National Strategy for Microfinance

This paper presents a working plan for Jordan's microfinance sector. The current economic scenario in the country is characterized by high incidence of poverty. Commercial banks are unwilling to lend to marginalized sectors. MFIs and informal financial institutions have weak institutional capacity. While the Government has sponsored some direct credit programs, they are unable to sustain operations due to high costs and nonpayment of loans. Defects in the financial system are prompting the government to encourage private sector participation in financial access programs. The government envisions a viable and sustainable private microfinance sector as part of the national financial system. Its microfinance policy will be built on the following principles:

• Enhanced private sector role;
• Enabling policy environment;
• Market-oriented financial and credit policies;
• Decreased government participation in credit and guarantee programs.

The paper states that the roles of stakeholders will be determined by the policy framework and their relative comparative advantages, concluding with a description of the roles and duties of these stakeholders.