MSME Development Project for Inclusive Growth

closed

The objective of the Micro, Small and Medium Enterprises Development for Inclusive Growth Project for Jordan is to contribute to the improvement of access to finance for micro, small and medium enterprises in the Hashemite Kingdom of Jordan. The proposed operation will be a Financial Intermediary Lending (FIL) with one component (Lines of Credits). The Lines of Credits will provide Participating Financial Intermediaries (PFI) loans to eligible PFIs for the purposes of on-lending as sub-loans to eligible beneficiaries or Microfinance Institutions (MFIs) for the carrying out of sub-projects. The operation will enhance the role of financial institutions in economic growth through financing and developing the Micro, Small and Medium Enterprises (MSME) sector in Jordan. A special focus would be placed on providing increased long and medium-term financing for these enterprises' investment. The operation will comprise a line of credit channeled through the Central Bank of Jordan to banks that either have an active MSME portfolio or the willingness and capacity to develop one. The banks will then on-lend the funding directly to micro and small enterprises or MFIs that will on-lend to MSMEs. The participating banks could be incentivized through various mechanisms such as tenor, having access to training and capacity building under the MSME Regional Technical Assistance (TA) Facility and through enhanced amounts, in case the lending proposals support on-lending to those market segments that face the biggest market failures, such as lending to viable MSMEs in remote areas.