Date of Submission to Coordination Unit:

A. GENERAL INFORMATION

1. Activity NameJordan's SME Growth Programme 2013-2015

2. Requestor Information Name:Ministry of Planning & International Cooperation Title:Minister

Organization and Address:Ministry of Planning & International Cooperation, P.O.Box 555 Amman 11118 Jordan

Telephone:+962 6 4644466/ 4649023 Email:Zeina.Toukan@mop.gov.jo

3. Recipient Entity Name:Jordan Enterprise Development Corporation JEDCO Title:Eng. Yarub Qudah -Chief Executive Officer

Organization and Address:Jordan Enterprise Development Corporation – P.O. Box 7704 Amman 11118 Jordan

Telephone:+ 962 6 5603507 Ext. 2062/2041 Email:hana@jedco.gov.jo

4. ISASC RepresentativeName:Julien SERRE Title: FEMIP Trust Fund Manager

Organization and Address: European Investment Bank

100 Boulevard Konrad Adenauer Luxembourg L 2950

Telephone: +52 621 339 175 Email: j.serre@eib.org

5. Type of Execution (check the applicable box)√ Type Endorsements Justification

1.

Country-Execution Attach written endorsement from designated ISA

√ Joint Country/ISA-Execution Attach written endorsement from designated ISA

Jordan/ JEDCO (the nationally mandated entrepreneurship, Startups and SME support institution) and EIB will build on their strong relationship of working jointly on promoting the development of SMEs. Given the expertise of EIB in the activities foreseen as well as EIB participation along other IFIs and private investors in SME dedicated funds for the MENA region, and expecting that growth SMEs benefitting from the Programme could receive investments from the existing or future investment funds to be supported by EIB along

April 17, 2013

other investors, Jordan/JEDCO has decided that joint country and ISA execution was required with EIB.

EIB will be supporting Component 5 of the programme by ensuring the monitoring of a substantial deal flow to the existing SME funds for the MENA region (including the ones in which EIB participates).

ISA-Execution for Country Attach written endorsement from designated ISA

(Provide justification for ISA-Execution)

ISA-Execution for Parliaments

Attach written endorsements from designated Ministry and ISA

6. Geographic Focusx Individual country (name of country):Jordan

Regional or multiple countries (list countries):NA

7. Amount Requested (USD) Amount Requested for direct Project Activities:(of which Amount Requested for direct ISA-Executed Project Activities):

USD 3,650,000(USD 190,000)

Amount Requested for ISA Indirect Costs:1 USD 200,000Total Amount Requested: USD 3,850,000

8. Expected Project Start, Closing and Final Disbursement DatesStart Date: September 16,

2013Closing Date:

September 15, 2015

End Disbursement Date:

December 30, 2015

9. Pillar(s) to which Activity RespondsPillar Primary

(One only)Secondary(All that apply)

Pillar Primary(One only)

Secondary(All that apply)

Investing in Sustainable Growth. This could include such topics as innovation and technology policy, enhancing the business environment (including for small and medium-sized enterprises as well as for local and foreign investment promotion), competition policy, private sector development strategies, access to finance, addressing urban congestion and energy intensity.

√ Enhancing Economic Governance. This could include areas such as transparency, anti-corruption and accountability policies, asset recovery, public financial management and oversight, public sector audit and evaluation, integrity, procurement reform, regulatory quality and administrative simplification, investor and consumer protection, access to economic data and information, management of environmental and social impacts, capacity building for local government and decentralization, support for the Open Government Partnership, creation of new and innovative government agencies related to new transitional reforms, reform of public service delivery in the social and infrastructure sectors, and sound banking systems.

x

Inclusive Development and Job Creation. This could include support of policies for integrating lagging regions, skills and labor market policies, increasing youth employability, enhancing female labor force participation, integrating people with disabilities, vocational training, pension reform, improving job conditions and regulations, financial inclusion, promoting equitable fiscal policies and social safety net reform.

x Competitiveness and Integration. This could include such topics as logistics, behind-the-border regulatory convergence, trade strategy and negotiations, planning and facilitation of cross-border infrastructure, and promoting and facilitating infrastructure projects, particularly in the areas of urban infrastructure, transport, trade facilitation and private sector development.

x

1 ISA indirect costs are for grant preparation, administration, management (implementation support/supervision) including staff time, travel, consultant costs, etc.

B. STRATEGIC CONTEXT

10. Country and Sector Issues

Achieving sustained growth and reducing unemployment and poverty are the main development challenges in Jordan. Innovation support, entrepreneurship, start-ups and small and medium enterprises (SMEs) development are seen as critical players in addressing these national challenges and do contribute towards its sustainable solution.

Role of MSME’s in Jordan Economy

Micro, small and medium enterprises (MSMEs) today are positioned as the backbone and vanguard of the modern enterprise sector in Jordan. The 2011 General Economic Establishments Census revealed that MSMEs represent 98% of Jordanian enterprises, 66% of which have less than 19 employees; employ 70% of the total labor force employed by the private sector; produce outputs that contribute 40% towards national GDP, and account for 45% of total exports. The total number of operating enterprises is 165,879, of which 135 are non-Jordanian owned, 45.8% are located in Amman, 16.7% in Irbid and 14.8% in Zarqa (main economically active Governorates in Jordan). In terms of company legal form, the number of individuals - owned (sole proprietorship) enterprises is 135,904 making up 86.7% of the total number of enterprises, followed by the joint-liability establishment at 8.9%. The percentage of enterprises employing less than 5 workers is 91.5% of the total number of enterprises, while enterprises that employ more than 20 workers accounted for 1.9%. Enterprises with an income of less than JD 5,000 accounted for 35.2% of the total number of enterprises, while those with an income more than JD 500,000 constituted 1.4%. This reveals that Jordan continues to have a dearth of enterprises with over 50 employees, making it a nation of very small enterprises.

MSMEs present the propelling force of economic modernization and growth at large and are an important sector that needs to continue being adequately factored into policy making and programme implementation in every national private sector development policy. The growth potential of the sector and its critical role in all productive sectors, distribution and value chains can only be underscored. The development of MSMEs is increasingly recognized as important to the economic, social and human development of Jordan and a clear priority of the government. Supporting MSMEs is identified in the National Agenda 2006-2015 as one of the elements of a holistic approach to stimulate economic development and improve social welfare and security.The Executive Development Plan 2011-2013 states “empowering and building the capacity of MSMEs” and “stimulating new start-ups” as short-term objectives for enhancing the competitiveness of the national economy, noting that the challenge is to increase investments in high-valued sectors in order to create more job opportunities. The Plan set targets for increasing the share of MSMEs in gross domestic product (GDP) to 40% by 2013, from a baseline of 30% of GDP in 2009 (in line with the stated aim in the National Agenda 2006-2015 to increase the MSME share of GDP to 47% by 2017); and for increasing the ratio of the workforce employed in MSMEs to 76% by 2013, from a baseline of 70% in 2009.The 2011 General Economic Establishments Census revealed that MSMEs have reached the 40% target contribution to GDP before 2013 and efforts are now focused on achieving the targeted 47% contribution sought by 2017.

Although MSMEs are not deliberately proclaimed and used by the Government (until recently) as a direct tool to contribute towards poverty reduction; their role as a medium for employment creation and creating a source of income had always been acknowledged. MSME development is a tool for alleviating some of the economic and social disparities between the various regions of Jordan. The government’s goal is to reduce development discrepancies between governorates and municipalities by increasing the available financing opportunities for micro and small enterprises, especially in the poorest regions, and encouraging the private sector and non-governmental organisations (NGOs) to set up development and productive investment projects that will increase employment opportunities for women and the unemployed, expanding the number of Development Zones to 10 by 2013, channelling more funds through the Agricultural Credit Corporation and implementing the Governorates Development Fund are among strategic actions.

Jordan is also facing other critical demands in terms of improving the productivity and competitiveness of its MSMEs to compete in international markets through innovation, upgrading, modernisation, and accelerating investment and economic growth. Actions are needed to address weaknesses in the institutional and business environment framework, the position of Jordanian products in world markets, and the basic infrastructure which supports industrial, technological, touristic and agricultural investments.

