Date of Submission to Coordination Unit:

A. GENERAL INFORMATION

1. Activity Name

Supporting Jordan to improve SME policy effectiveness through better coordination, consultation, monitoring and evaluation mechanisms.

2. Requestor Information Name: Saleh Al-Kharabsheh Title: Secretary General

Organization and Address: Ministry of Planning and International Cooperation; P.O Box 555 Amman 11118 Jordan

Telephone: +96264649023Email: Saleh.Kharabsheh@mop.gov.jo; Zeina.Toukan@mop.gov.jo

3. Recipient Entity Name: Hana URAIDI Title: Chief Executive Officer

Organization and Address: Jordan Enterprise Development Corporation; JEDCO, P.O. Box 7704 Amman 11118 Jordan

Telephone: +962 6 5603686 Email: Hana.Uraidi@JEDCO.GOV.JO; ceo@jedco.gov.jo

4. ISA SC RepresentativeName: Andreas SCHAAL Title: Head of the Sherpa Office and the Global

Governance Unit

Organization and Address: 2 Rue André Pascal

Telephone: +(33-1) 45 24 93 88 Email: Andreas.schaal@oecd.org

5. Type of Execution (check the applicable box)√ Type Endorsements Justification

Country-Execution Attach written endorsement from designated ISA

Joint Country/ISA-Execution Attach written endorsement from designated ISA

(Provide justification for ISA-Execution)

√ ISA-Execution for Country Attach written endorsement from designated ISA

The OECD has longstanding experience in promoting small and medium enterprise (SME) policy exchange and peer learning among OECD members and non-members, including from the MENA region. In 2013-2014, the OECD performed a full-fledged benchmarking exercise of SME policies in Jordan and other MENA countries (“SME Policy Index 2014: The Mediterranean Middle East and North Africa”). The exercise was done in co-operation with the European Union (EU) and in consultation with

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4 November 2015

experts, the private sector and others. One of the main recommendations for Jordan was to significantly strengthen institutional coordination, public-private consultations, monitoring and evaluation elements of SME policy making in order to achieve greater policy coherence and effectiveness. This is especially important given 1) the large number of actors and initiatives involved in SME support and 2) the lack of reliable and timely evidence on the effectiveness of SME support measures provided by the Jordanian government, donors, the private sector and other organisations.

The OECD will provide its policy expertise and experience to help Jordan to implement a system to strengthen policy coordination, public-private consultations and the country’s capacity to assess SME policy effectiveness and efficiency (the “Project”). The Project will be undertaken alongside the Jordan National Entrepreneurship and Small and Medium Enterprise Growth Strategy 2015-2019. The Project should also be aligned with the MENA Transition Fund project “Jordan’s SME Growth Programme 2015-2017” and especially its component 4 “Establishing a Start-ups and SME Growth Observatory at JEDCO.”

The results of the Project will contribute to the achievement of the objectives of SME policies in Jordan in terms of jobs, competitiveness and economic growth.

ISA-Execution for Parliaments

Attach written endorsements from designated Ministry and ISA

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6. Geographic FocusIndividual country (name of country): The Hashemite Kingdom of Jordan

Regional or multiple countries (list countries):

7. Amount Requested (USD) Amount Requested for direct Project Activities:(of which Amount Requested for direct ISA-Executed Project Activities):

1,220,500

Amount Requested for ISA Indirect Costs:1 77,000Total Amount Requested: 1,297,500

8. Expected Project Start, Closing and Final Disbursement DatesStart Date: 1 January 2016 Closing

Date:1 August 2018 End Disbursement

Date:1 December 2018

9. Pillar(s) to which Activity RespondsPillar Primary

(One only)Secondary(All that apply)

Pillar Primary(One only)

Secondary(All that apply)

Investing in Sustainable Growth. This could include such topics as innovation and technology policy, enhancing the business environment (including for small and medium-sized enterprises as well as for local and foreign investment promotion), competition policy, private sector development strategies, access to finance, addressing urban congestion and energy intensity.

√ Enhancing Economic Governance. This could include areas such as transparency, anti-corruption and accountability policies, asset recovery, public financial management and oversight, public sector audit and evaluation, integrity, procurement reform, regulatory quality and administrative simplification, investor and consumer protection, access to economic data and information, management of environmental and social impacts, capacity building for local government and decentralization, support for the Open Government Partnership, creation of new and innovative government agencies related to new transitional reforms, reform of public service delivery in the social and infrastructure sectors, and sound banking systems.

√

Inclusive Development and Job Creation. This could include support of policies for integrating lagging regions, skills and labor market policies, increasing youth employability, enhancing female labor force participation, integrating people with disabilities, vocational training, pension reform, improving job conditions and regulations, financial inclusion, promoting equitable fiscal policies and social safety net reform.

√ Competitiveness and Integration. This could include such topics as logistics, behind-the-border regulatory convergence, trade strategy and negotiations, planning and facilitation of cross-border infrastructure, and promoting and facilitating infrastructure projects, particularly in the areas of urban infrastructure, transport, trade facilitation and private sector development.

√

1 ISA indirect costs are for grant preparation, administration, management (implementation support/supervision) including staff time, travel, consultant costs, etc.

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B. STRATEGIC CONTEXT

10. Country and Sector Issues

THE BUSINESS ENVIRONMENTThe Jordanian business environment benefits from a relatively well-developed infrastructure, a sound institutional and regulatory framework and a relatively open economy. Committed to strengthening the liberalisation of investment and increasing its integration in the world economy, Jordan adhered in November 2013 to the OECD Declaration on International Investment and Multinational Enterprises.Jordan ranks 113rd out of 189 economies in the World Bank’s 2016 Doing Business, six places down from the 2015 index. Paying taxes is relatively easy in Jordan (ranked 52nd) – the total corporate tax rate of 29% is lower than the MENA and OECD averages. Getting electricity (56th) and trading across borders (50th) are further strengths of the Jordanian business environment. Trading across borders has been made easier by improving infrastructure at the port of Aqaba. Getting credit (185th), however, represents a major burden, due to the lack of creditor rights, difficulties in obtaining credit information, and weak registry coverage. Protecting minority investors (163th) and enforcing contracts (126th) are also weak areas – the ability of shareholders to sue officers and directors is assessed as particularly restricted for entrepreneurs in Jordan and enforcing contracts is a lengthy and costly process.OVERVIEW OF THE STATE OF SMEsSMEs (usually firms with 1 to 249 employees) represent the vast majority of enterprises in all countries. Micro firms (with 1-9 employees) and the self-employed are the dominant type of private sector firms, especially in low and middle income countries and in the services sector. More importantly, SMEs are important drivers of job creation and economic growth: they generally account for between half and two thirds of private sector employment and contribute, to varying degrees, to value added and exports.SME development in Jordan is somewhat higher than in the rest of the MENA region, although it lags significantly behind that of other emerging and developing countries:

The density of SMEs in Jordan is 25.6 per 1 000 inhabitants, compared to 19 in the MENA region, 45 in high-income OECD countries and 31 in developing countries.

