micro-, small- and medium-sized enterprises; set out a framework for the SMEs sector in Jordan, and promote the development of a favourable investment environment in Jordan, the ESC said.

The study, which surveyed 535 businesses, revealed that SMEs and micro-businesses make up 99.5 per cent of the private sector in Jordan, while large corporations constitute only 0.5 per cent.

In Jordan, SMEs are defined in two ways. The first definition measures the annual sales and the number of employees, accounting for sectoral distribution. 

The second definition, adopted by the Central Bank of Jordan, depends on the combination of annual sales, the number of employees and capital.

In this regard, the study recommended the nation-wide adoption of one definition, as is the case in many other countries. 

“One hundred and one countries worldwide depend only on one criterion, and that is the number of employees,” the study said.

The council recommended the following definition: “Home-based or individual enterprises are businesses managed by one person or family from home; micro enterprises are businesses run by less than 10 employees; small enterprises are businesses employing 10 to 20 persons and medium-sized enterprises are businesses employing 21 to 250 individuals.”

Further, the study added that there are many difficulties impeding the desired growth and expansion of these businesses in the Kingdom. One of the most significant challenges facing SMEs is the multiplicity of legislative and regulatory structures, the study observed.

Other recommendations of the study included the need for a national register of SMEs and as well as a legislative framework for startup companies.