Macro and micro level actions are needed to strengthen the MSME sector. Macro level requires political and macroeconomic stability, clear and transparent regulations, secure property rights, rule of law, andstable and well-functioning financial markets. Micro level actions include MSME development agencies and programmes in parallel with efforts to improve the policy, legal and regulatory environment in which MSMEs operate.To address the multiplicity and interaction of factors that underpins the growth and competitiveness of MSMEs, a more coherent, holistic and integrated approach to their development is currently being undertaken by the Government and will be reflected in the National Entrepreneurship and MSME Development Strategy (2013-2017). The Strategy will seek to address challenges resultant from the impact of globalisation of production and opening of domestic markets, as they can have an adverse effect on the structure of the MSME sector, with MSMEs losing ground in terms of competitiveness and leading to a predominance of micro-scale and necessity-driven, “survivalist enterprises” in the structure of the economy. To a great extent, this has been happening in Jordan.

The Current Status of the MSME Sector

The first major observation is that the density of MSMEs (25.6 per 1,000 inhabitants) in Jordan is low compared to the global average and for a country at Jordan’s level of economic development.

Secondly, an analysis of MSME sector trends reveals very slow growth in the net stock of non-agricultural enterprises over the past five years – an annual average increase of only 1.3% from 2006 to 2011. Net growth in the number of enterprises is the end product of a dynamic that reflects the entry of new businesses (start-ups) and the survival rates of new and existing businesses. Unfortunately, due to the lack of relevant statistical data on this dynamic in Jordan, it is not possible to assess the underlying factors in the slow growth rate in the stock of enterprises. However, it is noted that the net growth in number of enterprises was lowest for those with 1-4 employees (annual average of just over 1%). On the other hand, the net stock of enterprises with 10-19 employees, 20-49 employees and more than 100 workers has increased by an average of about 4% a year in each of the size categories. This could indicate a slower rate of new business start-ups (since it might be assumed that start-ups generally fall in the 1-4 employee enterprise category) and/or the movement of enterprises from one size class to another. Furthermore, growth in the net stock of enterprises slowed considerably in the second half of the decade, compared to the 2000-2005 period, a trend that would be threatening to Jordan’s future growth if it was to continue.

Thirdly, employment in non-agricultural private enterprises grew by an annual average of 2% from 2005 to 2010, again at a much slower growth than during the 2000-2005 period (annual average of 6.5%). This is also a trend of concern. The share of employment in enterprises with 100 or more employees has been increasing while the share of employment from enterprises with fewer than 50 employees has been shrinking. However, the end result is that the average firm size has increased from 3.9 employees in 2000 to 4.6 employees in 2010.

Fourthly, over the 2000-2011 period, the number of self-employed persons increased by an annual average of 1.3%, again at a very slow rate. Overall, self-employment rates have dropped from 17.1% of employment in 2000 to 15.2% in 2011 and the actual number of self-employed persons has been on the decline since 2009. This suggests that self-employment is growing at a slower pace than that of overall employment. Women make up less than 5% of self-employed persons, which is exceedingly low compared to their participation in self-employment activity in other countries. However, over the past ten years, although their numbers are very small, Jordanian women have been becoming self-employed at more than three times the rate of men, suggesting that self-employment is becoming a more attractive employment option for Jordanian women.

Fifthly, the prevalence rate of early-stage entrepreneurs in the adult population (percentage of adults in the process of trying to start a business combined with the percentage of adults who own a young business of no more than 42 months old) is lower than might be theoretically expected for a country at its level of development. This suggests room for boosting entrepreneurship promotion efforts.

Constraints to entrepreneurship and MSME development

Although MSMEs are dominant in Jordan, their small size distribution, particularly the dominance of enterprises with fewer than five workers, places them at a disadvantage relative to large enterprises. They have fewer internal

resources and less capacity to innovate and compete in global markets. They suffer from a lack of management skills, financing, and technology that limits their survival and growth potential. The majority of MSMEs focus on the production of traditional, low value-added goods with mediocre quality, serving local markets, and competing on the basis of price. Very few have the capacity to export and/or compete in international markets. The vast majority do not have any quality control systems in place or follow quality control procedures that are in compliance with international quality certification systems. They do not invest heavily in technologies that will add value to their products and overall economic performance, and exhibit low levels of technology utilisation.

Apart from internal constraints, the ability of MSMEs to function effectively is also impacted by external factors. These include the markets in which they operate (e.g. entry barriers, competition); policies, laws and regulations affecting business activities, which do not sufficiently consider the impact on smaller enterprises in their development and implementation; and the organisational and institutional arrangements surrounding the enterprise (e.g. business support entities and services, financial mechanisms, etc.), with an uneven availability of these supports at the regional level.

There are few empirical studies of Jordanian MSMEs, however, consultations with business and sector associations, government officials and MSME support providers during the preparation phase to prepare the first National Entrepreneurship and SME Development Strategy (2013-2017) reveal consensus on the major obstacles acting as barriers to MSME development. These are:

A weak entrepreneurial culture; Lack of financing; Lack of entrepreneurial and management skills and capacity, coupled with inadequate access to business

development, advisory and diagnostic support services, especially in the governorates; Market access; Lack of innovation and technology adoption/development; and Legal, regulatory and administrative challenges.

These barriers are magnified for new enterprises, which can have a deleterious effect on business start-up rates and the survival and growth opportunities of new entrepreneurs. Women and young people starting businesses are even more seriously impacted because of their lack of experience, management skills, participation in formal business networks, and credibility. In addition, Jordanian stakeholders emphasized the high input costs (e.g. cost of energy); the lack of appropriately skilled labor due to an education and training system that is not adequately preparing graduates with “employability skills”; and the low commitment/investment of MSMEs in training their workers, all of which reduce their productivity and competitiveness.

The Current Entrepreneurship and MSME Support Landscape

The entrepreneurship/MSME support system in Jordan is comprised of a number of government and non-governmental organisations offering project-based programmes to address the financial and business support needs of MSMEs. A large number of these organisations and programmes were put in place since 2000, with Jordan Enterprise Development Corporation – JEDCO – established in 2003, being nationally mandated by the Government through a law to spearhead and implement policies and actions to support the development of enterprises throughout their lifecycle. Furthermore, there is a number of existing good support initiatives to promote and support entrepreneurship and MSME development at various stages of the business cycle currently undertaken by JEDCO and other entities in Jordan. These include entrepreneurship education and culture-building initiatives; start-up support; training and counselling; consultancy and upgrading assistance; innovation support; export development assistance; and financing support.

On the other hand, it appears that most programmes have limited reach in terms of beneficiaries and access in many parts of Jordan. Access to support programmes is often through a competitive process and non-selected, but promising applicants have few other avenues for professional guidance. There is no mechanism for coordinating the range of service providers and programme efforts and the quality of services offered. This can result in sporadic and geographically uneven support offerings, as well as hinder policy learning and the capacity to identify and fill gaps and scale-up good initiatives. In addition, a number of the organisations delivering MSME support initiatives are dependent on donor or other project-based funding, which affects the continuous, sustained delivery of their

programmes and services. Only a few organisations and/or programmes target the development of women entrepreneurs.

Challenges faced by MSMEs in Jordan

Government-led studies and surveys have confirmed the above constraints and identified the following challenges as limiting factors to the vibrant growth, competitiveness and productivity of MSMEs. It has been concluded that these challenges are serious obstacles hindering the growth of enterprises from micro too small to medium, and finally to a large scale enterprises. The Government is currently undertaking the necessary steps with the support of the private sector and donor agencies to address the predominant challenges below, through the various relevant institutions, with JEDCO taking a leadership role in implementation and facilitation of actions across the board to address the identified constraints.

