USAID Informal Livelihoods Advancement

Activity (Iqlaa‫)ع‬

Assignment: Mapping Analysis of the Regulatory

Framework for the Access to Finance with a specific focus
on Alternative and Innovative Funding in Jordan
 Short Term Technical Assistance (STTA) - SOW

Project Informal Livelihoods Advancement Activity USAID Iqlaa‫ ع‬Project

Work Plan Activity Activity A3. Financial Sector Analysis

Position Title
STTA for the mapping analysis of the regulatory framework for
the access to finance sector with a specific focus on Alternative
and Innovative Funding

Reporting Expectation State Project Manager

Period of February - March 2023 Level of Effort (LOE) up to 45

Performance days.

Location Amman - Jordan

Background

Informal Livelihoods Advancement Activity (Iqlaa‫( ع‬is a five-year USAID-funded program

that aims to support Jordan's home-based businesses (HBBs) and Micro and Small
Enterprises (MSEs) to grow, transform, and become resilient to future shocks. HBBs and
MSEs are essential drivers of employment and economic stability in Jordan. Micro and
small enterprises represent 98 percent of all businesses in Jordan and compose half of the
country’s private sector employment. Therefore, the Iqlaa‫ ع‬approach places formal and
informal Jordanian HBBs and MSEs on a path to recovery, stabilisation, and growth,
focusing on four critical sectors: agriculture, tourism, manufacturing, and services, with
special attention to technology development and implementation.

Iqlaa‫ ع‬works to implement good practices in crisis response, enterprise strengthening,

inclusive job creation, and financial sector development within a market-systems
development (MSD) framework and leveraging innovative behavioural change
methodologies to facilitate long-term, sustainable changes in the behaviours or
stakeholders and beneficiaries that align better with the current needs of Jordan’s MSEs.

Iqlaa‫ع‬, led by Mercy Corps (MC), weaves together technical expertise from a robust set of
national, regional, and international partners including Andersen for Legal and Tax
Consultancy (Andersen), Dalberg Design (Dalberg), Expectation State, Middle East
Investment Initiative (MEII), Migrate-Jordan (Migrate), Q-Perspective, and American
Chamber of Commerce in Jordan (AmCham).

USAID Iqlaa‫ ع‬- mapping analysis of the regulatory framework for the access to finance sector with a
specific focus on Alternative and Innovative Funding SOW
To achieve its objectives, Iqlaa‫ ع‬through its implementing partners and market sector
actors, will offer bundled support in forms of technical assistance and grants as the
following:
▪ Formalization
▪ Start-Up Funding
▪ Business Growth
▪ Innovation & Scale
▪ Technology Integration

These interventions will achieve Iqlaa‫’ع‬s main outcomes:

▪ Increase sales and revenues for MSEs through access to markets and business
▪ opportunities.
▪ Create new employment and self-employment opportunities for women, youth,
and persons living with disabilities.
▪ Increase the number and quality-targeted products and services offered by
business service providers.
▪ Support growth-oriented non-formal business to formalize.

Introduction
Access to suitable and appropriate finance (debt, equity and hybrid) plays an integral role
in enterprise formation, development, and ability to formalize. MSEs represent the largest
number of formal enterprises that seek finance. Informal businesses, who are potentially
larger in number than formal micro and small enterprises, also represent a potential driver
for economic growth and employment generation. MSEs are the backbone of a strong
economy and create jobs for millions of people. Their capacity for innovation and their
ability to adapt to an ever-changing business environment makes them a vital building
block for economic growth and prosperity. MSEs are of particular importance in Jordan,
forming around 99.6% percent of the formally registered companies in Jordan.

Despite their substantial economic value, Jordan’s MSEs face many challenges, including
legal and regulatory issues, slow technology adoption, and poor financing options. The
lack of access to suitable financial products is hindering the growth and expansion of
MSEs where a great portion do not have a banking relationship and hard access to credit.
Securing formal financing often requires MSEs to undergo long and tedious procedures,
causing many to resort to informal funding channels – i.e., borrowing from relatives or
friends.

