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Expanding Jordan’s Leasing Market

 

Leasing is an important source of medium and long-term financing for companies in developed and transitioning economies. It is an effective means for increasing a lessee’s asset base, particularly in the new companies and smaller businesses that play a key role introducing innovation and competition and creating jobs.

With a growing and young population of 5.9 million, of which 35 percent are under the age of 14, Jordan will need large amounts of job creation to meet future demand for employment. One way to do this is by creating finance opportunities for micro, small and medium enterprises (MSMEs) to allow them to grow.

To develop the Jordanian leasing market, IFC Advisory Services in the Middle East and North Africa has:

    • Worked with the Jordanian government to draft, pass, and promote leasing legislation to facilitate investments in the sector. As a result of this work, the law on leasing, which meets all international best practice standards, became fully effective on September 17, 2008.
    • Released in October 2009, a study on the Jordanian leasing market entitled, A Study on the Leasing Market in the Hashemite Kingdom of Jordan, which assessed the challenges and opportunities for the leasing market in Jordan. The study indicated that updated tax policies in specific areas would benefit the growth of leasing and that improved risk management systems among leasing companies would help enhance access to capital in response to the financial crisis.
    • Supported the drafting and enactment of legislation to clarify tax regulations related to leasing in addition to working with lessors to increase capacity and strengthen their operations.
In order to educate the market and raise awareness about the benefits of leasing, IFC held nearly 50 workshops/conferences, reaching approximately 450 key stakeholders

What is Leasing?

MSMEs that do not have a lengthy credit history, nor a significant asset base for collateral can benefit from an expanded leasing market because leasing is based on the borrowers’ ability to generate cash flow from business operations to service the lease payment, rather than the balance sheet or on past credit history.