1. Lack of and difficulties in accessing capital and finance. Start-ups and MSMEs have an intrinsic inability to meet collateral requirements of banks, are unable to access other forms of financing, in addition to their lack of knowledge about how to properly prepare loan/financing requests, etc.). Microfinance is not consistently available in all parts of Jordan, for example, some microfinance institutions operate with geographic criteria or only in poverty pockets where the unemployment rates are highest; there are rigid guarantee requirements for bank loans, even if the loans are guaranteed by the Jordan Loan Guarantee Corporation (JLGC); and forms of equity investment capital are under-developed.

2. Inadequate availability and access to updated market information and intelligence (e.g. information on market opportunities, export markets, market competition, etc.) make finding export markets, understanding and meeting regulatory and consumer requirements a further challenge.

3. The variance in product quality, high input costs (e.g. cost of energy); lack of diversification and innovation also reduces the productivity of MSMEs and their competitiveness.

4. Difficulties in accessing technology and the lack of technology know-how within most Start-ups and MSMEs,

5. Lack of human capital management skills, including growth-enabling know-how (i.e. marketing, sales, financial and HR management; product and process development, strategic planning); how to think innovatively, start and grow a business are further drawbacks that contribute to Entrepreneurship and SMEs growth prospects in the economy.

6. Quality MSME diagnostic, innovation and business support services are limited, expensive and not readily available or accessible to the private sector- and particularly those located or want to locate in the Governorates, hence nine out of a total of twelve governorates are lagging behind, and need to be integrated into this proposed national MSME growth programme in order to facilitate an equitable distribution of development and modernization across Jordan. When present though, we witness a low awareness among MSMEs of the government and other support programmes available.

7. The availability of innovative and skilled labor as the tertiary and vocational education system is not adequately preparing graduates with ‘employability skills' and we witness a low commitment/investment of MSMEs in training their workers.

8. Collaboration between MSMEs, Innovation and R&D service providers and Universities is negligible,

9. There are very weak to non-weak linkages between Start-ups, MSMEs and larger firms; hence value chains – if existent - are very vulnerable and fragile.

10. Competent and certified consultants, specialized business coaches with sector and technology knowhow, mentors and training and capacity building services in applied disciplines that MSMEs will need towards their business growth.

In spite of efforts to improve MSMEs’ access to training, financing through microfinance, loan guarantees, government

grant and subsidy schemes to boost MSME activity, and the launch venture capital funds, the financial market for MSMEs is severely underdeveloped. The unmet demand for microfinance is estimated at JD 150 million to JD 200 million, bank lending to MSMEs comprises less than 10% of the business loan portfolio, the volume of loan guarantees to GDP is only 0.07% (below the benchmark in several other developing MENA countries), and new venture capital funds are only sizeable enough to make a few investments, although a FEMIP study in 2007 identified the financing gap for SMEs to be US$1.5 billion.

EIB is a key actor in support to Jordan’s SMEs through its lending, risk capital ( e.g. Jordan Capital for Growth Fund, Badia Impact Fund) and technical assistance. EIB attaches great importance to the development of SMEs, which can contribute to mobilizing more dedicated resources for equity funds in the country and for global loans to local banks supporting small and medium enterprises. EIB’s FEMIP has made the development of SMEs a priority, with 2,500 companies supported between 2001-2012. EIB is not directly involved in projects, but funds local banks, with 55% of FEMIP funds going to the private sector, mostly SMEs. EIB has provided loans to Jordanian banks supporting SMEs and envisages a guarantee scheme, reflecting the Bank’s confidence in the country’s capacity to grow successful companies.

11. Alignment with Transition Fund Objective

The project fully aligns with the objectives of the Transition Fund and mainly with the primary pillar of investing in sustainable growth, in addition to responding in a secondary manner to the other three Transition Fund pillars: inclusive development and Job creation, Enhancing Economic Governance and Competitiveness and Integration. It builds on the accumulated experience of JEDCO in the area of supporting the upgrading, modernization and development of Entrepreneurship, Startups and SMEs by providing specialized and focused technical assistance. It fulfills and is in line with the global and MENA region governments approach to promote and enable innovation, invention, patents and copy-rights registrations and enforcements, IP commercialization, and responds more directly to the ambitions and needs of both Government and society at large to ensure inclusive growth and development by targeting populations of less developed regions and governorates in Jordan, education and skills empowered women and youth.

The project provides technical assistance, specialized and/or advanced human capital training, capacity and capability building to boost growth through future technology transfer and adoption, trade, and job creation. It is foreseen that this programme will be directly linked with the existing and future new Funds in which the ISA participates (Jordan Capital for Growth Fund and Badia Impact Fund)that will facilitate access to finance and provide options for financial instruments such as equity and/or mezzanine capital that does not exist in Jordan.

This programme is positioned as a new generation programme that introduces a new paradigm for sophisticated business support and growth provisions. It will further reinforce and enable JEDCO's high growth insight by establishing a new Entrepreneurship, Startups and SME Growth Observatory, which will monitor and document enterprise behavior, and policy related matters and impact, in addition to harnessing potential business opportunities, linkages and market intelligence to provide meaningful insight into the wider targeting of JEDCO activities, in addition to adding value and support to those of the Chambers of Industry, Commerce and business association community in Jordan. This is an intelligent programme, analytically learning as it delivers to continuously yield higher impact and value over time. It will provide and adapt methodologies and tools proven to deliver high growth and a return on investment. It will aim at providing access to the largest and most experienced coaching pool in Europe in order to develop capacity in the Jordanian business coaching community via targeted coaching and "hand-holding" ensuring maximum value from each customer engagement. It includes a plan to establish relationships with local accountants, lawyers, and investors to provide connectivity to the local private sector community. The overall offering is a value proposition to clients that establishes the Jordan's SMEs Growth Programme as the premier access point into the fastest growing companies in Jordan. This may also serve as an information base for Investment Funds seeking credible business opportunities in Jordan.

Specific measures that will be undertaken by the project to achieve TF objectives and pillars:

The measures - illustrated by the components of action foreseen in this project - mainly anticipate responding to Pillar 1: Investing in Sustainable Growth.

By introducing tailored training, advanced and quality business coaching and specialized business support services that respond to specific entrepreneurs and MSME community needs in Jordan identified through the comprehensive diagnostic stage of the project; an investment in the sustainable growth of these enterprises and hence their positive impact on the economy will be achieved.

This will lead to an overall enhancement of the operational business environment (including that for local and foreign investment promotion), and respond to private sector development strategies (also highlighted in the fourth pillar of the Transition Fund Competitiveness and Integration).

The National Entrepreneurship and MSME Development Strategy (2013-2017) emphasizes the need for specialized training services to be offered across Jordan in leadership, strategic management development and marketing, in addition to facilitating access to finance, especially to implement the business growth plans that are developed by these MSMEs as an outcome of these training activities. It is proposed that one of the tools to facilitate access to finance may be through introducing and offering competitive grants to contribute towards the financing of the implementation of these enterprises growth plans. These grants may leverage bank loans, in addition to enhancing the attractiveness of the MSME to venture capital and investors in Jordan, the region and possibly the international sphere. Priority topics that will be encouraged and addressed by the beneficiary MSME base of this project will be related to productivity enhancement, innovation and technology needs, in addition to the provision of solutions that address the energy challenges and costs they face and are affecting their competitiveness in the markets.

Furthermore this project will respond in a secondary manner to the other pillars of the Transition Fund particularly Inclusive Development and Job Creation as entrepreneurs and MSMEs and human capital from lagging regions will be targeted when soliciting beneficiaries for this project. It is anticipated that the training offered will develop skills and increase youth and female employability, improving job conditions and maybe integrate people with disabilities if they can function within the minimum requirements of these MSMEs.

Finally, Enhancing Economic Governance will also be achieved through establishing the MSME Observatory at JEDCO, as it will facilitate and simplify access to economic data and information, publish reports, manage economic, environmental and social impacts (where applicable), in addition to offering capacity building for the organization and its staff in the areas of research and policy support, management of operations, developing the private professional and business services sector, outreach and communication. The project implementation will be transparent, with anti-corruption and accountability policies in place to ensure easy oversight, integrity, and will contribute towards creation of new and innovative government agencies related to new transitional reforms, and reform of public service delivery in the social and infrastructure sectors.