Jordanian SMEs employ 31% of the workforce, compared to an average of 28% in MENA, 33% in developing countries and 45% in OECD countries.

The average rate of enterprise creation per 1 000 people of working age in 2004-2012 was 0.69, slightly higher than the MENA regional average of 0.6 but well below the OECD average of 4.8.

Jordanian SMEs are strongly oriented towards internal trade: They accounted for only 2.4% of total domestic exports in 2011.

The Jordan National Entrepreneurship and Small and Medium Enterprise Growth Strategy 2015-2019 (the SME Strategy) cites a number of constraints limiting SME development potential. Some of those constraints reflect the economic structure and level of development in the country: a preponderance of micro firms (fewer than ten employees) in the enterprise population (96%) which limits the competitive and productivity potential of the economy. This is because micro firms have fewer internal resources, less capacity to compete in global markets, and suffer from a lack of management skills, financing, and technology that limits their survival and growth potential. The majority of SMEs focus on the production of traditional, low value-added goods of low quality, serving local markets, and competing on the basis of price. Very few have the capacity to compete in international markets. The vast majority have no quality control systems in place nor follow quality control procedures in compliance with international quality certification systems. They do not invest heavily in technologies that will add value to their products and overall economic performance, and exhibit low levels of technology utilisation.The SME Strategy also identifies constraints related to the environment in which SMEs operate:

• a weak entrepreneurial culture;• lack of access to financing;• lack of entrepreneurial and management skills and capacity, coupled with inadequate access to business

development, advisory and diagnostic support services, especially in the governorates;• market access challenges;• lack of innovation and technology adoption/ development; and• legal, regulatory and administrative barriers.

To address the constraints faced by SMEs and entrepreneurs, the SME Strategy puts forward a vision to pave the way

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for enhanced growth, productivity, innovation and internationalisation. The vision for the strategy is “to create an environment conducive for SMEs to grow and entrepreneurship to flourish, in both urban and rural areas, in order that they may contribute more fully to the generation of jobs, economic wealth and the socio-economic well-being of the Kingdom”.Section 12 of this document provides details of the SME Strategy and how this Project proposal is aligned with it and will contribute to its implementation.SME POLICY COORDINATION, CONSULTATIONS, MONITORING AND EVALUATION IN JORDANThe SME Policy Index for the Mediterranean Middle East and North Africa 2014 (the “SME Policy Index”)(a benchmarking of SME policies in the MENA region by the OECD and the European Union) notes that the preparation of the SME Strategy is one of the most significant SME policy developments in Jordan in recent years. The SME Strategy has been endorsed by the Jordanian Cabinet in 2015 and the approval of its implementation Action Plan is in the process of endorsement. The successful achievement of its ultimate objectives, nonetheless, will greatly depend on how effectively the institutions and actors in charge of implementing its different actions coordinate and consult with each other and with the private sector. A thorough monitoring and evaluation (M&E) of the results of those different actions, individually and collectively, will be essential to assess whether the objectives were efficiently and effectively achieved, and to adjust policies when necessary.

SME policy coordination

The identification of concrete SME policy objectives, responsible agencies and the establishment of consultation, coordination, monitoring and evaluation mechanisms are essential to assess and to better respond to the development needs of the private sector, including SMEs. In Jordan, enterprise policy is the responsibility of several institutions; the Jordan Enterprise Development Corporation (JEDCO) is one of the main actors of SME policy. Policy coordination has remained a relatively weak point which should be addressed by the implementation of the SME Strategy if the right coordination and consultation mechanisms are in place. As stated in the MENA Transition Fund project “Jordan’s SME Growth Programme 2015-2017”, “it appears that most programmes have limited reach in terms of beneficiaries and access in many parts of Jordan [while] there is no mechanism for coordinating the range of service providers and programme efforts and the quality of services offered.”

The endorsement and implementation of the SME Strategy could be a milestone to overcoming this weakness in the policy environment and would represent a major success for SME policy in Jordan and in the overall MENA region. The new strategy, formulated through an extensive participatory process, creates an opportunity to rationalise legislation and regulations affecting SMEs. It also allows for greater synergies between programmes and their implementation. Among the most important attributes of the SME Strategy is the fact that it sets a new range of medium-term objectives, groups enterprises in terms of size, provides a tailored action plan that reflects their needs, and putts a clear emphasis on enterprise growth. The SME Strategy aims to facilitate policy management, assigning a major role to JEDCO in terms of policy advocacy, coordination and implementation.Public-private consultationsEffective and constructive public-private consultations can contribute to improving significantly the quality of public policy towards SMEs, provided that those consultations are conducted regularly, are transparent and open, and private sector representation is wide, including all different segments of the SME population.In Jordan, the Economic and Social Council (ESC), which meets twice a year, is the main conduit for public-private consultations. Additional consultations take place when major economic measures are proposed, but, according to the SME Policy Index, private sector organisations consider the framework non-conducive to a productive dialogue, due to a lack of structured mechanisms for consultations.Intensive public-private consultations were also conducted in 2012-2013 as part of the preparation of the SME Strategy. Those experiences provide fertile ground for improving the public-private consultation mechanisms required for the effective implementation of the SME Strategy. The intensive and inclusive consultation process for the elaboration of the SME Strategy could be taken as a starting point and institutionalised.Monitoring and evaluationThe SME Policy Index found that despite the significant number of SME initiatives by governments, donors, the private sector and other organisations, the evidence on their levels of implementation and effectiveness remains very scarce.

