Creating a Future of Prosperity: The U.S.-Jordanian Partnership

Creating a Future of Prosperity: The U.S.-Jordanian Partnership

November 15, 2015
Alice G. Wells
Ambassador of the United States to the Hashemite Kingdom of Jordan

Remarks as Prepared

Thank you so much for your warm welcome. I am pleased to be here today on the eve of Global Entrepreneurship Week to celebrate Jordan’s entrepreneurs and their contributions to the Jordanian economy. As I look around the room, I am delighted to be surrounded by such immense talent. My sincere thanks to the Young Entrepreneurs Association for inviting me to your monthly breakfast. I applaud your efforts to bring business people, startups, and academics together to generate new ideas and collaboration.

Every morning, I give thanks to the work of a small group of entrepreneurs. Many of you may have heard that I am always on the lookout for the nearest Starbucks – I may be their biggest supporter in the entire country. I should probably consider buying stock at this point.

But the interesting thing about Starbucks, which got its start in my hometown of Seattle, is that it wasn’t always the java giant that it is today. In 1971, two teachers and a writer were looking for better quality coffee than what they could find locally, and thought maybe others shared their somewhat obsessive love of caffeine. As you can imagine, on the salaries of teachers and writers, none of them was wealthy, and their family and friends thought they were crazy when they pooled their life savings of only $8,000 to start a business selling roasted coffee beans. Luckily, they didn’t listen to the naysayers, were willing to risk the security of their day jobs, and clung to their dream. What started as a single shop in Seattle exploded into nearly 40,000 stores in 40 countries. In fact, between 2007 and 2008, there was a new Starbucks store opening nearly every day. Today, the company employs almost 200,000 young people, two thirds of them young women, and is in the top 50 of Forbes lists of most innovative companies and most valuable brands. In May, the company was valued at over $70 billion. Quite a gain from the $8,000 three friends pooled together over 40 years ago. These entrepreneurs succeeded because they had an idea, were prepared to take a risk, and succeeded in convincing people like me that life is much better with a triple Grande Latte skinny.

But Starbucks is just one of the innumerable reasons that I believe in the power of entrepreneurship – the notion that if you have an idea, work hard, and yes, embrace the inevitable failures, you make your dream a reality. Entrepreneurship matters, because it can help us tackle our greatest challenges: job creation, economic stability, and security. Small businesses are essential to stimulate economic growth and employment opportunities. Not just in Jordan, but around the world. In the U.S., for example, Small and Medium Enterprises (SMEs) are the backbone of the U.S. economy — creating‎ approximately 75 percent of the new jobs that are added to the American economy each year.

But the impact is just as significant on the personal level. Entrepreneurs not only create jobs, but harness the creativity of young people. If we look back throughout history, so many path-breaking ideas have come from the bright minds of young people. Mark Zuckerberg was a 19-year old college student when he launched Facebook – the social media platform that has revolutionized the manner in which many of us stay in touch with friends and family around the world. Elon Musk of PayPal and Tesla Motors was a millionaire before he was 30 years old. And as important as it is to have a paycheck, when we create opportunities for young people to learn, to contribute, to lead, to grow personally and professionally, our impact extends beyond our contribution to GDP.

Jordan’s workforce continues to get younger and younger, yet as you well know, there are not enough jobs for everyone to work in his or her chosen field. Nearly 100,000 graduates seek to enter the workforce each year and struggle to find jobs. In fact, the region faces the highest rate of youth unemployment in the world, as well as the marginalization of women in the workforce.

After having met so many highly qualified, well-educated, and poised young Jordanian women, you can imagine my surprise to learn that only 13 percent of Jordanian women participate in the workforce. Each Jordanian woman who isn’t working represents both an opportunity and revenue lost for herself, her family, and for Jordan. Expanding women’s economic participation remains a struggle, in the United States as in Jordan. And we care about this issue because women’s economic participation lifts entire economies. Economists have estimated that the U.S. GDP is $2 trillion greater because of the number of women who have entered the workforce in the last 45 years. Here in Jordan, the potential impact of bringing more women into the labor force is massive. The Jordan 2025 plan aims to raise women’s participation in the labor market to 24 percent by 2025. If Jordan reaches that regional norm of 24 percent, experts estimate that GDP will grow by 5 percent.

Tipping the balance toward more opportunities for women means, in large part, affording them opportunities to start and sustain their own businesses. Entrepreneurship is often even more attractive than public or private sector positions – it’s an avenue to creative, innovative, and flexible positions that meet women’s professional and personal goals. But currently, the OECD cites the Middle East as having the largest gender gap of any region in the world — with only 12 percent of women running their own businesses, compared with 31 percent of men.

Creating opportunities for young people, both men and women, isn’t just an economic imperative, but a security one as well. Around the world, and especially with Da’esh at our doorstep, we’ve seen how violent extremists are exploiting and tapping into the frustrations of our youth. While poverty alone has not been shown to cause terrorism or violence, investments in youth entrepreneurship and education are some of the most powerful antidotes that we have to combat violent extremism. Job creation is a key to our shared prosperity and security.

No one said the road to job and business creation would be easy, and Jordan’s economy faces more than its fair share of challenges. I’ve spoken with many business owners who say that one of their greatest difficulties is a long-standing one: how to secure appropriate financing to expand their businesses. SMEs represent 95 percent of all registered businesses in Jordan, but receive 10 percent of commercial loans. Historically, it has been more profitable for banks to lend to the government and easier to lend to large, established businesses than to an entrepreneur. Most banks have not yet considered how their lending practices could be restructured to facilitate access to this crucial sector. And entrepreneurs have not yet mastered the language of bankers needed to present a business case with hard numbers to the lending institutions. Etihad Bank, for example, has already utilized 94 percent of its $10 million allocation under the USAID/OPIC loan guarantee program designed to boost first-time entrepreneur’s access to finance, and is currently awaiting approval from OPIC to double its allocation to $20 million.

