Maher Hasan Deputy Governor Central Bank of Jordan JLGC-SME Conference 2014 Amman, Jordan November 24,25, 2014

Outline 1. Importance of SMEs in the Jordanian Economy 2. Challenges Facing SMEs 3. CBJ’s Policy for enhancing Financial Inclusion 4. CBJ’s Programs Supporting SMEs 5. Expanding CBJ Regulatory Umbrella 2

3 Constitute 95% of all the companies in Jordan Create 70% of Job Opportunities Account for 40% of GDP

4 High cost of lending and inappropriate maturity Lack of Information Challenges with Managing SMEs risk Lack of Collaterals World Bank Loan ($70million) Arab Fund Loan ($200 million) CBJ Internal Window EBRD Loans $ 150 million & Guarantee Credit Bureau(expected to be licensed by end of 2014) CBJ Statistics for SMEs TA for Banks and training for SMEs New loan guarantee strategy Sharia Compliant Products

5 Communication Lowering banks cost of funds through programs with global and regional partners. Supply Lowering lending cost through programs with global and regional partners. Extending CBJ supervision to MFIs TA and training for SMEs Consumer protection Financial literacy Islamic Finance (level playing field) Demand Credit Bureau (expected to be licensed by the end of 2014) National payment strategy with focus on retail payments Infrastruct ure

World Bank Loan  USD 70 million for 15 years with 5 years grace period ( CBJ to banks)  Interest Rate: LIBOR+1.8%( CBJ to banks)  12 banks participated including 2 Islamic banks  More than 4000 clients benefited from the loan ( 58% outside Amman )  Average interest rate on loans granted to SMEs is about 6% 6

Arab Fund Loan  USD 50 million for 10 years with 3 years grace period ( CBJ to banks)  Interest Rate: 2.5% ( CBJ to banks)  12 banks participated including 1 Islamic bank  Will be disbursed to the banks very soon  USD 150 million non loans 7

 CBJ has an internal program directed to the industrial and tourism and renewable energy sectors. The program aims to provide medium-term financing to these sectors (including SMEs) at reasonable cost.  98 projects benefited from this program with a total amount that reached to JD 88 million as at 23/10/

 Availability of Information: The first Credit Information Company is expected to be licensed by the end of 2014 which will help in enhancing access to finance especially for SMEs.  Credit Guarantees: In cooperation with the IFC, restructuring and procedural improvements of the JLGC is undergone in order to provide the necessary collaterals to obtain funds for SMEs. 9

 The CBJ has finalized drafting the Microfinance Bylaw and sent it to the Cabinet in June-2014  As a second phase the CBJ will study the feasibility and the possibility of regulating all non-banking financial institutions 10

Thank you 11