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This indicates a sweeping lack of monitoring and evaluation of policies across the MENA region, including in Jordan.Jordan should therefore significantly increase its efforts to assess the effectiveness of SME policies and measures. This is essential to enhance policy effectiveness and improve the allocation and use of scarce resources, especially in times where government finances are under increasing stress. Consultation and coordination with the private sector should also be an essential element to strengthening policy monitoring and evaluation.Another important recommendation put forward by the SME Policy Index points to the need to improve the collection of more and better data on private enterprises. This includes timely and complete evidence on the number of firms, their size, the sectors in which they operate, employment creation, entry and exit of firms, value added, exports, etc. This is essential to achieve more accurate diagnoses of the needs and performance of the private sector, including SMEs, and to design better targeted SME support programmes. Greater availability of statistical evidence on the state of SMEs is also fundamental to better monitor and evaluate the actual impacts of SME policy.

11. Alignment with Transition Fund Objective

The objective of the Transition Fund as provided in the Operations Manual (Section 2, Para. 7) is, “to improve the lives of citizens in transition countries, and to support the transformation currently underway in several countries in the region (the “Transition Countries”) by providing grants for technical cooperation to strengthen governance and public institutions, and foster sustainable and inclusive economic growth by advancing country-led policy and institutional reforms.”This proposed Project is in alignment with the above stated objective. It will build capacity in Jordan to increase the governance and institutions in charge of SME policymaking, which will in turn facilitate the achievement of the vision of the SME Strategy (“to create an environment conducive for SMEs to grow and entrepreneurship to flourish, in both urban and rural areas, in order that they may contribute more fully to the generation of jobs, economic wealth and the socio-economic well-being of the Kingdom.”). By helping Jordan to achieve an effective implementation of the SME Strategy through greater institutional coordination, public-private consultations and monitoring and evaluation (essential elements to achieve greater policy coherence and effectiveness), the Project will contribute to the successful execution of the actions defined in the SME Strategy, and ultimately to contribute to its stated goals of job creation and economic development.

12. Alignment with Country’s National Strategy

The main objective of the SME Strategy is to provide a comprehensive and coherent framework for SME support in Jordan and to foster job creation and income generation by promoting the entry of new start-ups and improving the performance and growth of existing micro, small and medium-sized enterprises to increase the contribution of SMEs to the Jordanian economy.The SME Strategy is structured around a number of key elements including a set of principles, objectives, targeted enterprises, thematic pillars and institutional implementation mechanisms. The proposal presented in this document addresses the institutional mechanisms of the SME Strategy. The following sections include a short description of the elements contained in the SME Strategy and a particular description of its institutional arrangements.SME DefinitionThe SME Strategy is designed to address shortcomings and bottlenecks in existing support for SMEs and start-ups. One of the most important elements is the introduction of an official SME definition aligned to that used by the OECD members and the European Union, although based only on number of employees and excluding assets, turnover and other considerations:

• Microenterprise – Fewer than 5 permanent workers.• Small enterprise – 5-49 permanent workers.• Medium enterprise -50-249 permanent workers.• Early-stage start-up (ESSU) a business that has been in operation for no more than two years.

Guiding principlesThe SME Strategy also puts forward a number of guiding principles for SME policymaking in Jordan. The proposed Project in this document is aligned with several of those principles, namely:

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building on the existing SME support infrastructure and delivery system, with provisions for expanding its reach and capacity and improving its coordination;

providing national guidance on appropriate actions for all public and private stakeholders; inclusive participation of all relevant public and private sector bodies to ensure an effective, coordinated and

integrated implementation approach, recognising that the promotion and development of entrepreneurship and SMEs is a shared competency, spanning a range of ministerial boundaries and policy areas and different levels of government, as well as private sector organisations, educational institutions and non-governmental organisations (NGOs);

commitment to a process of regular dialogue with entrepreneurs and SMEs on their needs and proposed solutions to inform on-going policy and programme actions;

a clear delineation of roles, responsibilities and accountabilities of implementation partners; and monitoring and evaluation of the Strategy’s implementation against quantifiable objectives and targets.

Strategic goals and objectivesThe SME Strategy identifies strategic goals (increasing the stock, employment, productivity and exports of Jordanian SMEs) and strategic objectives (increasing the rates of: creation of new enterprises; high-growth and innovative firms; productive SMEs; and access to finance and business development services).Target groups and thematic pillarsTo achieve these objectives and goals, the SME Strategy focuses on target groups: i) new entrepreneurs; ii) early stage start-ups; iii) SMEs; and iv) high-growth potential and innovative SMEs.To address the main barriers to entrepreneurs and SMEs in Jordan, the SME Strategy focuses on six thematic strategic pillars:

Pillar 1: Conducive legal and regulatory environmentPillar 2: Entrepreneurship awareness and culture buildingPillar 3: Entrepreneurial/ management skills and top quality business supportPillar 4: Access to financingPillar 5: Innovation capacity and technology adoption/developmentPillar 6: Market access

Implementation mechanismsThis proposed Project “Supporting Jordan to improve SME policy effectiveness through better coordination, consultation, monitoring and evaluation mechanisms” is aimed at helping the Jordanian authorities to strengthen the implementation mechanisms of the SME Strategy. Those mechanisms are identified in the SME Strategy as new structures and actions required for its effective implementation:

1. creation of a mechanism for effective oversight, coordination, partnership development and capacity building;

2. development of an adequate business support infrastructure and effective SME support services;3. development of a statistical database and dedicated SME information web-portal; and4. design and implementation of a monitoring and evaluation system.

This proposed Project focuses on supporting Jordan with capacity building and good practices for the implementation of mechanisms 1, 3 and 4. This Project proposal is fully aligned with the SME Strategy of Jordan and will also consider the procedures outlined in the implementation document of the Strategy: the Final Action Plan for the Implementation of the Jordan National Entrepreneurship and SME Growth Strategy 2015-2019 (“the Action Plan”).

C. PROJECT DESCRIPTION

13. Project Objective

The Project will support Jordan to increase SME policy effectiveness by building capacity to reinforce key elements of the SME policy making process: coordination, public-private consultations, monitoring and evaluation.