In the Iqlaa‫ ع‬program, access to finance plays a central role and this is where the focus of
Expectation State falls. Expectation State is an employee-owned business that works with
governments, investors, donors, intermediaries, family offices, startups, multinationals,
and communities to deliver growth. Under Iqlaa‫ع‬, Expectation State will provide technical
knowledge and skills primarily related to improving the access to finance ecosystem to
meet the needs of MSEs in Jordan.

The access to finance sector in Jordan is considered one of the most advanced sectors in
the region. In 2017, the Central Bank of Jordan (CBJ) issued the National Financial

USAID Iqlaa‫ ع‬- mapping analysis of the regulatory framework for the access to finance sector with a
specific focus on Alternative and Innovative Funding SOW
Inclusion Strategy (NIFS) 2018–2020, which aimed to enhance financial inclusion, with an
objective to improve SMEs access to finance through microfinance and digital financial
services, as well as to promote financial literacy and strengthen financial consumer
protection. According to the CBJ Financial Inclusion Report, the NFIS succeeded in
enhancing financial inclusion in Jordan to reach 50%, and reducing the gender gap to
reach 29% at the end of 2020. The CBJ working closely with the ecosystem partners
worked to improve the legal regulatory framework to expand access to financial services
and increasing active usage.

In 2018, the CBJ issued new regulations to govern the Venture Capital Industry in Jordan
by issuing the Venture Capital (VC) Regulations No. 143 of the Year 2018. These
regulations allowed the establishment of VC funds in Jordan according to international
good practices. Additionally, in 2018 Jordan launched the Regulatory FinTech Sandbox
with an objective to encourage competition and innovation by utilizing technological
advancements by introducing financial tools that meet the needs of SMEs in Jordan.

More recently, the CBJ issued the Finance Companies Regulation No. 107 of the year 2021
to regulate and supervise the operations of all companies engaging in financing activities,
including microfunding, crowdfunding, leasing and factoring. The new Regulations has
given existing finance companies two years to adjust their status in line with the
Regulations’ provisions.

Despite all of these efforts and interventions by the government, MSEs are unable to
capture the full potential of accessing innovative funding such as microfunding, leasing,
factoring, equity finance or insurance. The reasons for this include regulatory barriers as
well as obstacles on both the supply and the demand side.

Objectives of the Assignment

The assignment aims to assess the regulatory environment governing the access to
finance sector in Jordan with objectives to identify opportunities to introduce innovative
financing tools that meet the needs of MSEs and bridge the financing gaps.

The assignment is expected to be delivered by working closely with the CBJ and the
ecosystem market players including but not limited to the banks, microfinance
institutions, crowdfunding and leasing companies, in addition to financing institutions that
are providing innovative financing tools such as factoring and reverse factoring.

Roles and Responsibilities

The consultant(s) will be responsible for the following main

activities: General
1. Identify and review the relevant laws, regulations, policies and instructions in
regards to the access to finance sector in Jordan, including but not limited to
Finance Companies Regulation No. 107 of the year 2021, Open Finance

