“Learning” to Engage the Private Sector in Development
This blog post was written by Ali Hayat (Chief of Party, MESP) and Margaret Lada (Monitoring and Evaluation Specialist, MESP).
Private sector engagement is an essential part of addressing development challenges. Key outcomes related to economic development hinge on the ability of the private sector to generate sufficient opportunities, income, and investments. The private sector can also play a role in efficiently providing certain goods (for examples books, food etc.) that contribute to the accomplishment of larger development objectives such as improving the quality of education or enhancing food security. Development interventions are also more likely to be sustainable when there are incentives for the private sector to continue to perform certain necessary roles.
However, the private sector’s ability to play such a constructive role requires an enabling environment and a certain level of development within the private sector. Understanding the profile and maturity of the private sector is therefore an essential first step for efforts focused on engaging the private sector. Such an understanding is also beneficial for figuring out the type of technical assistance that may be provided to the private sector to further enhance its maturity and its ability to positively contribute to development outcomes.
The global economic crisis, regional instability and a skills mismatch between graduates and market demands have slowed Jordan’s economic growth. A rapidly growing population and the influx of refugees are placing additional pressure on the labor market. As a result, unemployment has increased from 12.2 percent in 2012 to 18.1 percent in the first half of 2017. The poverty rate has also increased from 14.4 percent in 2010 to an estimated 20 percent in 2016. In this context, a priority of the donor community lies in the development of the Jordanian private sector and increasing employment. When it comes to the data on the private sector however, up until recently the donor community has had access to a limited number of sources. Even the more systematic and standardized World Bank Enterprise survey, last fielded in 2014, only covers 573 businesses from five out of the twelve governorates of Jordan and therefore does not capture the present and complete realities of the private sector. To address this knowledge gap, the USAID Jordan monitoring and evaluation support platform, Monitoring and Evaluation Support Project (MESP), conducted a survey of the private sector during the winter of 2017.
Private Sector Survey
Starting from a universe of over 80,000 registered Jordanian businesses, the USAID Monitoring and Evaluation Support Project used quota-based non-equal probability sampling that allows for representative data at the company size, sector (based on International Standard Industrial Classification) and governorate level. USAID Monitoring and Evaluation Support Project conducted a survey of 1,864 registered businesses throughout Jordan towards the end of 2017.
The survey is representative of the Jordanian formal private sector at the governorate, business-size, and business-sector levels. The survey questionnaire built on the World Bank Enterprise Survey and captures the perceptions of the private sector on key issues surrounding growth and competitiveness in Jordan, including company performance, employment, access to finance, the business enabling environment, connectedness, and attitudes toward women and youth.
PRIVATE SECTOR SURVEY – KEY FINDINGS
Firms are focused on local markets, with very little national or export activity
92 percent of firms access markets within their own governorate. 37 percent of firms access markets across Jordan. 9 percent of firms export to the Middle East and North Africa (MENA) region. Less than 5 percent of firms export outside of the MENA Region.
Most firms are struggling, but small firms struggle more
62 percent of firms are in poor financial health. 67 percent of micro firms and 57 percent of small firms are in poor financial health compared to 35 percent of large firms.
Access to finance is limited
88 percent of firms state that access to finance is important to their growth and success. However, only 23 percent have applied for a loan.
Employment is erratic, with no clear strategy or pattern
47 percent of firms report erratic hiring patterns.
Women face challenges in engaging in the private sector
Only 16 percent of firms are owned by women. 49 percent of firms report that they do not hire women as employees.
Private sector lacks connection
Only 12 percent of firms work with or are a part of a trade association or other organized business interest groups. Only 35 percent of businesses collaborate with other businesses.
Private sector is underserved
70 percent of firms reported that business support services were not available to them.
Sharing Learning and Fostering Collaboration: Engaging the Relevant Stakeholders
On October 24, 2018, the USAID Monitoring and Evaluation Support Project hosted an event to release the survey data. The event featured an overview of the survey methodology and key findings, followed by an in-depth panel discussion with local business leaders to discuss the real-world implications of the survey findings. The discussions focused on major areas of concern for Jordan’s economic growth and development, including access to finance, employment, firm financial health, market access and gender. Audience members were also encouraged to visit the publicly accessible Jordan Development Knowledge Management Portal and download the dataset, questionnaire, and other materials to use in their own work and program development.
The event brought together over 75 stakeholders from USAID, the Government of Jordan, the donor community, implementing partners, and the private sector to discuss major findings from the survey data. The event was a first step in fostering collaboration between development actors to create data-driven, synergized strategies to engage the private sector and tackle Jordan’s most pressing economic growth and development priorities.
MESP is currently implementing a post-event engagement strategy to ensure continued collaboration, learning and utilization of the private sector survey findings. This includes providing tailored follow-up presentations to USAID implementing partners and other governmental and non-governmental stakeholders, hosting workshops on data analysis and visualizations so that stakeholders have the ability to use and analyze the PSS dataset themselves, and conducting individual consultations with stakeholders on how to integrate this data into program designs and approaches. All the materials and data related to the private sector survey have also been made available on KAMP, the Jordan Development Knowledge Management Portal.
For more information on the private sector survey including the dataset, questionnaire, event presentations and videos please visit the Jordan Development Knowledge Management Portal.