12. Alignment with Country’s National Strategy

This advanced support Programme is aligned to Jordan's National Strategy depicted in the National Agenda and its updated version currently underway in addition to the evolving first National Entrepreneurship, Start-ups and SMEs Development Strategy (2013-2017) currently being prepared by JEDCO to be raised for Cabinet approval and action-plan endorsement in the third quarter of 2013. It is part of the focused efforts aimed at developing MSMEs by introducing and supporting their adoption of innovation, and the provision of an accelerated growth support facility to promising Startups and MSMEs that have a demonstrated growth threshold for the last 3 years. It aims at building capacity of the private sector professional business and service provider community in a manner consistent with the outputs of the Services Sector Development Masterplan (2013-2017). These efforts are all in alignment with Jordan's overall objective to pursue a knowledge-based economy, leveraging the country’s strong human capital base, creating jobs and reducing the country’s substantial fiscal deficit.

Furthermore, this project aims at preparing MSMES to grow and innovate utilizing a competent and uniquely certified Jordanian provider talent pool and with the connection to venture capital is an integrated approach that will certainly support transforming the culture and advance the targeted MSME and fast growing audience. Jordan/JEDCO through

this project will also be investing in developing the national talent pool that will be empowered and positioned to be an exporter of these specialized business support and development services in the region, hence further build the Jordanian consultancy and professional services sector and help them grow their exports. This is aligned to the goals and objectives of the Jordan Services Development Masterplan (SDMP) 2013-2017.

This project is proposed to be implemented by JEDCO, taking into account its national mandate to support the establishment and development of enterprises throughout their life-cycle to become globally competitive, and to become the Jordanian national organization most recognized for increasing enterprise exports and substituting imports with equivalent or better local products and services.

The proposed project addresses JEDCO’s core values providing support for entrepreneurship and innovation, capability and capacity building to SMEs to export and compete globally, sustain and create new jobs and facilitate the value chains that will enhance Jordan's integration in the global market. These values will reinforce the basis for sustainable business and economic growth equipping Jordan to advance into the new millennium. Since independent research has shown that growth may occur in any sector, and that high growth is achieved uniformly across sectors and business profiles, the project will focus on businesses which have the capacity to grow from any sector thereby supporting the economy’s need to diversify its reliance on the service sector which accounts for 67% of gross domestic product (GDP) and more than 70% of jobs. Having a diverse, robust and resilient economy will allow Jordan to be better placed to deal with any future economic crisis.

With JEDCO's current successes in: policy advocacy; developing and introducing national strategies and masterplans; pro-active approach to coordinating national efforts targeted at developing entrepreneurship and MSMEs; designing and implementing entrepreneurship and MSME development programmes; introducing and managing access to finance tools and implementing them; in addition to its credible track record of positively impacting its client base of 1400+ enterprises, and with the prospect of introducing a Startups and SME Growth Observatory (not present in Jordan), and tasking it with the provision of information on Entrepreneurship and SMEs to policy-makers, researchers, economists and SMEs themselves (i.e. improving the monitoring of the economic performance of entrepreneurship, startups and small and medium sized enterprises (MSMEs) in Jordan and providing an empirical foundation for the design of SME policies); it is believed that the longer term vision and potential for pioneering new approaches will respond to the Government’s need to leverage private capital for investment in key business development and outreach into the governorates infrastructure and continue with the provision of business development and innovation support activities.

C. PROJECT DESCRIPTION

13. Project Objective

Project Overall Objective:Supporting and sustaining Startups and SMEs - with particular focus on high-value growth enterprises –to increase productivity and competitiveness through adopting and applying innovation.

Specific Objectives:1. Employing innovation, business coaching and other forms of sophisticated support tools, inclusive a growth accelerator for high growth businesses- facilitating support to high-value growth sectors.2. Building capacity within Startups and MSME eligible beneficiaries to access competitive finance, technology and know-how to achieve sustainable growth and create new high-added value employment opportunities.3. Selecting and training professional service providers to offer quality services to entrepreneurs and MSMEs and establishing a Business Coach Roster and an advanced interactive online database.4. Establish an Entrepreneurship and MSME Growth Observatory at JEDCO (inclusive recruitment and training of technical staff), tasked with a research and monitoring role.5. Generate a positive and promising MSME deal flow to existing and future Venture Capital Funds and investors in Jordan and the region.

14. Project Components

This proposal builds on nationally existing efforts, and is aligned to recommendations made in the National Entrepreneurship and MSME Development Strategy (2013-2017). It proposes the implementation of a new technical assistance and financial support facility to support the provision of solutions to 50% of the challenges identified (mainly those covered in points 1,4,6,8 and 10) above. The link between the challenges and the solutions proposed will be clearly emphasized in the overall objective, specific objectives, expected results and components/activities. The targeted audience for this project (inclusive all components) include startups and entrepreneurs (with focus on innovative and traditional ones) in addition to existing enterprises employing between one and 300 full time employees, and operational in all economic sectors in Jordan. Component 3 target population is further identified in the description of the component below and referred to as "High Growth Companies."

The project will fund the technical assistance of the contractor/the service provider of diagnostic studies services, training needs assessments, training programme implementations; certification and accreditation costs, IP registrations and commercialization that result from the innovations produced by the beneficiary enterprises, etc. of components 1, 2 and 3 below.

Project Components include:

Component 1: Identifying, diagnosing and recruiting Startups and SMEs with growth potential motivated and committed to invest in development and innovation.

Sub-Component 1.1: Identifying, diagnosing and recruiting Startups and SMEs with growth potential motivated and committed to invest in development and innovation.

This component will include the implementation of an open call of interest to solicit and identify Startups and MSMEs that demonstrate their interest (this constitutes willingness, readiness and ability) to invest in innovation and technology to facilitate their growth, enhanced competitiveness and employment generation capacity. Eligibility criteria will be developed to guide the process and guideline to screen and recruit these enterprises shall be developed by JEDCO and the contractor to ensure the transparency and credibility of the process. Once selected these companies will undergo a comprehensive diagnostic phase where their needs and priorities for support will be identified. A detailed business growth plan will be developed and costed in order for funds to be allocated and raised towards its implementation.

This diagnostic phase will be undertaken and/or managed by the contractor in cooperation with relevantly specialized business national and international experts. Wherever possible, group and/or sectoral diagnostic services may be implemented.

Sub-Component 1.2: Training JEDCO Staff:

This will include building the capacity within JEDCO to provide demand driven innovation services to deliver goals and outputs of the project through working collaboratively with the private sector. The Contractor will be required to evaluate the skills of the existing JEDCO staff from the relevant Directorate(s) to be assigned to following up on the implementation of this component. A training needs assessment will also be conducted in order to prepare the relevant staff to manage and monitor the undertakings of this stage of the project. It is expected that JEDCO staff will be trained in good and innovative practices to promote the programme, motivate and encourage the Startups and MSMEs to join and benefit from this opportunity.

Component 2: Providing and Training internationally recognized and accredited, monitored and specialized business coaching service providers in areas of sustainable growth, productivity enhancement and competitiveness, technology, innovation and exports development.

Evidence demonstrates the need to upgrade, build capacity and certify Jordanian professional service providers (i.e.

talent pool) to offer specialized and state-of-the-art/cutting-edge support to entrepreneurs and MSMEs in Jordan in order to coach and enable them to identify, develop and implement their strategic growth plans in addition to responding to obstacles and barriers existing and/or anticipated in the future to establish their competitiveness and comparative advantage in the local and target export markets. It is crucial to organise and coordinate the required talent pool upgrading and development activities, in a manner that ensures that participating enterprises (beneficiaries of the Growth Programme) receive a focused and integrated support approach from the Government inclusive an enhanced complimentarity with the coaching elements this national talent pool will be offering.

