Transcript Robert Dressen-Improving Growth and Containing Unemploymnet

“SMEs: Improving Growth and
Containing Unemployment”
Robert Dressen,
Senior Banking & Financial Services Advisor, DAI
JLGC - SME Conference
November 24, 2014
SME’s – THE CONTEXT
Small firms are
the lifeblood of a
country’s
economy
For example, in EU
Companies that are
SMEs
SME
Value added
Jobs
1
34
42
58%
66%
99%
Change in SME
financing
channels
USAID JCP
Traditional
New (as cited in the Economist, 16 August, 2014)
▪
▪
▪
▪
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Banks
Guarantee schemes
Friends and family
Non-financial institutions
Crowd funding
Insurance companies
Here in Jordan, USAID’s Competitiveness Program is trying something
different
Source: USAID JCP ATF team, the Economist
1
OVERVIEW OF USAID JORDAN COMPETITIVENESS PROGRAM
“Jordan Competitiveness Program (JCP) is a fiveyear program that is funded by the US Agency for
International Development (USAID) and managed
by Development Alternatives, Inc. (DAI)”
“The $45 million program will focus on increasing
competitiveness initially in three “knowledge
economy” sectors: ICT, Clean Technologies, and
Healthcare & Life Sciences”
“JCP aims to generate at least 40,000 well-paying
jobs, increase foreign direct investment by $700
million and increase exports by 25% over the next
five years”
2
USAID JCP APPROACH
SECTOR FOCUS – selected three business sectors with highest growth and
employment impact - ICT, Healthcare, and Clean Tech
MAPPED SOURCES OF FINANCING – angel/ VC, microfinance, leasing,
SME bank, and corporate bank
WORKFORCE DEVELOPMENT GAP ANALYSIS – demand and supply
Enabling environment interventions
Implementation plan
3
JORDAN’S ACCESS TO FINANCE CHALLENGES
Challenge 1
▪ Bank loans account for the majority of
financing for the economy
Challenge 2
▪ Angel and VC funding is limited and
focused on technology
▪ SMEs account for 10% of bank loans
Challenge 3
2 principal gaps for SMEs
▪ $50K-500K: early stage entrepreneur
▪ $500K-4,000K: growth capital to scale-up
Challenge 4
Demand side
▪ Investment/ financing readiness
▪ Awareness
▪ Deal flow
Source: USAID JCP ATF team,
Supply side
▪ Limited investor pool
▪ High thresholds
▪ Unclear exits
▪ Bank’s criteria for collateral
▪ Interest rates
▪ Loan tenors
4
JCP ACCESS TO FINANCE INTERVENTIONS
Angel/VC Investing
SME Financing
Demand
•
Investment readiness
training and toolkit,
business innovation
center, and business plan
competitions
•
Awareness and match
making sessions for Clean
Tech, financing readiness
training, and export
readiness for ICT
Supply
•
Bootcamp for new
investors, training for
existing angels, angel
investor network, and
crowdfunding trials
•
Facilitation of deals using
existing financing
schemes, improve
bankability of clean tech/
ICT/ healthcare
transactions, and bank
product development
5
WORKFORCE DEVELOPMENT CHALLENGES
Demand
•
Mismatch of skills of new graduates and the
skills needed by companies; curriculum
reform process does not keep pace with the
rapidly evolving market place
Innovation
gap
•
Lack of emphasis on new ideas,
competitiveness and practical applications
Information
gap
•
Weak career counseling and job placement
services
•
Centers of Excellence and Skills Development
Programs, Career Development Centers,
Entrepreneur Promotion and Internship
Support, Monitoring & Evaluation Systems
Skills gap
Supply
6