USAID LENS at the outset of the project conducted a comprehensive financial sector analysis of Jordan, reviewing demand side drivers, financial service providers and available support programs for both micro and small enterprises as well as financial institutions. USAID LENS SME survey reported that 80% of MSEs in Jordan don’t have a bank account for their business and generally lack access to financial services. To this end, several Microfinance Institutions in Jordan provide financial services to underserved and vulnerable populations, thus engaging in USAID LENS’ target areas of intervention and are poised to move towards their next stage of maturation to further expand depth and breadth of outreach. However, in order to successfully meet the unmet needs of these previously neglected populations, microfinance institutions in Jordan require support and technical assistance to further build capacity and deploy new and innovative means of product and service delivery. USAID LENS estimates that the potential market for MFI clients in Jordan is in the 500,000 range.
USAID LENS Work
Institutional Capacity Building to Increase Lending through Improved Credit Scoring Methodologies and Risk Management Techniques.
With two leading MFIs, we have supported establishment of new Departments to better evaluate risk, introduce new credit scoring techniques, and increase lending for productive purposes. This will increase efficiencies in evaluating risk and allow the institutions to approve low risk loans faster, while focusing resources on higher risk profiles
Capacity Building to Assess Market and Introduce New Products.
We are working with several MFIs in Jordan on introducing new products, including new Youth and Start-Up products, a new Green Energy product, and an Islamic product. This product development process can take up to a year and includes a market demand study, institutional assessment of the MFI capacity to introduce the product, product policies, MIS set-up, product prototypes, marketing strategy, and training for relevant departments. We are also starting a market demand study for another MFI to map current product offerings against customer segments to determine possible product modifications.
Financial literacy and Training.
LENS provides capacity building to the various departments involved and works directly with branches to conduct training for potential clients. With one MFI, we are supporting a Training Centre and extensive curricula for both internal staff and potential clients. For another MFI, we have developed curricula and training plan in financial literacy targeted to youth.
Industry wide initiatives
Support for the Microfinance Industry through Tanmeyah.
We have supported several activities to enable Tanmeyah to provide high quality services to its members. This includes organizing Finance Fairs in several governorates to increase awareness of lending products and services and how microfinance can be used to start and grow a business. Another intervention studied HR Sector Benefits in MFIs and compared them to the banking sector to improve recruitment and retention in the sector. A third intervention will support an information sharing system for all Jordanian MFIs to be housed within Tanmeyah, to enhance both sector-wide reporting capabilities and provide strategic market information. The installation of the System will be done in coordination with the EU, that will cover the related Database maintenance costs until August 2019.
Initiatives to increase use of DFS and expand reach of MFI
Expanding Reach and Leveraging Technology.
LENS has supported promotion of alternative delivery channels and innovative technologies to expand MFI outreach. For one leading MFI, we procured a mobile branch bus to provide loans and other services in Ma’an and Tafileh, and introduced a kiosk to allow for repayments in Karak. We are supporting two other MFIs in the integration of their IT systems to the eFawateercom and Jomopay to provide clients with an alternative loan payment option without visiting a branch.
The support provided by USAID LENS currently in process and anticipated for 2016 totals $2.275 million in financial support to MFIs as well as on the ground support provided by the USAID LENS Access to Finance team.
The Jordan Microfinance Network- Tanmeyah, in cooperation with the USAID Jordan Local Enterprise Support Project (LENS), organised a series of finance fairs in target governorates. The finance fairs aim to improve access to finance for micro and small enterprises by increasing awareness of how microfinance can help entrepreneurs to start and grow a business and connecting Jordanian microfinance institutions directly to these entrepreneurs and business owners.