Sub-Component 2.1: Identify, recruit, train, qualify and promote business coaching service providers:

The component will aim at identifying, assessing, training and providing competent and specialized national and international coaches to work face to face with Startups and SME owners and management teams to help them to develop and implement their business strategies, develop their skills, expertise and techniques to overcome the barriers they face to achieve their targeted growth potentials. Coaching will be provided on a range of general and specific business areas including but not limited to:

Fully identify growth potential and developing growth action plans, assessing the resources available and/or needed to achieve them and costing their implementation,

Helping on key business issues such as marketing, strategy and sales, Helping businesses undertake technology, energy and other efficiency and optimization audits in order to

identify the necessary technology or know-how that needs to be acquired, Helping individuals in the senior management team to develop and sharpen their leadership and

management skills, Helping businesses to raise external finance, for example by providing tailored specialist help to develop a

successful investment pitch and/or bank financing request dossier, Providing advice on how to innovate and commercially exploit innovation or how to identify and protect

intellectual property and copyrights, Helping businesses maximize their growth potential by improving productivity, competitiveness and

internationalizing their business. Helping business identify with and match-make with global supply chain opportunities in national and

international markets. Helping high-growth Startups and SMEs expand their market share and target multinational corporations for

collaboration agreements and licensing technology/IP.

It is worthwhile to note that having national and international business coaches and experts working together will establish a solid cross-border professional network and platform to share knowledge, experience, transfer skills and know-how and will offer a more comprehensive opportunity for beneficiary enterprises to be benchmarked against similar enterprises and competitors in the global market, hence contributing to their strategic growth plans in a manner that has medium to long-sight goals to achieve. This project component will also require specialized certified training to be implemented towards the Jordanian national consultancy community identified and recruited to constitute the home-grown business coach talent pool to ensure that a legacy exists once the project has been completed. This talent pool will be categorized and reflected in a Business Coach Roster forming the core of a Roster of Experts to be developed to serve the Jordanian and possibly MENA/GCC region.

Sub-component 2.2: Establish Business Coach Roster and advanced Matchmaking correlations and other monitoring support features database. This may be an online and interactive tool.

JEDCO will aim at fully integrating these business development service offerings to other forms of support from both the public and private sector that it is aware of and has access too into one consolidated and multi-layered and interactive online database. This will assist beneficiary enterprises to have access to correlated technical assistance, facilities, finance, specialists and networks to support their growth.

Component 3: Exclusively select and support high-growth (defined as a being in a phase in which the business is achieving a minimum of 20% increase in turnover or staff in three consecutive years) companies (and with potential for greater genuine and rapid sustainable growth), by implementing an exclusively advanced intensive coaching, training, certifications and grant contribution Accelerator programme that is tailored to deliver the strategic intervention to support the aspirations of this exclusive group of beneficiary companies.

Sub-component 3.1: Exclusive Startups & SME Beneficiary Selection Process Implementation.

This component may include the implementation of an open call of interest to solicit and identify Startups and MSMEs that demonstrate high growth as per definition above (if they were not already identified and/or attracted in the process implemented for component 1 above). Eligibility criteria will be developed to guide the process and guidelines to screen and recruit these enterprises shall be developed by JEDCO and the contractor to ensure the transparency and credibility of the process. Once selected these enterprises will undergo a comprehensive diagnostic phase where their needs and priorities for support will be identified. A detailed business growth plan will be developed and costed in order for funds to be allocated and raised towards its implementation. This diagnostic phase will be undertaken and/or managed by the contractor in cooperation with relevantly specialized business national and international experts. Wherever possible, group and/or sectoral diagnostic services may be implemented.

Sub-component 3.2: Provision of sophisticated tailored services, grants and after care services to selected businesses.

Advanced services will be provided by the contractor and national/international talent pool and delivered to these high-growth enterprises in a manner responsive to their pace and respective needs. Grants may be provided to contribute towards facilitating the acquisition of technology (inclusive equipment and software), certifications, patenting and commercialization of innovation (if applicable), and offering intensive support to companies wishing to integrate in global value and supply chains.

It is to be noted that a separation between component 1 and 3 has been established in order to facilitate the delivery of a two tracks and parallel approach to support eligible entrepreneurs and MSMEs. It is a global good practice to differentiate between the high-growth and slow to normal growing enterprises to expedite their expansion and further development. Introducing the concept of a business Accelerator to host and provide intensive and tailor made services and grants to expedite implementations of business growth plans to this select group of enterprises will allow a facilitated realization of growth prospects that will reflect on the national economy. These businesses will be in a better position to position their investment needs to banks, VC or investors with the type of support and training that they may be offered. A good role model for these accelerators is the US Plug and Play Accelerator Programme serving the ICT sector enterprises in Silicon Valley. The concept of this project's sub-component is that it will work on an expanded approach of supporting an linking entrepreneurs, startups and MSMEs active in all economic activity sectors (and not only ICT as Oasis500 does).

For the purposes of implementing Sub-Component 2.1 and Sub-Component 3.1, a promotional campaign to stimulate demand for consultancy providers and to increase the business perception of the value of coaching services to help grow the reputation of consultancy service providers and to demonstrate the return on investment through the use of case studies in key target sectors will be implemented.

Component 4: Establishing a Startups and MSMEs Growth Observatory at JEDCO with the capacity to: i) monitor the Entrepreneurship, Startups and MSME sector, ii) document enterprise behavior, and policy related matters and impact, iii) harnessing potential business opportunities, linkages and market intelligence to provide meaningful insight into the wider targeting of JEDCO activities, iv) adding value and support to those of the Chambers of Industry, Commerce and business association community in Jordan. The Observatory will identify national needs and trends, facilitate and advocate for their satisfaction and utilization.

Sub-Component 4.1: Establish and Equip the Observatory with the necessary hard and software to establish a service portal and enable operation. This Observatory (a novel specialized unit in Jordan) will allow JEDCO to employ good practice models implemented in the EU, as the tasks that will be undertaken include researching, compiling and providing information on Entrepreneurship and MSMEs to policy-makers, researchers, economists and MSMEs themselves (i.e. improving the monitoring of the economic performance of entrepreneurship, startups and micro, small and medium sized enterprises (MSMEs) in Jordan and providing an empirical foundation for the design of

SME policies). The Observatory to be established will be in the form of a Unit within the Policy Support Department within the Cross Cutting Support Directorate at JEDCO. This Observatory will also host the interactive database containing the talent pool of Jordanian service providers trained by this project. It has organizational development capacities for JEDCO.

The Observatory will undertake in cooperation with the relevant institutions in Jordan specialized surveys on entrepreneurship and MSMEs in Jordan and produce/or contribute towards two annual reports the Global Entrepreneurship Monitor (GEM) and the MSMEs in Jordan Report. The MSMEs in Jordan Report will include two parts, the first reflecting the state of matters in the sector, meanwhile the second part will focus on a specific theme relevant to MSMEs in that year (e.g. Competence development in MSMEs, Productivity Enhancement, MSMEs and Access to Finance, Internationalization of MSMEs etc...). It is worthwhile to note that the EU has established such an Observatory at a regional level, meanwhile Croatia for example has a good model implementation at a country level.

In addition to the above role, the Observatory will host the interactive and comprehensive multi-layered (3-tier) database developed to serve all the other four components of this project, have the task of maintaining and updating its content, promoting awareness and enhancing and developing the network of its users, gauge all programme implementations in Jordan and obtaining and coordinating their impact reports (if possible), It will be the core of a national knowledge base in the area of Entrepreneurship and MSME development in Jordan. The total anticipated budget to establish, equip and run this Observatory for the first 3 years (duration of this project) is US$ 600k of which US$ 100k will be in the form of in-kind contribution from JEDCO.

Sub-Component 4.2: Recruit and train 3-5 new specialized JEDCO staff to manage/operate the service.

A maximum of 5 staff members will be recruited for the operation of the Observatory, of which four will be senior and junior technical researchers, and one administrative support officer. The project will fund the salaries and training of the employed of 3 – 5 personnel to manage and implement the operations of the Observatory, for the duration of the project. JEDCO will undertake the necessary steps to sustain their employment and continued function as part of JEDCO's staff after the completion of the project.

