Program Data Sheet
278-005

USAID MISSION: Jordan
PROGRAM TITLE: Broad-Based Economic Growth (Pillar: Economic Growth, Agriculture, and Trade)
STRATEGIC OBJECTIVE AND NUMBER: Increased Economic Opportunities for Jordanians, 278-005
STATUS: Continuing
PLANNED FY 2002 OBLIGATION AND FUNDING SOURCE: $87,000,000 ESF
UNOBLIGATED PRIOR YEAR FUNDS AND FUNDING SOURCE: $187,000 ESF
PROPOSED FY 2003 OBLIGATION AND FUNDING SOURCE: $133,500,000 ESF
INITIAL OBLIGATION: FY 1997      ESTIMATED COMPLETION DATE: FY 2004

Summary: The ultimate goal of USAID’s economic opportunities program is to support broad-based economic growth and an improved quality of life for all Jordanians. The program consists of three major components:

• Increased access to business services;
• More effective identification and implementation of policy reform;
• Improved environment for sustained policy reform.

Inputs, Outputs, and Activities: FY 2002 Program: As in previous years, USAID will obligate funds for direct project activities and a policy-based cash transfer program. A total of $37 million will be utilized for technical assistance, training, commodities and grants that support a range of broad-based economic growth project activities under the business services and policy components. These funds will be used primarily to: 1) provide micro, small and medium enterprises with improved access to finance, technology, management training and marketing information, as well as to support "new" industries such as the information and communications technology sector; 2) increase private-sector trade and investment by supporting innovative schemes (e.g., Aqaba Special Economic Zone) to facilitate new market access agreements and promote increased private sector investment; 3) ensure people-oriented impact through the implementation of a poverty alleviation strategy, youth entrepreneurship training (i.e., Junior Achievement) activities and a nature-based socioeconomic program implemented by Jordan’s leading environmental NGO; and 4) expand and strengthen private markets, including privatization activities, and public-sector reform activities focused on trade, investment policy including Free Trade Agreement implementation, customs modernization, and capital markets development. In addition, a $50 million policy-conditioned cash transfer will be obligated to ensure sustained support for Jordan’s impressive economic restructuring program. As in previous years, disbursement will be conditioned on the achievement of a set of economic policy-related reforms. Cash transfer-associated local currency is used to help support U.S.-Jordan mutually programmed development priorities, with an emphasis on poverty alleviation, water and health programs.

Planned FY 2003 Program: USAID plans to use FY 2003 resources to provide continued funding for ongoing project activities, as well as for the implementation of follow-on projects such as the Jordan-U.S. Business Partnership, with a specific emphasis on the Free Trade Agreement. A total of $43.5 million will be utilized for technical assistance, training, commodities and grants that support a range of broad-based economic growth project activities under the business services and policy components in support of the King’s Economic and Social Reform goals. In addition, a $90 million policy-conditioned cash transfer will be obligated to ensure sustained support for Jordan’s impressive economic restructuring program.

Performance and Results: The program is at the forefront in addressing key economic growth challenges in Jordan. Important outcomes of the program by the end of the strategy will be improved private-sector performance and public-sector efficiency, leading to more robust and sustained economic growth. USAID believes that Jordan’s economy can be transformed by a combination of enterprise- and industry-level activities, along with an ambitious economic and business policy reform agenda and deliberate efforts to broaden participation in the economy.

Jordan’s economic transformation efforts, coupled with significant USAID support, are beginning to yield benefits. After several years of slow growth, GDP growth rates are nearly 4%, the highest since 1995. Exports rose nearly 20% in 2001.

Remarkable progress has been achieved in supporting microenterprise development through USAID lending programs. From a base of only a few hundred active clients four years ago, USAID-supported sustainable microfinance programs served 16,518 active clients during 2001. Eighty percent of the borrowers are women.

Firm- and industry-level efforts through the Jordan-U.S. Business Partnership have helped Jordan’s small and medium firms become more competitive and take advantage of new business opportunities, both domestic and international. As a result of the project assistance over the past three years, clients have increased their exports by $11.7 million and domestic sales by $3.5 million, exceeding USAID’s expectations.

During the last year, Jordan effected a series of wide-ranging measures designed to open markets, overcome structural economic obstacles and integrate the country more closely in the wider global economy. USAID’s economic opportunities program was especially well positioned to take advantage of King Abdullah’s energetic leadership in promoting a world-class economic and business environment and private sector trade and investment. Building on the World Trade Organization-related reforms enacted in 2000, Jordan and the U.S. Government began implementation of the Free Trade Agreement in December 2001, positioning Jordan as the fourth country (after Canada, Mexico, and Israel) to enjoy such a relationship with the United States.

Jordan officially opened the Aqaba Special Economic Zone in May 2001, setting the stage for its emergence as a model for streamlined investment procedures. USAID played a critical role in providing extensive advisory services for this initiative. This assistance is scheduled to continue as the zone is established and efforts are made to expand trade and attract new investment. Already, the zone has attracted $422 million in private investment, far exceeding USAID’s 2001 target of $100 million. USAID also initiated the construction of a light industrial estate in Aqaba in September 2001, which is anticipated to generate over 5,000 new light industrial jobs within five years. With respect to economic policy reform and implementation, a number of important milestones are anticipated in 2002, such as the enactment of investment related legal and regulatory reforms, and a continuation of Jordan’s impressive privatization program, the most successful in the Middle East. To date, $936 million in state-owned enterprise assets have been transferred to private-sector control, exceeding the target of $900 million.

Principal Contractors, Grantees, or Agencies: Principal contractors and grantees include Chemonics; Save the Children; the Cooperative Housing Foundation; International Executive Service Corps; the United Nations Development Program; Wilbur Smith Associates; Consolidated Consultants; Gensler; PricewaterhouseCoopers; The Services Group; ABB SUSA; Nathan Associates; and the World Bank. USAID’s primary Government of Jordan counterpart is the Ministry of Planning, as well a number of other key economic-related ministries and institutions. In addition, numerous local business associations, private sector firms and NGOs benefit from USAID’s assistance in the economic opportunity area. USAID anticipates selecting new implementing entities for the potential FY 2003 poverty alleviation activities and follow-on to the Jordan-U.S. Business Partnership.

US Financing in Thousands of Dollars