2.5.3. Strengthen Investment Promotion Agency Capacity
Many countries have some form of Investment Promotion Agency which have the potential to play a large role in identifying and promoting investment opportunities. Investment Promotion Agencies can have a strong impact in convening, creating forums and events in which those seeking finance can engage with finance providers (Source: Mobilizing Private Finance for Development: A Comprehensive Introduction).
- Availability of suitable training for the needs of [target sector/region]
- Sufficient understanding of [target sector/region] and the needs of borrowers in [target sector/region] to make lending decisions
- Transaction costs associated with originating and managing loans to [target sector/region]
MUST HAVE’S, CRITICAL POINTS, OR QUESTIONS TO CONSIDER
VIGNETTE: JORDAN ECONOMIC DEVELOPMENT PROGRAM
Jordan’s economy is one of the smallest in the Middle East and the country lacks natural resources, presenting significant challenges to economic growth. Historically, the Jordanian government has relied heavily on foreign assistance as a driver of economic growth, leading to investments with an artificial comparative advantage. Exacerbating economic stagnation are rigid and non-competitive practices of the Jordanian private sector, which has resisted public sector efforts to transition to a more competitive economic environment. Thus, a primary goal of the government has been to demonstrate the positive national impact of economic reform to both private sector and public sector actors who are needed to make economic reform a success.
USAID collaborated with the Government of Jordan and BearingPoint (now part of Deloitte Consulting LLP) to fund, design, and implement the multi-faceted five-year Jordan Economic Development Program. While the Program supported both the public and private sectors with technical assistance, it was particularly effective at advocating for policy reform to support private sector development. Examples of successful policy action include: collaborating with the Ministry of Industry and Trade to reduce capital requirements to establish a limited liability company in Jordan, working with the Greater Amman Municipality to create a Small Office Home Office vocational license, establishing a development zone framework, and launching the Jordan Investment Board as a proactive investment promotion agency.
The Jordan Economic Development Program has facilitated the creation of more than 60,000 jobs and increased exports in targeted sectors by 117% (just over $84 million). The Program has also increased direct revenues in target sectors by 108% and indirect revenues by 121%, totaling over $400 million. Additionally, the Program has generated over $1 billion in investment. Many of the activities developed by the Program were demand driven by both public and private sector stakeholders, and over $8 million was dispersed as grants to Program stakeholders. Finally, the Program utilized 62 local subcontractors to deliver technical assistance valued at over $14 million.