The project will also finance the technical assistance to design and development of the interactive database (if not already available in the market) that will establish the core knowledge base at JEDCO, and its integration with the Management Information Systems that JEDCO has, in addition to a suitable capacity server.

Furthermore, it is anticipated that the project will also fund the development and publication of the flagship reports in the project lifespan, after that JEDCO will undertake the necessary steps to allocate the necessary funds for this activity sustainability.

Component 5: Providing a positive, supported and credible deal flow to existing and future new Funds and/or other investors.

Sub-Component 5.1: Undertake due diligence services of identified deal flow to the existing and new Funds and/or other investors.

Providing a positive, supported and credible deal flow to the two existing Funds dedicated to SMEs in the MENA region, including those in which the European Investment Bank is participating (e.g. Jordan Capital for Growth Fund and Badia Impact Fund), in addition to attracting and meeting the needs of potential national and international investors and investment portfolios of banks, venture capital and/or holding companies.

Sub-Component 5.2: Monitor the deal flow to the existing funds and provide advisory support on the due diligence services.

EIB will act as ISA of this component by ensuring the monitoring of the deal flow of SMEs that benefit from the Programme and that could subsequently receive investments (debt, equity) from the existing funds or from future ones to be established. In order to deliver on this task, EIB (as the ISA) will hire 1 staff resource to be located in Jordan

for a period of 4 years (from Y2-Y5).

15. Key Indicators Linked to Objectives

Key measurable indicators relevant to the corresponding components and are directly linked to Project's objectives above and can be used in the results framework for project monitoring are:

1a. Number of identified, diagnosed and recruited Startups/MSMEs ready, willing and able to participate in the Jordan Startups and MSMEs Growth Programme.

1b. Number of trained JEDCO staff to undertake the relevant functions associated with this project implementation.

2 a. Number of trained and certified/accredited specialized business coaching service providers through an internationally recognized partner in areas of sustainable growth, competitiveness, productivity enhancement, technology, innovation and exports development. Training delivery models may include online training, workshops, one-to-one coaching, one-to-many many peer group workshops for needs common to more than one business and where shared learning can increase the take-up and impact, etc.

2 b. Number of beneficiary high growth potential Startups/MSMEs receiving coaching services.

2 c. Number of high growth potential Startups/MSMEs implementing growth, innovation oriented and/or export development plans.

2 d. Number of matched Startups/MSMEs with global supply chain opportunities in national and international markets.

2 e. Number of high-growth Startups/MSMEs with collaboration agreements and/or licensing technology/IP with multinational corporations.

2 f. Impact assessment of the implementation of these on growth, innovation oriented and/or export development plans i.e. increased sales, profits, exports, number of export markets, number of employment opportunities created, etc.

2 g. Number of IP (patents, copy rights, electronic designs, software codes and software etc…) generated, registered and commercialized (if applicable).

2 h. Number of business or collaboration agreements signed between businesses to achieve international technology transfer deals and partnering agreements.

2 i. Creation of a JEDCO roster (database) of consultants and business coaches including the segmentation of expertise and establishing a matchmaking tool providing each high growth Start-up and SME with a choice of Jordan's best consultants versus their business needs.

2 j. Promotional campaign to stimulate demand for consultancy providers and to increase the business perception of the value of coaching services to help grow the reputation of consultancy service providers and to demonstrate the return on investment through the use of case studies in key target sectors.

2 k. Business Coach Performance will be monitored and continuously assessed via client surveys and annual performance reviews undertaken by Account Managers within the Startups and SMEs Growth Observatory at JEDCO.

3. Number of exclusive high growth businesses benefiting from this intensive and exclusive service.

4. Establishment and functioning of a Startups and SMEs Growth Observatory at JEDCO. Development and adoption of an annual action plan to be implemented by the recruited and trained team.

5. Number of supported and credible deal flow Startups and MSMEs (inclusive members of the exclusive high-growth businesses group) to the existing and future new Funds and/or potential national, international investors, and investment portfolios of banks, venture capital and/or holding companies.

The project is expected to train 100 business coaches and service providers, support 350 businesses and will create, within two years of project completion, impact of:

Approximately, USD 50 million economic growth (increase in turnover of participating businesses) 1,000 jobs created

D. IMPLEMENTATION

16. Partnership Arrangements (if applicable)

The implementation of this programme will require contracting the services of national and international service providers in the fields of business coaching and development, innovation facilitation and development, R&D evaluation and validation, IP registration and commercialization, supporting high-growth and innovative startups and existing businesses by understanding and meeting their needs, sourcing and training the necessary human capital inclusive existing or new employees, sourcing new technology, localizing and facilitating its adoption and training beneficiary Startups and SMEs on its utilization. Wherever possible, partnerships with academic and R&D institutions of both the government and private sector in Jordan will be sought by JEDCO.

Furthermore, international certification and accreditation bodies will need to be identified as partners for the implementation of this project, and agreed with to certify the Jordanian business coaches and service providers. Jordanian and/or international Universities or research centers will need to be identified and agreed with in order to undertake R&D evaluation and validation services prior to the IP registration. Identified partners will be coordinated with and relationship organized through special MOU's at the outset of the project implementation.

JEDCO’s vision for the project is to create the infrastructure conducive to improve the quality of business coaching to accelerate the economic impact through business turnover growth and new job creation. The legacy of the project will be created through engagement with indigenous consultancy community to transfer knowledge and know-how.

JEDCO has consulted widely with many stakeholders to ensure that the proposed project is effectively positioned and integrated within the wider business support landscape in Jordan. As a result of this consultation, the contractor is required to work closely with JEDCO to adapt and implement these findings in addition to bringing their own expertise, systems and processes allowing for full intellectual property and data transfer to JEDCO on completion of project.

The implementation of this programme is directly connected to accessing and leveraging finance from the existing Funds and future ones in which the ISA has participated. The outputs of this programme will be amongst the main source of deal flows for these Funds EIB (the ISA) will advise JEDCO on how to improve coordination with the existing funds so as to ensure access to equity finance to a higher number of MSMEs in the country.

17. Coordination with Country-led Mechanism/Donor Implemented Activities

JEDCO, the EIB and the contractor will work closely with related donor activity (if applicable) to ensure that the outputs and outcomes of this project contribute towards fulfilling national economic policy and the country objectives set out in corresponding donor-orientated country strategies for Jordan In particular, JEDCO will work through the mechanisms established by the Ministry of Planning and International Cooperation in Jordan (mandated to undertake donor coordination activities) and the EIB will relay to the Deauville IFI working group on MSMEs the advancement and results of this initiative also with a view to averting duplication of efforts in Jordan.

Below is a brief describing current major ongoing initiatives and activities that JEDCO is aware of and/or spear-heading their implementation:

Governmental Support for Entrepreneurs, Start-ups and MSME’s:

Other than JEDCO, the Development and Employment Fund (DEF), and the Ministry of Planning and International Cooperation Programme IRADA are the main providers of government support to MSMEs. DEF is a major provider of microfinance, both through direct lending to micro and small enterprises, and indirectly through grants to other microfinance institutions (MFIs) for relending to microenterprises. IRADA has 32 offices throughout Jordan offering business counselling services to micro and small enterprises in the governorates (enterprises with less than JD 100,000 of investment), including feasibility studies, marketing support, and training). JEDCO has signed a cooperation agreement with IRADA to expand its outreach and services provision in the different governorates of Jordan.

JEDCO focuses on supporting economic enterprises from the idea to internationalization phases of their life-cycle. Accordingly it supports and manages a network of eight innovation centers and business incubators across Jordan. Furthermore it has specialized programmes to support established small and medium enterprises (with 5-300 employees) by facilitating their modernisation, enhancing their productivity and competitiveness (including in export markets), and also provides some programme support for new entrepreneurs (support for business incubators, seed grants for start-ups). JEDCO is currently studying the feasibility of establishing Business Development Units (BDUs) in five pilot governorates with the technical support of the World Bank MSME Facility Programme. This initiative will be completed in April 2013 and is directly linked to the World Bank US$ 70 million credit line programme being implemented by the Central Bank of Jordan.