Another challenge in Jordan is that many young people prefer a position in the stable public sector versus a job in a “risky” start-up. Government jobs still retain the perception of prosperity and stability, even when the number of positions and wage levels has stagnated. Prime Minister Nsour has pointed out that Jordan’s public sector is “bloated” and “unhealthy” – representing a staggering 42 percent of the Jordan’s economy, or three times the average public sector around the world. With the government projecting zero-growth budgets for the foreseeable future, there will be few, if any, new positions in the government for jobseekers.

Family and cultural pressures also present significant obstacles for creative young people who are considering the risks inherent in starting a new business. Others struggle to find reliable and affordable transportation to commute to work and childcare options are limited.

But despite these challenges, entrepreneurship in Jordan is growing – in large part due to your strongest resource – your human capital. Your nation’s success stories range from large to small and span across the sectors. We’ve all heard the examples of Hikma Pharmaceuticals and Petra Engineering – small companies that grew to become giants in their fields with millions of dollars in revenue and operations around the world. But the beauty of entrepreneurship is that not everyone needs to become a Hikma or a Petra. Opportunities exist everywhere. And even the smallest companies do big things and fill vital needs in the market.

Fatima from Zarqa is one example of a strong-minded woman who found a niche in the market – plumbing. Despite being told that plumbing was a male profession, Fatima persevered. She now operates a successful in-home repair service. Her business provides additional income for her family and is improving the water quality of households in Zarqa.

Successful business owners tell me over and over again that the key to success is to embrace failure. Bill Gates, whose net worth is estimated at over $56 billion, is known to say, “It’s fine to celebrate success but it is more important to heed the lessons of failure.” Remember Elon Musk, whom I mentioned earlier – the founder of SpaceX and the co-founder of PayPal and Tesla Motors. He dropped out of Stanford University to start his businesses and hit a low point in 2008 when all three of his businesses looked like they were on the brink of failure. He ended up laying off nearly a third of his staff, closed a Tesla branch in Detroit, and reached a point where he only had one week’s worth of cash left in the bank. Despite this, Musk refused to abandon his ideas, and championed them until he raised enough financing to pull his companies back into solvency. Now, at only 44 years old, his companies are worth billions – and his cars are driven all over the United States – and Jordan. Perhaps his biggest lesson learned is reflected in his saying, “If things are not failing then you are not innovating enough.”

As Jordan strengthens its entrepreneurial ecosystem and develops a more supportive business environment, you can count on us to support these efforts. And we already see evidence of the U.S. and Jordan’s great collaboration. Let me point to just a few.

USAID’s $45 million Jordan Competitiveness Program (JCP) focuses on developing small and medium-sized businesses, particularly in the sectors of clean technology, healthcare, and information communications technology. JCP is partnering with some of the world’s largest tech firms to empower young Jordanian talent with cutting-edge expertise in cloud computing, app development, and the Internet of Things. Through its Microsoft Academic Accelerator Program, for example, USAID has supported the development of more than two dozen new business ideas in the last six months – more than half of them developed by young women. One of these ideas, TrueMeter – an app to help commuters estimate the cost of taxi fares and end over-charging – is already on the Windows app store and has earned the backing of the Greater Amman Municipality.

The $69 million Local Enterprise Support Project, which encourages economic growth in underserved Jordanian communities, has connected micro and small businesses that produce food in Irbid with Safeway – one of Jordan’s largest supermarkets. We are proud to announce that as of last month, one of the companies – Al Andalus Dairy Factory run by the Cattle Farmers Association in Irbid – is now one of Safeway’s suppliers, selling their products in two main Safeway branches in Amman. This small business, which was making around 10,000 to 15,000 JD a month, has now increased its revenues to 100,000 JD a month as a result of the connection to Safeway that was facilitated by USAID.

The Jordan Loan Guarantee Facility, established in partnership with USAID and the Overseas Private Investment Corporation, is guaranteeing $250 million to participating Jordanian banks to fund small businesses; and over 10 percent of the guarantees thus far have benefitted women-owned businesses. For instance, Ultimate Packaging Solutions Company, which produced plastic water bottles, decided to expand their business by filling the water bottles and selling them in the local market. The company financed 60 percent of the total cost of the construction of the water filling facility and used an OPIC-guaranteed loan to finance the remaining 40 percent. They estimate that this expansion will increase their annual sales by 11 percent.

But overcoming the challenges requires more work. How can entrepreneurs take the risk of starting their own business without clear and simple registration and licensing policies? How can young people fail, fail again, and finally succeed if Jordan doesn’t have a modern and coherent bankruptcy law that allows companies to fold without punishing the honest efforts of entrepreneurs. And how can business owners secure much needed capital if the high minimum capital requirements discourage foreign investment in SMEs?

The United States is committed to supporting your efforts and those of many other Jordanian private sector visionaries as you create the economic prosperity of Jordan’s future. You will be the source of change – one person, one step, one business at a time. When I hear your stories, I am both proud of and hopeful for Jordan’s future. As the marketing guru Peter Drucker once said, “The best way to predict the future is to create it.” Thank you.