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The ultimate aim is to increase the value for money of SME policy and to help Jordan achieve the main goal of its National Strategy for Entrepreneurship and SME Growth 2015-2019: “to foster job creation and income generation by promoting the entry of new start-ups and improving the performance and growth of existing micro, small and medium-sized enterprises (SMEs) to elevate the contribution of the SME sector to Jordan’s economy”.Specific objectives are:

1. based on good practices and other country experiences, and through analysis and capacity building, support Jordan in the “creation of a mechanism for effective oversight, coordination, partnership development and capacity building” (stated as first implementation mechanism of the SME Strategy);

2. building on OECD expertise in international data collection and harmonisation, help in the “development of a statistical database and dedicated SME information web-portal” (stated as third implementation mechanism of the SME Strategy), in consultation with the Transition Fund project “Jordan’s SME Growth Programme 2015-2017” and in alignment with the activities of a possible OECD-European Commission project to build the statistical capacities of MENA countries for the collection and harmonisation of data by enterprise size; and

3. based on good practices and other country experiences, and through analysis and capacity building, support Jordan in the “design and implementation of a monitoring and evaluation system” (stated as fourth implementation mechanism of the SME Strategy).

14. Project Components

The Project will be undertaken alongside the SME Strategy and its Implementation Action Plan (The SME Strategy has been endorsed by the Jordanian Cabinet in 2015 and the approval of its implementation Action Plan is in the process of endorsement). The Project will consider and build upon the overall vision of the SME Strategy, its strategic goals and objectives, thematic pillars and target groups, as noted in Section 12 above. The Project will, in particular, support Jordan in the implementation mechanisms of the SME Strategy, which are:

1. creation of a mechanism for effective oversight, coordination, partnership development and capacity building;

2. development of a statistical database and dedicated SME information web-portal; and3. design and implementation of a monitoring and evaluation system.

These implementation mechanisms will constitute the main components of the proposed Project.As noted in the SME Strategy, the completion of a strategy document is only the first step in achieving objectives for entrepreneurship and SME development and growth over the next five years. In order to successfully execute the strategy, Jordan must commit to a steadfast and focused implementation mechanism and to the allocation of sufficient resources.COMPONENT 1. “CREATION OF A MECHANISM FOR EFFECTIVE OVERSIGHT, COORDINATION, PARTNERSHIP DEVELOPMENT AND CAPACITY BUILDING”Building on international experience and good practice, the first component of the Project will support Jordan with the implementation of the governance mechanism for the execution of the SME Strategy and its Action Plan. The governance mechanism identified by the SME Strategy consists of:

1) the establishment of a Higher Council on Entrepreneurship and SME Growth as the oversight body;2) the confirmation of JEDCO as the lead body for coordinating actions under the SME Strategy (and acting

as the Secretariat to the Higher Council); and3) the creation of entrepreneurship and SME support networks and Service Level Agreements between

public and private sector organisations to achieve a more integrated and coordinated system of business support to entrepreneurs and SMEs.

Given the horizontal nature of government policies impacting on development of entrepreneurship and SMEs, the SME Strategy seeks to implement an integrated policy approach with oversight from the highest levels of government. According to the SME Strategy, this is to be achieved by a Higher Level Committee (HLC) composed of the key relevant ministers and other key figures (the Minister of Industry and Trade, the Minister of Planning and

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International Co-operation, the Minister of Finance, the Governor of the Central Bank of Jordan, the Chief Executive Officer of JEDCO, the Chairman of the Jordan Chamber of Commerce, the Chairman of the Jordan Chamber of Industry).At the technical level, the SME Strategy also puts forward the creation of an Entrepreneurship/ SME Advisory Committee (the “Committee”), based on international practices. The Committee will offer a formal forum for dialogue with SMEs, representative entrepreneurship and SME associations, and key organisations providing business services to SMEs.The SME Strategy identifies JEDCO as the leading institution for the implementation of the Strategy and as the Secretariat to the Higher Council. According to the SME Strategy, JEDCOs role will include advocacy, coordination (linkages with other ministries, agencies, and SME stakeholder groups), partnership development, networking of business services and programme delivery partners, capacity building to ensure the quality of service delivery to SMEs, and monitoring and evaluation of the implementation of the SME Strategy. The Secretariat of JEDCO will also prepare annual reports on progress in line with its role in implementing a SME Observatory.At the operational level, and to assist JEDCO in its coordination function, the SME Strategy calls for the creation of “SME focal points” to be established in all ministries and public agencies implicated in the implementation of actions within the framework of the SME Strategy. One of the roles of these focal points is to ensure that the interests of entrepreneurs and SMEs are taken into account in the formulation of departmental policies and programmes. JEDCO will coordinate regular meetings of these focal points to assist in developing and implementing action plan activities and initiatives developed within the context of executing the SME Strategy.The SME Strategy foresees the creation by JEDCO of regional committees for enterprise creation and SME support in each governorate, consisting of key programme and service delivery partners. The purpose of these committees will be to promote entrepreneurship and SME growth in the governorates and to co-operate in providing more coordinated actions within the framework of the national strategy. Regular meetings of these regional committees will foster the sharing of experiences and good practices, and enhance the relevance and quality of services being provided. They will also be a conduit for identifying gaps in services to new entrepreneurs and SMEs and opportunities for providing better services to meet their needs.The OECD will provide support and capacity building to JEDCO to lead the implementation and coordination of the overall SME StrategyThe OECD undertakes full-fledged country reviews of SME and entrepreneurship policies at the national and sub-national levels for member and non-member countries. Recent examples include Italy, Thailand, Russia, Mexico and Poland. The objective of the reviews is to analyse the overall situation of SMEs and entrepreneurship in the country, the business environment, the main support measures and the strategic and institutional frameworks for SME policy. The OECD has also undertaken regional benchmarking exercises of SME policies in the MENA region and in other regions (South East Europe and Turkey, Eastern Europe and Central Asia, ASEAN and the MENA region). These exercises include in-depth analyses of the institutional coordination mechanisms in place in these countries and provide specific recommendations for improvement.The experience of these countries and of the OECD will provide valuable guidance for Jordan and for JEDCO in particular in the development of the specific implementation of the SME Strategy coordination mechanisms, including at the high level and the technical and operational levels. Those experiences will also be important for the establishment of systematic mechanisms for public-private dialogue and for policy advocacy.This component will take a “bottom-up” approach, focusing on the development of general coordination and consultation guidelines based on the analysis of a few concrete SME policy areas.The MAIN ACTIVITIES under this component will be:

1) To identify specific SME policy areas involving a significant number of actors (institutions at the central and local levels, private sector representatives from different industries, donors, etc.) and where coordination and multi-stakeholder dialogue are especially relevant (for example improving the business environment, innovation policy and technology transfers/development; business development services for start-ups; business development services for SME growth; access to finance, etc.).