Flagship government and donor support programmes implemented by JEDCO include:

1. EU and Government funded Jordan Service Modernization Program (JSMP Phase I & II) (2009-2017) with a total of Euro 30 million with the total number of 264 beneficiaries to date.2. EU and Government funded Support to Enterprise and Export Development Program (JUMP I & II) (2005 – 2017) with a total of Euro 45 million with a total number of 1085 beneficiaries to date.3. Government funded export promotion programme implemented since 2005 with an average annual participation of 350 – 450 beneficiaries.5. The USAID US$ 30 million SME Financing Programme leveraging Loan Guarantees of US$ 300 million (OPIC Fund).6. Increasing access to finance through The Banking Window Programme implemented by JEDCO which offers financial coaching and loan applications dossier preparation services to Jordanian companies looking for greater access to finance. This programme is listed as a best practice program in the EU-MENA Database of Good Practices managed by DG Enterprise and Industry in the EU.8. Establishing and launching a Governorate Development Fund (with a total investment of US$ 350 million) over the next five years.9. Creating two venture capital funds dedicated to support SMEs in the early stage and growth phases with the participation of the EIB and other financing institutions. The Capital for Growth Fund with a first closing of US$ 30 million is already active and is managed by Abraaj Capital. Secondly, EIB signed equity participation, under European Neighborhood Partnership Instrument (ENPI) resources, of up to EUR 4m in Badia Impact Fund, a closed-end venture capital fund that will be managed by a first-time team actively supported by an established Jordanian venture capital firm.

The Fund seeks to invest seed, start-up and expansion capital in early and growth stage Technology, Media, and Telecom (TMT) Small and Medium-Sized Enterprises (SMEs) located predominantly in Jordan or in one of the Mediterranean partner countries. This operation supports venture capital that is key not only in providing long term equity and quasi-equity funding to the real economy but also in providing long term strategic and operational value added to start-up investee companies.

In the area of enhancing the business environment:

Developing and formulating a Services Sector Development Master Plan (SDMP) to promote the development of the services sector – contributing 67% to GDP.

Developing and formulating a National Startups and MSME Strategy and Law.

As the project will be implemented by JEDCO, it will already be coordinated with the other ongoing and potential

pipeline Entrepreneurship, Start-ups and SME upgrading and development support programmes in Jordan. The project will also ensure that JEDCO communicates to ambitious businesses the Government’s new and existing initiatives is which it can leverage support for growth made available through loan guarantees, technical assistance and targeted grants. As such, JEDCO will enable an integrated business support offering, signposting businesses to other forms of support, and overcoming inertia and barriers to growth.

EIB will leverage the results of this project to improve the allocation of its risk capital funds and loans to Jordan, and will coordinate with other IFIs to increase the impact of their operations on SMEs, job creation and growth. Results could assist in the development of the SME Guarantee facility set up by IFC, EIB and AFD. In addition, EIB will consider through a separate initiative to improve the access by SMEs in Jordan to capital markets (2 nd tier capital market initiative) and will ensure coordination with these results.

18. Institutional and Implementation Arrangements

The project will be implemented by JEDCO, the EIB and a contractor with a demonstrated track record of similar service delivery preferably in Jordan and/or the MENA region. An Agreement will be signed between JEDCO and the EIB as soon as the grant application is approved to enable the implementation of the project in September 2013. An international tender to identify and contract a qualified service provider to support JEDCO in the implementation of Components 1-4 below shall be undertaken asap and as per the procurement procedures of the EIB. The role of the contractor(s) will be further elaborated on in the detailed terms of reference that will be part of the tender for services to be procured.

Each implementing agency will implement its risk management system where capacity, governance, fraud and corruption, etc. are concerned and as per the good practices, operational manuals and standards they apply. Financial management, reporting and procurement procedures will be implemented in accordance to the Transition Fund/donor requirements. Flow of funds and the accountabilities for financial reporting will be agreed upon with the EIB (the ISA responsible for supporting JEDCO/Jordan in this project).

JEDCO will work with the internationally recruited contractor to implement this project and to enable the transfer of intellectual property and know-how into the Jordanian economy. The contractor must demonstrate their experience of working with the business community (preferably the Jordanian Business Community) to create innovative products, improve productivity and increase growth through international trade and partnerships. The contractor must also demonstrate their experience in attracting external funding through donors and the private sector to increase the impact of this Transition Fund Grant. Due consideration will be given as relevant to EIB’s procurement rules and requirements as ISA of the Transition Fund.

The Contractor will undertake in close collaboration with the relevant Directorates at JEDCO the actions related to Components 1-4.

The institutional capacity of JEDCO will be developed so that the organization receives knowledge transfer, systems and processes for designing, managing and evaluating these pioneering economic development initiatives. The capacity building will also create a business intelligence model - Establishing a Startups and SMEs Growth Observatory at JEDCO - to facilitate higher value engagement with Jordanian businesses, building trust and reputation for this project and new initiatives, helping to evolve programme design to adapt to business needs and changing economic conditions in global markets, in addition to undertaking the publication of two annual flagship reports to reflect the state of entrepreneurship in Jordan (GEM) and the MSME's in another separate report. This Observatory will be the nucleus of the Knowledge development and management system that JEDCO hopes to establish as part of its organizational development requirements.

A dedicated EIB resource will be responsible for carrying out the activities under Component 5 as outlined in Section 14 above.

19. Monitoring and Evaluation of Results

The design of the project will provide transparency, accountability and participation of the stakeholder community and, in particular, JEDCO’s active involvement in the project through close working relationship with the selected delivery partner. The contractor will be required to have an office in close proximity to JEDCO to ensure a close working relationship is achieved. The delivery model will track progress and gather impact figures using proven techniques which are based on international methodologies – adapted specifically for the Jordanian business environment – to be independently audited by a recognized auditor. Processes to capture outputs and outcomes are required to be built into the governance of the contract with training provision made available for JEDCO staff.

The indicators relevant to the project objectives will be the key method of measuring success. The contractor will have an active role in monitoring programme delivery and impact assessment as appropriate. Results are anticipated as being:

1. USD 50 million increases in business turnover within 5 years of programme implementation.2. 1,000 new jobs created within 5 years of programme implementation.

Whilst the outcomes above will be the primary measure of success, it is expected that JEDCO and the contractor will also track outputs measured through the following targets.

350 businesses assisted 350 growth plans created 100 trained Business Coaches and Service Providers. Other quantifiable business benefits listed by participating businesses e g cost savings achieved through

improved productivity, etc.

Tailored follow-up and reporting templates will be developed by JEDCO and the contractor for the components 1-4 to track progress in the project and business coaches' performance, MSME customer satisfaction, and business coach feedback on client's commitment to the programme. A regular interval information collection process shall be initiated by JEDCO's M&E Department and a random quality assurance testing of data shall be undertaken in a regular manner as well to ensure information accuracy and validation.

EIB acting as the ISA will contribute to the monitoring and evaluation of Component 5 of the Programme.

E. PROJECT BUDGETING AND FINANCING

20. Project Financing (including ISA Direct Costs2)

Cost by Component Transition Fund(USD)

Country Co-

Financing (USD)

Other Co-Financing

(USD)

Total(USD)

Component 1: Identifying, diagnosing and recruiting Startups and SMEs with growth potential motivated and committed to invest in development and innovation.(a) Sub-component 1.1: Identifying, Diagnose and Recruit

Start-ups and SMEs to enter the Programme.(b) Sub-component 1.2: Training JEDCO Staff

500,000

475,000

25,000

10,000

5,000

5,000

NA 510,000

Component 2: Providing and training internationally recognized and accredited, monitored and specialized business coaching service providers in areas of sustainable growth, productivity enhancement and competitiveness, technology, innovation and exports development.(a) Sub-component 2.1: Identify, recruit, train, qualify

and promote business coaching service providers.(b) Sub-component 2.2: Establish Business Coach Roster

and advanced Matchmaking correlations and other monitoring support features database. This may be an online and interactive tool.

