Distribution of credit facilities in Jordan: Challenges and opportunities

Data from the monthly statistical bulletin issued by the Central Bank of Jordan indicates that the Capital governorate of Amman holds 80.9 per cent of the total credit facilities provided by banks operating in the kingdom at the end of 2023, amounting to 27 billion dinars out of a total estimated at around 33.4 billion dinars. This reflects the concentration of business in the Jordanian economy. Irbid governorate comes second, with a share of only 5.5 per cent of the total credit facilities valued at approximately 1.8 billion dinars, followed by Zarqa governorate with a share not exceeding 3.6 per cent of the total credit facilities and a value of no more than 1.2 billion dinars. The shares of other governorates range from 2.0 per cent (Karak governorate) to 0.4 per cent (Tafilah governorate, which has the lowest share among the governorates).

The distribution of credit facilities at the governorate level in Jordan reflects several aspects of the country’s economic and developmental situation. Firstly, the Capital governorate of Amman holds a very large percentage of the total credit facilities, reflecting the volume of economic and commercial activity in this governorate. The presence of major financial and commercial centers, as well as government institutions and basic services, are factors that attract investments and enhance financing in the Capital governorate. The distribution of facilities also indicates economic disparities between the main regions and other governorates in Jordan. For example, Irbid and Zarqa governorates rank high among the other governorates but receive a small share of total credit facilities compared to Amman. This disparity can be explained by the greater concentration of economic, industrial and commercial activities in the Capital, in addition to the presence of advanced infrastructure that facilitates economic activity. Overall, this distribution highlights the disparity in economic development and the need for guiding policies aimed at enhancing regional balance and promoting economic opportunities in less represented governorates. Boosting financing and investment in these areas can contribute to stimulating sustainable economic growth and enhancing economic stability throughout the Kingdom.

On the other hand, four economic sectors (construction, general services and utilities, general trade, and industry) account for about 66.4 per cent or 21.8 billion dinars of the total credit facilities provided by banks operating in the kingdom, estimated at about 33.4 billion dinars as of the end of 2023. The construction sector accounts for about 24.3 per cent or 8 billion dinars of the total credit facilities, followed by the general services and utilities sector at 15.8 per cent or 5.2 billion dinars, then the general trade sector at 14.7 per cent or 4.8 billion dinars, and finally the industry sector at 11.6 per cent or 3.8 billion dinars of the total credit facilities. The distribution of credit facilities among four key economic sectors sheds light on the composition of economic activity in Jordan and the sectors receiving the largest financing. The construction sector appears prominently, accounting for nearly a quarter of total credit facilities, reflecting the size of urban and developmental activities in the country, linked to public and private investments in infrastructure and real estate.

On the other hand, the general services and utilities sector ranks second in terms of financing, indicating its importance in supporting public infrastructure and providing essential services to society, including health, education, transportation, communications, and others. As for the general trade sector, its share in financing credit facilities reflects its vital role in supporting domestic and international trade activities, serving as a key driver of the economy by facilitating the flow of goods and services to the Kingdom. Although the industry sector ranks fourth in terms of financing among these sectors, it still plays an important role in diversifying the economy and enhancing competitiveness. Providing additional financing for this sector is necessary to stimulate innovation, increase economic complexity, develop national industries, and enhance their competitiveness in domestic and international markets.

Data indicates that the agriculture sector accounts for a small share not exceeding 1.8 per cent or 584.3 million dinars of the total credit facilities provided by banks. This indicates the challenges facing this sector in Jordan, particularly in obtaining the necessary financing and financial support for agricultural development and productivity improvement. This financing could be crucial for updating agricultural technologies, improving agricultural infrastructure, providing training and education for farmers, and enhancing research and development in this field. However, the very small share of agriculture compared to other sectors usually indicates limited capacity for this sector to attract financing from banks, which may be the result of several possible factors, such as financial assessment of the risks of the agricultural sector, weak infrastructure, and instability in productivity due to natural factors such as drought, frost, or desertification resulting from urban encroachment on agricultural areas. On the other hand, the low level of financing in agriculture highlights the importance of striving to enhance this sector, especially in a country like Jordan seeking to achieve a higher level of self-sufficiency in crops and agricultural products. These efforts require improving agricultural infrastructure, providing professional training and education for farmers, enhancing agricultural research, and implementing supportive policies to encourage investment in this vital sector. In conclusion, the distribution of credit facilities among governorates and sectors reflects the trends of the Jordanian economy and the priorities of financing, indicating the governorates and sectors that receive the largest support and investments, reflecting the challenges facing the kingdom and the opportunities available in various areas of economic activity.