USAID Iqlaa‫ ع‬- mapping analysis of the regulatory framework for the access to finance sector with a
specific focus on Alternative and Innovative Funding SOW
 Instructions No. 12 of the year 2022, Digital Banking and others. In addition,
identify the reasons behind the government’s issuance of the identified laws,
regulations, policies and instructions; and what are they meant to achieve (i.e.
economic growth, tax revenues, unemployment, exports, etc)
2. Identify opportunities for introducing new innovative financing solutions and tools
in Jordan including reverse factoring / supply chain finance, blended finance,
embedded finance, and other possible solutions that are meant to address nation-
wide challenges such as economic growth, unemployment, exports, etc.
3. Identify the main legal and regulatory challenges that might hinder the
development of innovative financing tools in Jordan, and what are the challenges
that these innovative tools will address and/or solve.
4. Identify and discuss main legal and regulatory requirements and challenges for
introducing Reverse Factoring - Supply Chain Finance and crowdfunding based on
the applicable laws.
5. Provide policy recommendations to allow the introduction of innovative financing
solutions and tools in Jordan including reverse factoring / supply chain finance,
blended finance, embedded finance, and other possible solutions.
6. Facilitate policy advocacy consultation sessions with ecosystem market players.
7. Assess the impact (both positive and negative) of the newly enacted Finance
Companies Regulation No. 107 of the year 2021 and the Open Finance Instruction
No. 12 of the year 2022 on the current activities implemented by financing
institutions in Jordan including leasing companies, crowdfunding platforms and
financial institutions that provide leasing and factoring services.
8. The impact of the newly enacted Finance Companies Regulation No. 107 of the
year 2021 and the Open Finance Instruction No. 12 of the year 2022 on the
beneficiaries of the services provided by the affected companies under this law.
9. The consultant is expected to identify other institutions that extend, directly or
indirectly, finance to formal and informal businesses including but not limited to
Agriculture Credit Corporation and Cities and Villages Development Bank. The
consultant should assess their mandate, laws and policies and identify
opportunities and recommendations on how they can to introduce innovative and
alternative financing tools.
10. The Consultant is expected to work closely with other donor funded projects who
are focusing on this sector, namely the Innovating access to finance for micro,
small and medium-sized enterprises (MSMEs) GIZ I-FIN, and to build on their
existing efforts.
11. The consultant is expected to review and build on the recommendations of
existing reports, including but not limited to the Financial Sector Assessment
Report developed by ES and Financial Inclusion Diagnostic Study 2022.

Microfinance
12. Assess the impact of the newly enacted Finance Companies Regulation No. 107 of
the year 2021 on the Microfinance Sector and its relation to the Microfinance
Companies Regulation No. 5 of 2015. This should include but not be limited to: the
ability of MFIs to comply with the new regulations, sales tax implications on loan
agreements, MFIs ability to introduce innovative tools and expand its customer
base, and MFIs ability to raise finance from local and international sources.

USAID Iqlaa‫ ع‬- mapping analysis of the regulatory framework for the access to finance sector with a
specific focus on Alternative and Innovative Funding SOW
 13. Assess the potential impacts (both positive and negative) of the new regulations
on MSEs.
14. Conduct KIIs and FGDs with Tanmeyah, MFIs and MSEs. The main purpose of these
KIIs and FGDs is to better understand the main challenges facing the MF sector in
Jordan and limiting the ability of MFIs to lend and the MFIs to access affordable
lending. (MSEs should include women, youth and PLWDs owned MSEs)
15. Provide policy recommendations and facilitate discussions with the CBJ and other
relevant stakeholders.

Crowdfunding
16. Assess the impact (both negative and positive) of the newly enacted Finance
Companies Regulation No. 107 of the year 2021 on existing financing institutions
who are providing crowdfunding (Liwwa, Zoomaal, Beeezcrowd, in addition to
others). This should include but not be limited to: their ability to comply with the
new regulations, ability to offer different financing options (equity and loans),
ability to raise finance from local and international sources, their ability to offer
their services according to international good practices.
17. Identify opportunities and challenges in the sector.
18. Conduct KIIs and FGDs with Liwwa, Zoomaal, Beeezcrowd and others). The main
purpose of these KIIs and FGDs is to better understand their finance model, the
previous experience in the Jordanian market, and what challenges/opportunities
they see from the newly enacted regulations. In addition to that, to learn more
information about their investment/lending portfolio, the main targeted group and
any reported impact achieved by the MSEs that came as a result of the funding
they received, and ensure to also include questions related to women, youth and
PLWDs owned MSEs.
19. Assess the regulations with respect to international good practices offering
applicable/comparable models that are implemented elsewhere.
Countries/jurisdictions of good practices are to be identified in close collaboration
between the consultant ES and MC teams.
20. Provide policy recommendations and facilitate discussions with the CBJ and other
relevant stakeholders.