760,000

710,000

50,000

NA NA 760,000

Component 3: Exclusively select and support high-growth companies, by implementing an exclusively advanced intensive coaching, training, certification and grant contribution Accelerator programme to support the aspirations of this exclusive group of beneficiary companies.(a) Sub-component 3.1: Exclusive Startups & SME

Beneficiary Selection Process Implementation.(b) Sub-component 3.2: Provision of sophisticated

tailored services, grants and after care services to selected businesses.

1,700,000

100,000

1,600,000

NA NA 1,700,000

Component 4: Establishing a Startups and SMEs Growth Observatory at JEDCO.(a) Sub-component 4.1: Establish and Equip the

Observatory with the necessary hard and software to establish a service portal and enable operation.

(b) Sub-component 4.2: Recruit and train 3-5 new specialized JEDCO staff to manage/operate the service.

500,000

200,000

300,000

100,000(In-kind)

NA 600,000

of which100,000(In-kind)

Component 5: Providing a positive, supported and credible deal flow to existing and future new Funds and/or other investors.(a) Sub-component 5.1: Undertake due diligence services

of identified deal flow to the existing and new Funds

190,000

(ISA EIB: 90,000)

NA NA 190,000

2ISA direct costs are those costs related to the ISA’s direct provision of technical assistance within the project.

and/or other investors.(b) Sub-component 5.2: Monitor the deal flow to the

existing funds and provide advisory support on the due diligence services.

(ISA EIB:100,000)

Total Project Cost 3,650,000 110,000 3,760,000

21. Budget Breakdown of Indirect Costs Requested (USD)

Description Amount (USD)For grant preparation, administration and implementation support (EIB):

Staff time 140,000Staff travel 6,000Services 54,000

Total Indirect Costs (EIB) 200,000

F. Results Framework and Monitoring

Project Development Objective (PDO):

PDO Level Results Indicators*

Unit of MeasureBaselin

e

Cumulative Target Values**Frequen

cyData Source/Methodology

Responsibility for

Data Collection

Description (indicator definition

etc.)YR 1 YR 2 YR3 YR 4 YR5

Indicator One:a) Identifying, diagnosing and recruiting Startups and SMEs with growth potential motivated and committed to invest in development and innovation.b) No. of JEDCO Staff (Account Managers) trained

a) No. Of Startups & SMEs

0 100 175 250 300 350Quarterly Startups and

SMEsJEDCOContractor

Contractor & JEDCO

b) No. of Staff Trained

0 5 10 15 25 25

JEDCO

Indicator Two:Providing internationally recognized and accredited, monitored and specialized business coaching service providers in areas of sustainable growth, competitiveness, technology, innovation and exports development.

a) No. Of trained Business Coaches and Service Providers.

0 25 50 75 100 100 QuarterlyJEDCOContractor Service ProvidersInternational Service Certification BodiesStartups and SMEs

Contractor & JEDCO

b) Growth Impact of Services Delivered on Businesses.

0

10.

10% 20% 50% 65% 75%

c) Database at JEDCO

0 1 1 1 1 1

Indicator Three:Exclusively select and support high-growth companies, by implementing an exclusively advanced and intensive coaching Accelerator programme to support the aspirations of this exclusive group of beneficiary companies.

a) No. of exclusive high growth Startups & SMEs selected.

0 25 50 100 135 175 QuarterlyJEDCOContractorProvidersInternational Service Certification BodiesStartups and SMEs

Contractor & JEDCO

b) Variety of tailored services/Coaching Days obtained.

0 10 20 30 40 50

Indicator Four: Observatory0 1 1 1 1 1

Establishing a Startups &SMEs Growth Observatory at JEDCO

3-5 TrainedStaff

Quarterly JEDCO Contractor & JEDCO

0 3 5 5 5 5

Indicator Five:Providing a positive, supported and credible deal flow to the existing and future new funds and/or other investors.

No. of Due Diligence Studies and generated Deal flows

0 No. will be established by the 2nd Year of project implementation.Provisionally it would aim at supporting 10% of the high growth SMEs that will benefit from the Programme.

QuarterlyJEDCO/EIBJordan Capital for Growth FundBadia Impact Fund&/or other investors.

Contractor & JEDCO/EIB

0

N.B An option to include an independent evaluation of the project should be considered to audit the results claimed by the contractor.

INTERMEDIATE RESULTS

Intermediate Result (Component One):a) Identifying, diagnosing and recruiting Startups and SMEs with growth potential motivated and committed to invest in development and innovation.b) No. of JEDCO Staff trained

Intermediate Result indicator 1: Contractor Recruited and Mobilized

Within 3 months NA By month 3 1. Call for

proposal to identify contractor.2. Evaluation Committee Reports on Selection Process.3. Contract Signed between JEDCO and Contractor. Payment transfers for services rendered.

Contractor & JEDCO

Intermediate Result indicator 2:Marketing communication created and JEDCO website updated

Within 3 months NA By month 3

1. JEDCO Marketing Communication Strategy.2. JEDCO Website

Contractor & JEDCO

Intermediate Result indicator 3:Contractor Delivery office and JEDCO implementation Unit established

Within 3 months NA By month 3

Unit Establishment, staffing and operations at JEDCO.

Contractor & JEDCO

Intermediate Result (Component Two):Providing internationally recognized and accredited, monitored and specialized business coaching service providers in areas of sustainable growth, competitiveness,

technology, innovation and exports development.Intermediate Result indicator 1:Attract, Recruit & Certify Business Coaches

Within 6months NA 15Coaches

30Coaches

50Coaches

65Coaches

85Coaches

Quarterly 1. Call for Proposal from interested business coaches.2. Selection Reports for the business coaches.3. Attendance to training records.4. Copies of certificates awarded to Business Coaches.

Contractor & JEDCO

Intermediate Result indicator 2:Offer Services to Startups & SMEs

Within 6 months NA 50 100 150 200 250 Quarterly 1. Copies of communication listing the services offering to the MSME community.2. Expressions of interest received from the MSME community.3. Copies Services contracts to MSMEs.

Contractor & JEDCO

Intermediate Result (Component Three):Exclusively select and support high-growth companies, by implementing an exclusively advanced and intensive coaching Accelerator programme to support the aspirations of this exclusive group of beneficiary companies.

Intermediate Result indicator 1:Identify & Engage With targeted Startups and SMEs

Within 6 months NA 5 15 35 50 75 Quarterly 1. Applications of Interest from the MSMEs.2. Assessment Reports of applicant MSMEs.3. Copy of Agreement with MSME to commit to the support program.

Contractor & JEDCO

Intermediate Result indicator 2:Provide Tailored Services

Within 6 months NA 3 7 15 20 35 Quarterly List of services provided and Time plan for execution.

Contractor & JEDCO

Intermediate Result (Component Four):Establishing a Startups and SMEs Growth Observatory at JEDCOIntermediate Result indicator 1:Establishing the Observatory

Within 9 months 1 1 1 1 1 1 Quarterly JEDCO Board of Directors Decision to Establish and staff Observatory and integrate it in the Organizational chart as part of the Policy Department at the Cross Cutting Support Directorate.

Contractor & JEDCO

Intermediate Result indicator 2:Recruiting & Training Staff

Within 9 months 2 3 4 5 5 5 Quarterly 1. Posts advertisement.2. Shortlisted Candidates Interview reports.3. Staff Contracts.4. Staff training needs assessment reports.5. Staff attendance of training programs.

Contractor & JEDCO

Intermediate Result (Component Five):Providing a positive, supported and credible deal flow to the existing and future new Funds and/or other investors.Intermediate Result indicator 1:No. of Due Diligence Studies Conducted.

To Be Established

NA NAProvisionally it would aim at supporting 10% of the high growth SMEs that will benefit from the Programme.

Quarterly Copies of Due Diligence Studies.

Contractor & JEDCO/EIB

Intermediate Result indicator 2:No. of Successful Startups and SMEs that attract investments

To Be Established

NA NAProvisionally it would aim at supporting 10% of the high growth SMEs that will benefit from the Programme.

Quarterly Copies of Investment agreements.

Contractor & JEDCO/EIB