Rendered picture of the Abdali New Downtown in Amman
“The privatization program has advanced and was ranked by the World Bank as one of the most successful programs in the Middle East and North Africa region.” © Abdali
Rendered picture of the Abdali New Downtown in Amman
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Last updated: April 29, 2013

How the IT sector is key to Jordan’s future economic success

Getting a proper reading of entrepreneurship and the private sector in the Hashemite Kingdom of Jordan is an arduous task, as opinions vary greatly. But one thing is clear: the Jordanian business climate is more inviting than it was ten years ago.

The Jordanian economy rides the waves of the larger regional powerhouses as well as the global current. The dinar has been pegged to the US dollar since the financial crisis in 1989, and heaps of American and Saudi aid dollars are funnelled into Jordan annually. While some trickles down, a disproportionate amount seems to mysteriously evaporate. The list of suspects contains well-known stereotypes. There are bureaucratic government officials and “old school” CEOs who, similar to many of the heads of state in the region, have been resting on their laurels for years and are comfortably supported by the existing system.

In stark contrast to the above are the businessmen and women of the younger generation. Armed with a foreign education, ambition, and an eye for entrepreneurship, they are largely responsible for the amount of web start-ups in the Hashemite Kingdom. Although about 2% of all Arabs live in Jordan, the country generates about 75% of Arabic online content, according to a speech by Princess Sumaya of Jordan at the Arab Advisers Group's 8th Annual Media and Telecommunications Convergence Conference in 2011.

Oasis500 is one of the companies making this possible. Under the leadership of CEO Usama Fayyad, it has established itself as the first “start up accelerator” in the MENA region and aims to provide early stage and seed investment to start-ups in Information and Communication Technology (ICT). The company’s goal is to foster 500 tech start-ups in five years.

“The average graduating company in our acceleration process is hiring anywhere between 5 to 15 new employees, increasing its valuation three to ten-fold and dramatically increasing revenues in just four months after joining Oasis 500,” says Fayyad.

King Abdullah II of Jordan has been an advocate of developing the country’s IT capability since the start of his reign, which in many ways has paid off. On a more general level, the creation of a better business environment through the past decade’s privatization program is an important factor behind the many IT startups in the country.

“The privatization program has advanced and was ranked by the World Bank as one of the most successful programs in the Middle East and North Africa region,” Fayyad said. “Through the adoption of a multi-track approach to privatization that included the divestitures of shares, sales to strategic investors, private infrastructure development and operation models, and management contracts, the privatization program succeeded in creating a competitive free market.”

Gaith Kawar, founder and CEO of Taktek and Zero 3, two of the regions foremost web development and gaming companies, considers Jordan an advantageous place to build tech companies.

“Amman’s main advantage is good, cheap labour,” says Kawar.  “I can hire a team of web developers in Jordan for the price of one in America, and the only real disadvantage would be that the Jordanian workers don’t have the same level of experience.”

With a 100% local team, Taktek is on the brink of releasing two international iPad and iPhone games that were bought by two global brands, one of which is EA Games.

“Although the private sector is doing a lot to encourage web start ups, there is a lot more that could be done,” says Kawar, citing an example from a well-known American university that grants graduating students loans for web start ups, a model that he believes Jordan should attempt to emulate.

In a country with few natural resources, many view ICT as a logical industry develop. According to Fayyad, “in addition to the 15,000 direct jobs that the sector provides, it generates a total of about 84,000 indirect and induced jobs, meaning that for each direct job there are more than 5 other jobs being created.”

Jordan’s true unemployment rate is believed to be around 30%, so every one of those jobs is needed. Fayyad believes that ICT is one of the industries Jordan can capitalize on, especially if it starts to overlap with other fields.

“Recent analysis shows that this number can go even higher with further integration of ICT into vertical sectors such as health, education, manufacturing and commerce, creating more than 9 indirect and induced jobs for each direct ICT job.”

Dina Dabbas Rifai is the co-founder of fustuq.com, an expanding group-buying website that works because “people love discounts, and especially need them in this economy”. She notes that while Jordan is a small market and by no means an easy one, it can act as a litmus test for a company’s success in the rest of the region.

“Amman is an ideal stepping stone into other Middle Eastern markets. Some of fustuq’s competition that was founded in the Gulf then moved to Amman and had to shut down, whereas fustuq started in Amman and has so far succeeded in Kuwait.”

Amman has been used as a launch pad before. Of the many businesses that have gone from Amman to the Gulf or other parts of the region, Aramex is the first that comes to most Jordanians’ minds. Founded in 1982 by Fadi Ghandour, it has become a global brand and the first Jordanian company to be publicly traded on NASDAQ.

“Jordan is a small market and establishing a business means you have to look to the region to grow. Many Jordanian companies did that very well. Nuqul Group with their powerful brand Fine, Hikma pharmaceutical company, Aramex, Maktoob and several others,” says Ghandour, whose success and penchant for innovation have made him something of a local icon.

He ascribes great importance to the role of private enterprises in Jordan, saying that “they are employers, great managers, and contribute greatly to the Jordanian GDP. They have built industries like tourism, pharmaceuticals, and logistics and they have excelled at it.”

Recently, in a region brimming with CEOs who cling to power until their dying breath, Ghandour made an unprecedented move and stepped down. In doing so, he set a valuable precedent, proving that the stereotypes of the region are not set in stone. 

The stigmas that haunt the Middle East can often be economically crippling. Some believe that menial work is beneath them, and many entrepreneurs are scared to encounter failure and be viewed by society as such. Fayyad acknowledges this, and is working to combat it.

“My biggest goal with Oasis500 is to institute a cultural change in society. We do not lack skills, know-how or even drive. It is only a matter of creating a culture where creating companies becomes one of the most respected, rewarded, and sought after activities in the country.”

Whatever Fayyad and his colleagues are doing to foster the entrepreneurial spirit in Jordan, it seems to be working. A 2012 list compiled by Rachid Sefrioui, the founder of a California-based venture-capital firm, ranks Amman as the 10thbest city in the world to launch a tech start-up. Recently, Amman was called “the Silicon Valley of the Middle East” by Gulf News.

Overall, the same things that plague the global market also hinder Jordanian economic expansion, including unemployment, lack of corporate accountability, and absent social responsibility.

“The Jordanian private sector as well as all private sectors around the world need to think beyond their profits alone and think of what they can do for society in general. Investing in society is an investment in the future stability and prosperity of the country,” advises Ghandour.

The next step for Jordan is figuring out in what direction the next step should be.  While the future of the region is as murky as ever, the country has managed to stay afloat in the sea of turmoil. In any case, the ICT sector has a key role to play.

Munir Atalla
Munir is a Palestinian-Jordanian currently at Tufts University. He is a columnist at OpenDemocracy. Munir worked as an intern at the Your Middle East office during the summer of 2012.
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