2) Select for analysis up to five of those policy areas and identify the main actors to be involved, the current coordination mechanisms, and the shortcomings and bottlenecks of those coordination mechanisms.

3) Based on in-depth analysis and on consultations, develop and codify (in a manual or document for publication) operational guidelines to establish an effective system of policy coordination and consultations. The guidelines will build on international practices and experience, and will take into consideration the specificity of the policies selected. The guidelines will be designed so that they can be

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replicated in other policy areas and so that they can be taken as a general guidance for the implementation of the overall SME Strategy.

The main OUTPUT of this component will be the development of the set of guidelines for greater institutional coordination and public-private dialogue, adapted to the Jordanian context and replicable to any or most SME policy areas. The OUTCOME will be more coherent and therefore effective and efficient SME policy implementation at the level of the overall SME Strategy and at the level of the specific thematic pillars of the SME Strategy.COMPONENT 2. “DEVELOPMENT OF A STATISTICAL DATABASE AND DEDICATED SME INFORMATION WEB-PORTAL”IMPORTANT NOTE: In some of its sections, the SME Strategy’s classifies the development of a SME statistical database under “Monitoring and Evaluation” (e.g. pp. xxvi and 84-86); while in some other sections it classifies it as a stand-alone implementation mechanism, together with the creation of a SME information web-portal (e.g. pp.; xix-xx and 41). This Project proposal considers SME and entrepreneurship statistics as a stand-alone component which will provide essential information for the SME Observatory (a specialised SME surveillance and communications unit to be created within JEDCO), for the regular publications JEDCO intends to launch (SME policy series and annual reports on SMEs), and for the effective monitoring and evaluation of the SME Strategy.The OECD will support the Jordanian authorities to build capacity to collect, harmonise, analyse and publish business statistics online and in the form of reports (e.g. annual reports and SME policy papers)2.1. SME and entrepreneurship statisticsThe availability of extensive, reliable and timely data on SME and entrepreneurship is essential for the design, implementation, monitoring and evaluation of SME policies. Furthermore, international data harmonisation facilitates dialogue and exchange of experience among countries. The SME Strategy identifies the creation of a statistical database on SMEs and entrepreneurship as an essential element for its implementation. Specific actions identified by the SME Strategy to improve data availability on SMEs and Entrepreneurship are:

1. the realignment of the Department of Statistics reporting on enterprise and employment distributions according to size bands consistent with those outlined in the SME Strategy (see SME definition in Section 12 above);

2. the development of a statistical system to track the annual entry and closing of enterprises (in cooperation with the Jordan Chamber of Industry and Jordan Chamber of Commerce); and

3. provide funding for annual Global Entrepreneurship Monitor (GEM) studies in Jordan to monitor changes in entrepreneurial perceptions, attitudes and entrepreneurial activity rates.

Based on international practices, the OECD will assist the Jordanian authorities (JEDCO, the Department of Statistics, the Central Bank, etc.) in the establishment of a SME and entrepreneurship database. The OECD-Eurostat Entrepreneurship Indicators Programme (EIP) will be a particularly useful tool in this regard. The EIP develops and disseminates policy-relevant and internationally-comparable indicators, based on an analytical model and measurement infrastructure that achieve international comparability. Some of the EIP indicators are:

entrepreneurship indicators: new enterprise creation, bankruptcies and self-employment; structure and performance of the enterprise population: enterprises by size, employment by enterprise size,

value added by enterprise size; productivity by enterprise size, etc.; enterprise birth, death and survival; enterprise growth and employment creation; SMEs and international trade; the profile of entrepreneurs; and determinants of entrepreneurship.

The EIP has produced methodological tools to structure the development and collection of indicators of entrepreneurship: the "Eurostat-OECD Manual on Business Demography Statistics" and the Working Papers "Defining Entrepreneurial Activity: Definitions Supporting Frameworks for Data Collection” and "A Framework for Addressing and Measuring Entrepreneurship.” The OECD has also developed a Scoreboard on Financing SMEs and Entrepreneurs (the “Scoreboard”) to document the state of access to finance for entrepreneurs and SMEs and to monitor annually SME financing trends in 37 OECD and non-OECD countries, along with government responses to foster better access to finance. The Scoreboard covers indicators of debt, and non-debt finance, and general finance conditions complemented by an overview of the latest government policy measures. By improving data collection on SME finance, the Scoreboard increases knowledge about the problems faced by SMEs and entrepreneurs and helps

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governments and financial institutions design appropriate responses. It also enables the sharing of good practice policies to promote SME finance.In addition, OECD country reviews and work on local economic intelligence provide guidance on the collection and use of relevant information on SME and entrepreneurship issues such as barriers to business start-up and growth.Using these tools as a basis, the Project will support Jordan in developing capacities to improve SME data collection and harmonisation. This is also aligned with the SME Strategy’s Implementation Mechanism on Monitoring and Evaluation (see Section 12 above and Component 3 below). The Project will support capacity building in this area. The actual or final collection and publication of SME data will remain the responsibility of the Jordanian authorities.According to the SME Strategy, the Department of Statistics of Jordan (DOS) has a relatively good system of reporting on the SME sector. The 2011 Establishments Census provides an up-to-date and timely baseline for the SME Strategy. The next Establishment Census, anticipated in 2016, will allow Jordan to assess the overall impact of the SME Strategy’s implementation on net growth in the SME sector mid-way through its implementation period.The MAIN ACTIVITIES under this sub-component will be:

1) In close consultation with JEDCO, organise of a series of capacity building workshops building on the methodological tools provided by the OECD-Eurostat EIP; the OECD Scoreboard on Financing SMEs and Entrepreneurs; and information and guidance from country reviews and local economic intelligence work. The precise number and structure of the workshops will take into account the input of JEDCO, the DOS, the EIB and the Advisory Committee of Project.

2) Produce a manual for JEDCO and DOS to collect, analyse and publish SME and entrepreneurship information and statistics based on the existing statistical infrastructure in Jordan (business and tax registries, the Establishment Census, the Business Environment and Enterprise Performance Survey -BEEPS, etc.).

