| Jordan | Jun 28, 2019
Jordan is today a Middle East technology start-up hub, where highly skilled tech firms look outward to the Gulf Region given the limited scale of the domestic market.
The Jordan Economic Growth Plan 2018-2022 (JEGP) was drafted to recapture growth momentum and realize Jordan’s development potential in the broadest sense through economic, fiscal, and sectoral strategies, and their respective government policies, for each economic sector. The government holds that successful implementation of JEGP could double Jordan’s economic growth over five years, mitigating regional uncertainties.
…To Give ICT Momentum
Inculcating smart specialization is a key consideration in the commercial advancement of Jordan’s ICT sector. No longer an entity unto itself, technology is to be the ubiquitous driver of economic turnaround after years of macroeconomic slippage due to regional noise. Plans for the wholesale digitization of the state and private sector are encompassed in the national digitization strategy, the REACH 2025 Vision and Action Plan. That roadmap talks of building a “dynamic and yet accountable network of champions, movers, and shakers that together drive the agenda.” Underway is the integration of technologies across other strategic economic sectors to include health, education, energy and cleantech, transport and logistics, the financial sector, and communications and security. The vertical technology items identified for development are IoT, cloud computing, hardware, and AI. Jordan’s solutions strengths meanwhile, are identified as content and gaming (notably for localization with Arabic content), e-commerce, and professional services. Entrepreneurship is being supported by legislation and policy to boost Jordan’s value proposition in global value chains.
Reach-ing Joint Solutions…
Export drives are no hit-and-miss affair and require conducive commercial structures in the country of origin. The 2016 Reach 2025 Vision and Action Plan published by the Ministry of Digital Economy and Entrepreneurship (MDEE), formerly the Ministry of ICT, and ICT Association of Jordan relies on cross-agency collaboration between MDEE and the Information and Communications Technology Association (Int@j), which acts to promote Jordanian products abroad. Since then, ICT exports have quadrupled to USD200 million, generated by a sector that employs over 16,000 people. Today the sector of around 600 tech enterprises (half being innovative start-ups) contributes 12% of GDP, fueled by annual investment of roughly USD150 million. The ongoing rollout of the national fiber network is also key to upcoming 5G and IoT/M2M evolution, with sweet potential for foreign deals.
No Holding Back
REACH rings an alarm bell for the national “Cost of Inaction” in the ICT sector. Market players identify the state as having prioritized security over ICT in recent years due to regional conflagrations. “The average development from 2011-2014,” we learn had been, “a decline of 9%.” In fact, ICT contribution to GDP in 2014 was just 4%, dipping to 3.1% in 2016, according to World Bank numbers. Meanwhile, ICT sales to Jordan’s key export markets of Saudi Arabia and the US have also waned. Jordanian ICT exports for 2017 of USD82.3 million were down YoY from USD84.9 million and from USD122.3 million in 2010.
Jordan is leveraging its skilled human capital, competitive wages, and time zone as key pillars of its regional digital outsourcing hub status. REACH 2025 ambitiously seeks to bridge Jordan and international digital hubs through a network of 10 international innovation centers that expedite Jordanian tech companies to identify international partners and open new markets. A slogan making the rounds is ‘Making Jordan the regional hub for makers.’ In this scheme, tech entrepreneurs are to benefit from open source design and 3D printing, among other advantages, to render manufacturing of commercially attractive propositions more cost effective. And in November 2018, Int@j launched its 1,000 Entrepreneurs National Initiative, as part of REACH 2025, after the Central Bank of Jordan entered a partnership with the World Bank to establish a USD99-million Innovative Start-ups Fund.
Iraq Underscores Export Realities
“The truth is that the pre-occupation Iraqi authorities imposed Jordanian products on the [Iraqi] market, granting [our] exporters an absolute advantage, especially under the oil-for-food program, which was an internationally endorsed agenda. We should not forget that the Iraqi leadership was willing to overlook the shortcomings of our exported goods in favor of supporting Jordan,” Marji said. “This is no longer the case.” Notably, exports to Iraq dropped from JOD883.1 million in 2013 to JOD367.7 million in 2017, followed by a 36% increase in July 2018 YoY. Nonetheless, “the Iraqi market is overrun by Turkish products, as well as Iranian exports, though to a lesser extent,” Jubouri warned.
Saudi Arabia and other Gulf countries are now exporting to Iraq, a source with the direct foreign investments office at the Jordanian Embassy in Baghdad told The Jordan Times. Jordan is not going to be without competition in its pursuit of a slice in the Iraq reconstruction project, Razzaz acknowledged. However, head of the Direct Investment Department at the Jordanian Embassy in Baghdad Riyad Ababneh argued that “Iraqi consumers have confidence in Jordanian products, which is an advantage for [our] exports over competitors.”