Reverse Factoring - Supply Chain Finance

21. Identify the minimum requirements and challenges, according to the Finance
Companies Regulations No. 107 of 2021, to introduce reverse factoring - supply
chain finance.
22. Assess the regulations with respect to international good practices offering
applicable/comparable models that are implemented elsewhere.
Countries/jurisdictions of good practices are to be identified in close collaboration
between the consultant ES and MC teams.
23. Identify existing banks and financial institutions that offer supply chain finance,
and provide details about the current process, requirements and eligibility criteria
for both the supplier and buyer, in addition to identifying challenges and
opportunities.
24. Conduct KIIs and FGDs with banks and financing institutions to assess the market
to better estimate the current and/or expected market size, and their interest in

USAID Iqlaa‫ ع‬- mapping analysis of the regulatory framework for the access to finance sector with a
specific focus on Alternative and Innovative Funding SOW
 providing such solutions in the future, and ensure participation and questions
related to women, youth and PWLDs owned MSEs.

International Benchmarking

Benchmarking is becoming a central instrument for providing guiding principles to

introduce or improve areas of economic interventions. It provides similarities and
differences between one country and another and suggests new approaches and lessons
learnt to overcome the challenges faced by any country. International benchmarking
reflects that under the right conditions; comparison can be an important driver of
performance. Benchmarking shall be done against relevant countries and internationally
successful performers to identify good practices. Under this assignment, consultant is
expected to:

25. Identify 4 countries/jurisdictions that present international and comparable good

practices in implementing crowdfunding platforms and supply chain finance.
26. Provide benchmarking analysis between the selected countries and applicable laws
in Jordan.
27. Provide lessons learned from the selected countries and provide recommendations
on what to be considered by the Jordanian policy makers.
28. Expose areas where improvement is needed and reveal underlying problems of the
Jordanian financial sector key players in the areas mentioned in this SOW.
29. Provide best practices related to inclusion of women, youth and PLWDs owned
MSEs in the access to finance sector for Jordan to contextualise and learn from
30. Based on the benchmarked countries that have shown to implement best
practices, identify the economic impact for the adoption of the alternative
financing tools (SCF, Crowdfunding, etc)
31. Provide policy recommendations as relevant as identified in this SOW.

Women, Youth and Persons with Disabilities (PWD)

32. The unique needs of women, youth and PLWDs shall be taken into consideration in
all the tasks mentioned in this SoW and wherever relevant (i.e. policy mapping and
identification of challenges and impacts, policy recommendations, specific
preferential treatment in the current and/or financial solutions to be suggested,
etc). Consultations (KIIs, FGDs) with the MSEs will include representation of
women/youth/PLWDs.

Implementation and Deliverables

USAID Iqlaa‫ ع‬- mapping analysis of the regulatory framework for the access to finance sector with a
specific focus on Alternative and Innovative Funding SOW
 Activity LOE Est. Completion Date

Deliverable

List of the current applicable laws, 2 1 week from the

regulations and policies related to the areas kickoff meeting.
identified in this SoW. This deliverable should
also identify the targeted group and Deliverable: Word
beneficiaries of each law, regulations and Document of the activity
other policies. details.

Identify 4 countries/ jurisdictions that 2 1 week from the

present international good practices that are kickoff meeting.
comparable to Jordan in implementing
crowdfunding platforms and supply chain Deliverable: Word
finance. This deliverable should be Document of the activity
implemented in close coordination with ES details.
and MC teams.
International good practices outline and
comparison against the current applicable
laws, regulations and policies

Impact Assessment of the new regulations 15 Within 4 weeks from the

on: kickoff meeting.
1. Microfinance Sector
2. Institutions providing Crowdfunding Deliverable: Word
3. Institutions providing Supply Chain Document of the activity
Finance Services. details.
4. Institutions provided Leasing services
5. Any other institutions that may be
affected by this new regulation.
This deliverable should cover, but not limited
to:
1. The ability of financing institutions
identified in this SOW to to comply
with the new regulations and their
sustainability of serving their
beneficiaries.