2.2 Analysis and dissemination of statistics and informationSeveral countries produce regular (e.g. annual) reports on the performance and outlook of SME and entrepreneurship and on main policy trends and results. Those reports are addressed to a wide audience such as policy makers, government officials, researchers, business associations and SME and entrepreneurs themselves. Some countries have also established online platforms to publish information and interact with SMEs and entrepreneurs (e.g. inform about programmes and services provided by public and private institutions, publish online reports, etc.). The SME Strategy identifies some actions to increase the availability and dissemination of information about SMEs, entrepreneurs and policies to support them. Specific actions cited by the SME Strategy are:

1. develop and launch a comprehensive SME information web-portal;2. implement an SME Observatory project;3. develop a management information system that is capable of collecting data on each of the initiatives and

programmes included under the National Strategy (such as number of clients served, types of services and programmes accessed, etc.);

4. carry out impact studies assessing the effect of assistance programmes on the performance of assisted SMMEs; and

5. prepare an annual report on the state of entrepreneurship and SMMEs and progress in implementing the National Strategy

The SME Strategy also foresees, under the responsibility of JEDCO, the development of a communications plan to adequately inform SMEs and stakeholders about its existence, as well of the actions to be taken. An important element of the plan is the establishment of the SME information web portal to communicate to SMEs more effectively about the availability and nature of support programmes and services and their eligibility conditions and application procedures and disseminate information on the requirements to start and grow a business.The OECD has for many years generated and disseminated data and knowledge on SMEs and entrepreneurship through databases, publications and online resources. Building on its own experience and that of member and non-member countries, the OECD could support Jordan to build capacities to analyse and disseminate information and data on SMEs and entrepreneurs.The MAIN ACTIVITY under this sub-component will be:

1) Based on international good practices, support JEDCO and DOS’s to disseminate data in the SME web portal and in the regular SME Policy papers to be produced by JEDCO.

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The main OUTPUTS of the overall component will be the development of the manual for better enterprise data collection, based on international practices and taking into consideration Jordan’s specific needs and statistical infrastructure available. The main OUTCOME of the component will be greater capacities in JEDCO and DOS to perform data collection on private enterprises and conditions for SME development, including SME finance indicators; this will ultimately lead to increased evidence-based SME policy making, including through the evaluation of more accurate diagnoses of the state of SMEs and more accurate monitoring and evaluation of policies. It is also expected to result in the inclusion of Jordan in the annual report on Financing SMEs and Entrepreneurs: An OECD Scoreboard.COMPONENT 3. DESIGN AND IMPLEMENTATION OF A MONITORING AND EVALUATION SYSTEMThe SME Strategy focuses on the development of effective data and reporting systems to monitor the objectives and targets set in the SME Strategy. Monitoring and evaluation (M&E) of the effectiveness of SME policies, however, goes beyond data collection systems. M&E also requires improving the design of SME support measures, including the definition of clear objectives, targets, outputs and ultimate outcomes, as well as setting up adequate methodologies to assess how well those outcomes were reached.The OECD will assist JEDCO in implementing a monitoring and evaluation system of SME support measures and their individual and aggregate impact on SME and entrepreneurship performanceThe OECD has developed a Framework for the Evaluation of SME and Entrepreneurship Policies and Programmes to:

increase the awareness of politicians and public officials of the benefits from having an evaluation culture; identify the principles and methods of robust policy evaluation; disseminate examples of good micro evaluation practice at the national and sub national levels; highlight key evaluation debates: Who does evaluations? What procedures and methods should be used?

When to do the evaluations? What about the dissemination of findings? Should all policies be disseminated in the same way?

show the importance of policies at the macro level that influence SMEs and entrepreneurship and comprehensive assessment of actions across the policy portfolio.

Building on the framework and on specific experiences from OECD members and non-members, the OECD will support Jordan’s establishment of a system to monitor and evaluate the effectiveness of the individual components and actions of the SME Strategy and its aggregate impact.The MAIN ACTIVITIES under this component will be:

1) In collaboration with JEDCO, organise capacity building workshops on M&E techniques for officials involved in SME and entrepreneurship policies. The workshops will consider the SME Strategy, its related Action Plan and the OECD Framework for the Evaluation of SME and Entrepreneurship Policies and Programmes.

2) Develop M&E guidelines for the different thematic pillars of the SME Strategy, building on the discussions of the workshops and the related documentation. These guidelines will include information on monitoring indicators to collect and what to evaluate, when and how.

3) In collaboration with JEDCO, produce the first report on the state of SMEs and entrepreneurship in Jordan and a series of SME policy papers, including an overview of SME statistics mentioned in component 2 and the results of M&E in component 3.

The main OUTPUT of this component will be the production of the first of a series of policy papers and reports on the state of SMEs and entrepreneurship in Jordan and the implementation of the SME Strategy. The main OUTCOME will be the increased capacity of the Jordanian authorities to monitor and evaluate the effectiveness of SME policies and programmes, and the ultimate effectiveness of the overall SME Strategy.

15. Key Indicators Linked to Objectives

Key indicators to measure the results of the Project are:

1) Overall indicators: Government bodies, institutions and local government units receiving support services;

2) Studies, assessments, reports, action plans, roadmaps, models of good practices or frameworks endorsed

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3) Public sector staff trained in various aspects of SME and entrepreneurship coordination, dialogue, monitoring and evaluation, and data collection, harmonisation and analysis.

1. Provide support and capacity building for JEDCO to lead the implementation and coordination of the overall SME Strategy

4) Number of consultations between relevant actors of different levels (high and technical level) involved in selected, highly horizontal policy areas (e.g. innovation policy, access to finance, business environments, etc.). These actors will include representatives from different ministries, public institutions, private sector associations, etc.

5) Number of key shortcomings and bottlenecks identified in current coordination and consultation mechanisms.

6) Key recommendations or guidelines developed to address these shortcomings and bottlenecks. These recommendations or guidelines should be applicable to different SME policy domains.

2. Co-operate with JEDCO and EIB in the implementation of the SME Observatory, especially by building capacity to collect and harmonise business statistics

1) Number of capacity building workshops to improve the collection, harmonisation and analysis of enterprise data, including SMEs.

2) Recommendations, in the form of a manual, to collect, analyse and publish SME and entrepreneurship statistics.

3) Number and type of indicators collected by Jordanian authorities and published in the SME Observatory.

3. Assist JEDCO in implementing a monitoring and evaluation system of SME support measures and their individual and aggregate impact on SME and entrepreneurship performance

1) Number of capacity building workshops on monitoring and evaluation of different SME support measures.

