ICT association welcomes move to establish fund for start-ups

AMMAN — The ICT Association of Jordan (int@j) on Saturday said the creation of a fund to help start-ups with no credit history obtian financing is crucial to boost entrepreneurship, but stressed that follow- up on funded projects is required to ensure success.

int@j Chairman Jawad Abbassi said last week’s announcement by the Central Bank of Jordan (CBJ) to create a fund to help start-ups, especially small-sized ones, is a step in the right direction.

“Banks in Jordan are very conservative, which is understandable and not something bad. But at the same time, banks extend credit on a collateral basis, which is a major challenge for start-ups in different fields as they do not have credit history and do not have any collateral in most cases,” Abbassi said over the phone.

According to CBJ Governor Ziad Fariz, the fund, which will be created in collaboration with the government, seeks to make it easy for start-ups and entrepreneurs to obtian funding for their projects and overcome the obstacle of having no collateral.

“The fund will serve start-ups in all sectors. Many start-ups and entrepreneurs have good business ideas, but the lack of funding hampers the translation of these ideas into reality,” Fariz said at a meeting with economists last week.

The CBJ governor said the fund will provide technical assistance to start-ups on how to write proposals for financing and provide them with skills on managing such projects.

Abbassi noted that start-ups lack “soft skills” and educating them on how to approach funding entities is crucial.

However, he stressed that extending credit to start-ups should be studied thoroughly to avoid fraud.

“Over the past few years, many persons received money from private funds to implement certain projects. Then donors and those who extended the credit discovered that no projects were actually implemented and the entrepreneurs who took the money spent it on something else,” Abbassi said.

“Because of the lack of follow-up, many fraud cases were reported. Therefore, it is very important to follow up on the funded projects.  Some projects might fail, which is normal, but there is a need to ensure that funding was used properly for the project it was given to.”

According to official figures, small- and medium-sized projects represent 90 per cent of companies in Jordan and contribute 40 per cent to the country’s gross domestic product.

About 70 per cent of jobs created in Jordan are by these enterprises.