AMMAN, July 12, 2005 -
The International Finance Corporation, the private sector arm of the World Bank Group, signed today in Amman a memorandum of understanding with the government of Jordan to review the legal and regulatory framework for leasing and to propose improvements.
The signing is the result of close cooperation between Jordan’s Ministry of Planning, Ministry of Finance, and Ministry of Industry and Trade, which have collaborated with IFC to boost the role of leasing in the country’s financial sector. The program will be implemented through IFC’s technical assistance program, the Private Enterprise Partnership for the Middle East and North Africa (PEP-MENA).
As Jordan’s lending environment still relies heavily on collateral – mostly land and real estate – leasing provides one of the best opportunities to expand term financing for capital investments to small and medium enterprises. Since the establishment of the Temporary Leasing Law in 2002, leasing activities have developed moderately in Jordan, with only a few financial institutions actively offering this instrument.
Key objectives of the review include eliminating inconsistencies between the law and associated by-laws and reviewing the lease registration process. Improvements to this process will enable liens to be placed on movable property, significantly expanding access to finance. Other activities of the program in Jordan will include a conference on the benefits of leasing for small and medium enterprises, to be held in partnership with the Ministry of Industry and Trade, along with capacity building for selected lease finance providers.
“Establishing a best practice environment for leasing is expected to boost the leasing market in Jordan, which in turn will contribute to increasing access to finance for small and medium businesses,” said Sami Haddad, director of IFC’s Middle East and North Africa Department.
“This partnership strengthens the existing cooperation between IFC and the government of Jordan, especially in developing the financial sector. The signing of this memorandum of understanding comes as part of the government’s efforts to review economic laws and regualtions, and it supports financial reforms aimed at developing and deepening Jordan’s financial market,” said HE. Mrs Suhair Al-Ali, Minister of Planning and International Cooperation of the Hashemite Kingdom of Jordan, who signed the agreement on behalf of the government.
IFC has invested $1.1 billion in 198 leasing companies in 46 countries and $8.4 million in technical assistance for leasing, including establishing or improving related regulatory frameworks. PEP-MENA’s Middle East and North Africa Leasing Development Program is part of IFC’s strategy to strengthen local financial markets. The program is already active in Afghanistan, Algeria, and Yemen and is expected to expand to other countries in the region.
PEP-MENA is IFC’s technical assistance facility supporting private sector development in the Middle East and North Africa. It focuses on improving the business-enabling and regulatory environment in the region; strengthening the financial sector; promoting the growth of small and medium enterprises and their support services, such as business organizations and consulting firms; helping restructure and privatize state-owned enterprises; and developing viable private sector and public-private partnership projects, especially in infrastructure.
The mission of IFC (
www.ifc.org
) is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY04, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY04 was $17.9 billion for its own account and $5.5 billion held for participants in loan syndications.