2) Guidelines to improve SME policy monitoring and evaluation, at the individual SME programme level and the aggregate SME Strategy level.

3) Publication of a series of policy papers and the first annual report on the state of SMEs and entrepreneurship in Jordan, including SME statistics and results of the effectiveness of the SME Strategy’s measures taken so far.

D. IMPLEMENTATION

16. Partnership Arrangements (if applicable)

The Project will be implemented by the OECD in consultation with JEDCO, which is the main institution in charge of coordinating actions under the SME Strategy. The execution of the Project will also involve consultation with other organisations involved in SME policy, including the Ministry of Industry and Trade, the Ministry of Planning and International Co-operation, the Ministry of Finance, and the Central Bank of Jordan. The private sector, notably the Jordan Chamber of Commerce and the Jordan Chamber of Industry will also be closely involved in the implementation of the Project. Consultation with the Department of Statistics (DOS) and relevant experts will also be undertaken under components two and three of the Project.

17. Coordination with Country-led Mechanism/Donor Implemented Activities

The Project is aligned with the SME Strategy and contributes directly to its governance and implementation mechanisms. The project will coordinate with ongoing initiatives by donors, and notably the Transition Fund project Jordan’s SME Growth Programme 2015-2017 (the “SME Growth Programme”), implemented by JEDCO and the EIB, and particularly its component 4 on “Establishing a Start-ups and SMEs Growth Observatory within JEDCO” (the “SME Observatory”).The SME Growth Programme will “establish and equip the SME Observatory with the necessary hard and software to establish a service portal and enable its operation” and will “recruit and train 3-5 new specialised JEDCO staff to

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manage/operate the service”. The OECD Project presented here, on the other hand, will build the capacities of the Jordanian authorities to better coordinate, monitor and evaluate SME policy, and to collect more and better SME data. The results of the Project are expected to increase the effectiveness and efficiency of SME policy making.The SME Growth Programme support for the SME Observatory will involve the creation of a specialised unit within JEDCO. The tasks undertaken by the SME Observatory will include researching, compiling and providing information on SMEs and entrepreneurship for policymakers, researchers and SMEs. The SME Observatory will also co-operate with other institutions to undertake surveys on SMEs and entrepreneurship and will produce or contribute to annual reports. The SME Growth Programme will also finance the creation of an “interactive database that will establish the core knowledge base at JEDCO, and its integration with the Management Information Systems that JEDCO has, in addition to a suitable capacity server”.The SME Growth Programme’s component on Establishing a SME Observatory hence has a clear operational character (establishing and running the SME Observatory unit within JEDCO). This Project proposed by the OECD and Jordan, on the other hand, is providing capacity-building on how to gather information and data using international tools and good practices to produce regular surveys and improve the evidence base for SME policy making. Both projects are therefore complementary and well-aligned as shown in the table below.

This Project SME Growth Programme Combined effortsBased on workshops and the elaboration of guidelines, provide:- Capacity building and good practices for data collection, harmonisation, analysis and presentation Better diagnoses of the performance of SME and entrepreneurship.- Capacity building and good practices for better monitoring and evaluation More effective and efficient SME and entrepreneurship policy.

Equip and staff a unit within JEDCO to i) monitor the Entrepreneurship, start-ups and SME sector, ii) document enterprise behaviour, and policy related matters and impact, iii) harness potential business opportunities, linkages and market intelligence to provide meaningful insight into the wider targeting of JEDCO activities, iv) add value and support to Chambers of Industry, Commerce and business association community in Jordan.

Better data on SMEs and entrepreneurship and better diagnoses of SME policy effectiveness will be a valuable input for the regular reports that JEDCO intends to publish through the SME Observatory.

The OECD’s experience on disseminating knowledge could also provide useful guidance for the communications activities of the SME Observatory.

The Project will also coordinate with other relevant donor-sponsored projects such as the Jordan Upgrading and Modernisation Programme (JUMP) and the Jordan Services Modernisation Programme (JSMPI) – both programmes supported by the EU, as well as the Jordan Local Enterprise Support Project – supported by the Agency for International Development of the United States (USAID).

18. Institutional and Implementation Arrangements

The Project will be executed by the OECD in consultation with JEDCO and will follow the OECD’s standard operational policies and procedures, including procurement and financial management policies. The Project will benefit from the input of JEDCO, its main beneficiary, in day-to-day and strategic activities.A Project implementation team in charge of coordinating and managing the day-to-day execution of activities for the respective institutions (OECD and JEDCO) will be set up. The team will work under the supervision of the OECD and be composed of staff at the OECD and JEDCO; it will include a local Project coordinator and support staff. The Project will also benefit from the participation of international experts and consultants, who will likewise work under the supervision of the OECD.

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A Project Advisory Committee will be formed to provide input and support the execution of the activities of the Project. The Advisory Committee will be composed of representatives from the government institutions mentioned in Section 16 above, private sector representatives, the EIB, and donors active in SME development and other institutions relevant to the implementation of the SME Strategy. The Project Advisory Committee will meet to evaluate progress and provide input and support where needed.

19. Monitoring and Evaluation of Results

The key indicators linked to the objectives identified in Section 15 above will form the basis for monitoring and evaluating the results of the Project. These indicators are of a qualitative nature (e.g. the number of actors involved in consultations is less important than the relevance of those actors; the number of workshops organised is less important than the actual actions undertaken as a result of the workshops).The OECD, in consultation with JEDCO and the project Advisory Committee, will prepare progress reports bi-annually for submission to the MENA Transition Fund.

