AMMAN — The JD275 million Jordan Capital and Investment Fund
promises to “inject money into promising companies” and create more jobs,
according to Maher Mahrouq, director general of the Association of Banks, in an
interview with Jordan News.
اضافة اعلان
The investment fund, the largest ever established by the
private sector in Jordan, comes at a time of economic difficulty for the
country. The COVID-19 pandemic has had a devastating impact on the local
economy, forcing businesses to close and all but eliminating the country’s
usually profitable tourism industry. In the fourth quarter of 2020,
unemployment reached almost a quarter (24.7 percent), according to the
Department of Statistics.
The fund, created through a collaboration between 14 commercial
banks and three Islamic banks, will have three major impacts on the Jordanian
economy, according to Mahrouq. “It can enhance the economic growth, at the
macroeconomic level,” Mahrouq said. It will “deliver a great message about the
investment climate in Jordan.” The fact that commercial banks are investing
almost $400 million into this fund could “be one of the major tools to promote
an investment climate in Jordan”, encouraging foreign investors to invest as
well. The third impact, the director general said, will be the creation of new
jobs as companies selected by the fund increase production and increase
exports. “Because if you look at the labor market in Jordan, the highest or the
fastest factor to create jobs, is to have economic growth,” he said.
Launched under the patronage of Prime Minister Bisher
Al-Khasawneh, the fund will partner with companies with strong growth potential
in Jordan. “Any company, or any sector (that) has a potential to increase its
products, to increase its exports” will be eligible for funding, said Mahrouq.
However, specific areas of focus include food processing, agriculture, the
chemical industry, pharmaceuticals, IT, and digital entrepreneurship.
Businesses selected by the fund will receive both financial
and managerial assistance.
“In the developing countries, the
managerial theory says that all of the family businesses actually in the third
generation are collapsed,” Mahrouq said. To combat this collapse, the fund will
“help the companies to enhance their management level” and “implement the
concepts of governance and corporate governance,” he explained. “Corporate
governance” describes “having companies, owners and regulators become more
accountable, efficient and transparent, which in turn builds trust and confidence,”
according to the World Bank. Establishing strong principles of corporate
governance may take on added importance in Jordan, where the Global Corruption
Barometer study found that over half the population believed corruption had
increased in the past year.
“This will give a long life, and sustainability” for
selected businesses, Mahrouq said. And this service is going to be a crucial
service and a crucial contribution from the fund as well.” According to the
director general, the Jordan Capital and Investment Fund is the only fund in
Jordan offering this kind of managerial and governance consulting to its
partners. Consulting and training sessions will enable companies to follow
global best practices.
Decisions on which opportunities will be selected will be
made by the board of directors for the fund, which will be completely
independent from the banking sector. The investment policy of the banks
requires “some kind of diversification in terms of sectors and in terms of
companies,” Mahrouq said. “You will not find a concentration of a fund in a
certain sector or a certain company.”
The fund is completely owned by the banks themselves,
despite the coordination with the Prime Minister. “The ownership is private,
the management is going to be (governed) by the private sector rules and
regulations,” Mahrouq said. The Central Bank of Jordan will function as a
regulatory body overseeing the operations of the fund. He described corporate
governance as “one of the major pillars and the cornerstone of this fund”, and
attributed the strong precedent for corporate governance in the banking sector
to regulations implemented by the Central Bank of Jordan.
On March 31, the government announced a 448 million JD
stimulus package, which Mahrouq described as “a good step but not enough” to
revive the Jordanian economy during the pandemic. He suggested that the
government could clear procedural obstacles for investors to encourage them to
“sustain the jobs that they have for their employees”.
Mahrouq emphasized that he hopes that the establishment of
the fund will promote an optimistic message about the Jordanian economy, with a
ripple effect that encourages investment from global investors. “We are
supporting our economy, because we do believe in the Jordanian economy. We
still believe in our country. We will continue believing that there is
opportunity and a lot of good things to come in Jordan.”
“The structural changes in the sectors and the companies are
actually going to reposition the sectors and the companies in terms of the
supply chain, the whole supply chain all over the world,” he said. “We have to
be ready for these kinds of changes because our life — and our business and
economic structure — after COVID-19 is going to be completely different than
our structure before.”
“In developing countries,” most family businesses fail after
the third generation, Mahrouq said. To combat this collapse, the fund will
“help the companies” at the managerial level by implementing “concepts of
governance and corporate governance,” he explained.
“This will give a long life, and sustainability” for
selected businesses, Mahrouq said. And this service is going to be a crucial
service and a crucial contribution from the fund as well.” According to the
director general, the Jordan Capital and Investment Fund is the only fund in
Jordan offering this kind of managerial and governance consulting to its
partners. Consulting and training sessions will enable companies to follow
global best practices.
Decisions on which opportunities will be selected will be
made by the board of directors for the fund, which will be completely
independent from the banking sector. The investment policy of the banks
requires “some kind of diversification in terms of sectors and in terms of
companies,” Mahrouq said. “You will not find a concentration of a fund in a
certain sector or a certain company.”
The fund is completely owned by the banks themselves,
despite the coordination with the Prime Minister. “The ownership is private,
the management is going to be (governed) by the private sector rules and
regulations,” Mahrouq said. The Central Bank of Jordan will function as a
regulatory body overseeing the operations of the fund. He described corporate
governance as “one of the major pillars and the cornerstone of this fund”, and
attributed the strong precedent for corporate governance in the banking sector
to regulations implemented by the Central Bank of Jordan.
On March 31, the government announced a 448 million JD
stimulus package, which Mahrouq described as “a good step but not enough” to
revive the Jordanian economy during the pandemic. He suggested that the
government could clear procedural obstacles for investors to encourage them to
“sustain the jobs that they have for their employees”.
Mahrouq emphasized that he hopes that the establishment of
the fund will promote an optimistic message about the Jordanian economy, with a
ripple effect that encourages investment from global investors.