USAID Iqlaa‫ ع‬- mapping analysis of the regulatory framework for the access to finance sector with a
specific focus on Alternative and Innovative Funding SOW
 2. Tax implications on financing
agreements
3. Introduce innovative tools and expand
its customer base
4. Raise finance from local and
international sources.
5. Their ability to offer their services
according to international good
practices.
The assessment should also cover the impact
of the new regulations on the Microfinance
Sector, MFIs and MSEs, and its relation to the
Microfinance Companies Regulation No. 5 of
2015 with against the previous effective law.

Conduct international benchmarking 5 4 weeks from the kickoff

assessment between the pre-identified 4 meeting
countries/jurisdictions with the Jordanian
applicable laws and regulations in relation to Deliverable: Word
MFIs, crowdfunding, supply chain finance. Document of the activity
This deliverable should identify lessons details.
learned to be considered by the policy
makers in Jordan.

Conduct KIIs and FGDs to be conducted with 7 On going - During the

different stakeholders and to discuss the implementation period.
different topics as identified in the SOW
Deliverable 1 (Before the
KIIs and FGDs): Interview
guide, questionnaire or any
other tool that will be used
to be revised and approved
by ES.

Deliverable 2 (After the

KIIs and FGDs): meeting
notes, attendance sheets

Develop a policy recommendation document 3 Within 5 weeks from the

based on the assessment of the applicable kickoff meeting
laws and regulations and on the international
benchmarking analysis. Deliverable: Word
Document of the activity
details.

Identify opportunities for introducing new 2 Within 6 weeks from the

innovative financing solutions and tools in kickoff meeting

USAID Iqlaa‫ ع‬- mapping analysis of the regulatory framework for the access to finance sector with a
specific focus on Alternative and Innovative Funding SOW
 Jordan including reverse factoring / supply
chain finance, blended finance, embedded Deliverable: Word
finance, and other possible solutions, Document of the activity
according to the applicable laws and to the details.
benchmarking assessment.

Facilitate discussions with policy makers 5 Within 6 weeks from the

including but not limited to the CBJ. kickoff meeting

Deliverable:meeting notes,
attendance sheets

Final Report 2 6 weeks from the kickoff

meeting

Deliverable: Word Report

Total 45

Minimum Qualifications
▪ A degree in finance, law, economics, business administration, entrepreneurship, or
related discipline, or equivalent related experience. Master’s is preferable.
▪ 10 years’ legal and regulatory experience in the financial services sector, financial
inclusion, MSE access to finance and digital financial services.

▪ Experience with formal and informal finance.

▪ Experience in developing and implementing projects/programs around MSMEs and
MSME finance is a plus.
▪ Experience or relationships working with Development financial institutions, banks,
investor institutions and/or other similar financial service providers serving MSMEs
in Jordan.
▪ Experience in supporting the government of Jordan in drafting regulations.
▪ Previous Market systems development experience is an asset.
▪ Demonstrated experience in managing donor-funded projects, with experience in
result framework and reporting is an asset.
▪ Demonstrate a track record of developing, delivering and managing consultancy
assignments.

Submission of Application

USAID Iqlaa‫ ع‬- mapping analysis of the regulatory framework for the access to finance sector with a
specific focus on Alternative and Innovative Funding SOW
Interested applicants are requested to submit a cover letter, CV(s) and financial proposal
(daily rate) to at recruitment@expectationstate.com using the subject “STTA –
Regulatory Framework A2F Assignment ” no later than the 2nd of March 2023

USAID Iqlaa‫ ع‬- mapping analysis of the regulatory framework for the access to finance sector with a
specific focus on Alternative and Innovative Funding SOW