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E. PROJECT BUDGETING AND FINANCING

20. Project Financing (including ISA Direct Costs2)Cost by Component Transition

Fund(USD)

Country Co-Financing

(USD)

Other Co-Financing

(USD)

Total(USD)

Component 1: Provide support and capacity building for JEDCO to lead the implementation and coordination of the overall SME Strategy(a) Sub-component 1.1: Identification of coordination

shortcomings and bottlenecks(b) Sub-component 1.2: Elaboration of guidelines to

improve coordination and consultations(c) Sub-component 1.3: Application of guidelines to

the overall SME Strategy

427,000 85,50

0 128,00

0 213,50

0

12,000 439,000

Component 2: Build capacity to collect, harmonise, analyse and publish business statistics online and in the form of reports(a) Sub-component 2.1: Capacity building workshops

to improve SME data collection, harmonisation and dissemination

(b) Sub-component 2.2: Production of a manual reflecting the results of the workshops

(c) Sub-component 2.3: Publication of SME and entrepreneurship data

366,500 146,50

0 110,00

0 110,00

0

12,000 378,500

Component 3: Assist JEDCO in implementing a monitoring and evaluation system of SME support measures and their individual and aggregate impact on SME and entrepreneurship performance(a) Sub-component 3.1: Capacity building workshops

on monitoring and evaluation techniques(b) Sub-component 3.2: Production of M&E

guidelines for the different thematic pillars of the SME Strategy

(c) Sub-component 3.3: Report on the state of SMEs and entrepreneurship, including an overview of SME statistics and results of M&E

427,000 171,00

0 128,00

0 128,00

0

12,000 439,000

Total Project Cost 1,220,500 36,000 1,256,500

21. Budget Breakdown of Indirect Costs Requested (USD) Description Amount (USD)

For grant preparation, administration and implementation support 77,000Total Indirect Costs 77,000

2 ISA direct costs are those costs related to the ISA’s direct provision of technical assistance within the project.

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F. Results Framework and Monitoring

Project Development Objective (PDO):

PDO Level Results Indicators*Unit of

MeasureBaseline

Cumulative Target Values**Frequency

Data Source/Methodology

Responsibility for Data

Collection

Description (indicator

definition etc.)YR 1 YR 2 YR3 YR 4 YR5

Indicator One:Government bodies, institutions and local government units receiving support services

Number of bodies, institutions and units

No institutions receiving support

At least 4 instit-ution

At least one more institution

At least one more institution

Annually Progress ReportProject Implementation Team (PIT)

Institutions in charge of SME policy benefiting from the activities of the project

Indicator Two:Studies, assessments, reports, action plans, roadmaps, models of good practices or frameworks endorsed

Number of guidelines developed and endorsed

No guidelines 0

3 sets of guideli-nes (one per compo-nent)

Comprehensive publication for JEDCO

Annually Progress ReportProject Implementation Team (PIT)

Guidelines developed and endorsed to support each are under each component

Indicator Three:Public sector staff trained in various aspects of SME and entrepreneurship coordination, dialogue, monitoring and evaluation, and data collection, harmonisation and analysis

Number of staff

No staff trained

35 staff

70 staffOver 100 staff

Annually Progress ReportProject Implementation Team (PIT)

Staff benefiting from the capacity building activities under each component

INTERMEDIATE RESULTS

Intermediate Result (Component One): Provide support and capacity building for JEDCO to lead the implementation and coordination of the overall SME StrategyIntermediate Result indicator One: Consultations between relevant actors of different levels (high and technical level) in selected, highly horizontal policy areas (e.g. innovation policy, access to finance, business environments, etc.).

Number of well-structured, formal consultations

Consultations are sporadic, not well-structured and relevant actors are not consistently involved

At least one consultation

At least one additional consultation

Semi-annually OECD-JEDCO

Qualitative indicator. Relevance of the indicator lies in the form and participation of the consultations rather than their number.

Intermediate Result indicator Two: Key shortcomings and bottlenecks identified in current coordination and consultation

Number of coordination and

No specific shortcomings and

Primary shortc

Secondary shortco

Semi-annually OECD-JEDCO Qualitative indicator. Relevance of the indicator lies on

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mechanisms consultation short-comings and bottlenecks

bottlenecks identified

oming s and bottlenecks identified

ming s and bottlenecks identified

severity of shortcomings and bottlenecks identified rather than their number.

Intermediate Result indicator Three: Key recommendations or guidelines developed to address these shortcomings and bottlenecks. These recommendations or guidelines should be applicable to different SME policy domains

Specific guidelines or recommendations addressing specific shortcomings and bottlenecks

No guidelines to guarantee coordination and consultations

Primary and secondary bottlenecks and shortcoming addressed

Semi-annually OECD-JEDCO Qualitative indicator. Relevance of the indicator lies in the pertinence or usefulness of the recommendations rather than their number.

Intermediate Result (Component Two): Coordinate with JEDCO and the EIB in the implementation of the SME Observatory, especially by building capacity to collect and harmonise business statistics

Intermediate Result indicator One: Capacity building workshops to improve the collection, harmonisation, analysis and publication of enterprise data, including SMEs

Number of workshops

No capacity building in place

At least one workshop

At least one additional workshop

Semi-annually OECD-JEDCO Qualitative indicator. Relevance of the indicator lies in the results of the workshops rather than their number.

Intermediate Result indicator Two: Recommendations, in the form of a manual, to collect and analyse SME and entrepreneurship statistics

Number of recommendations

No guidelines on SME data collection

One manual

Data collection by JEDCO and DOS based on the manual

Annually OECD-JEDCO Qualitative indicator. Relevance of the indicator lies in the usefulness and application of the recommendations rather than their number.

Intermediate Result indicator Three: Number and type of indicators collected by Jordanian authorities and published in the SME Observatory

Number and type of indicators

No internationally comparable indicators currently available online

First set of indicators online

Second set of indicators online

Annually OECD-JEDCO Qualitative indicator. Relevance of the indicator lies in the usefulness and application of the indicators collected rather than their number.

Intermediate Result (Component Three): Assist JEDCO in implementing a monitoring and evaluation system of SME support measures and their individual and aggregate impact on SME and entrepreneurship performanceIntermediate Result indicator One: Capacity building workshops on monitoring and evaluation of different SME support measures

Number of workshops

No capacity building in

place

At least one

workshop

At least one

additional

workshop

Semi-annually OECD-JEDCO Qualitative indicator. Relevance of the

indicator lies in the results of the

workshops rather than their number.

Intermediate Result indicator Two: Guidelines to improve SME policy

Number of recommenda

No guidelines on M&E

One manu

Implementation

Annually OECD-JEDCO Qualitative indicator. Relevance of the

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monitoring and evaluation, at the individual SME programme level and the aggregate, SME Strategy level

tions al of M&E based on the manual

indicator lies in the usefulness and

application of the recommendations rather than their

number.Intermediate Result indicator Three: Publication of policy papers and a first report on the state of SMEs and entrepreneurship in Jordan, including SME statistics and results of the effectiveness of the SME Strategy’s measures taken so far

Reports No annual report on the state of SMEs

and entrepreneursh

ip

Pilot or

working

version

report

First report

Annually OECD-JEDCO

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