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French Version

Bank for the poor nearing reality for underprivileged Jordanians

The idea developed through conversations between Her Majesty Queen Rania and Saudi Prince Talal Bin Abdul Aziz, president of the Arab Gulf Fund for the UN Development Organization.

JORDAN (Star) - The poor and underprivileged in Jordan are about to have their own bank. Although the details of the project are a bit ambiguous at present, it has revived hope for those unable to adapt and function in an environment where the cost of living continues to increase a little too rapidly.

The latest studies of the Kingdom\'s population reveal some 30 percent are below the poverty line. These are individuals that earn JD 300 or less per year, considered hard cases as they face abject poverty-a reality that scarcely existed twenty years ago. Official statistics, however, put the numbers at around 12 percent of the population.

The draft law for the proposed bank should be ratified later this year by the government. Economic Minister Mohammed Halaiqa explained the bank would begin working with JD 5 million in capital and be run largely by the private sector. The bank will provide long-term loans with no collateral. Each loan will be limited, never exceeding JD 10,000.

The idea developed through conversations between Her Majesty Queen Rania and Saudi Prince Talal Bin Abdul Aziz, president of the Arab Gulf Fund for the UN Development Organization. The bank is part of Queen Rania\'s objective to secure greater social and economic growth for those living in rural and remote areas of the Kingdom.

A recent report by the World Bank has detailed a slight change in the basics of the rural economy of many developing countries, once synonymous with agriculture. The report states non-farm income in Jordan is the primary provider and divider of the population.

\"Jordan\'s rural population does not press for access to land because the attractive economic rates of return are found in the non-farm sector,\" the report explained. \"Unlike Egypt\'s rural rich, Jordan\'s rich earn less than 10 percent of their total per capita income from agriculture. More than 55 percent of it comes from non-farm sources.\"

Halaiqa explained the proposed Bank would serve low-income and underprivileged families as part of the government\'s plan to fight poverty and unemployment in the Kingdom. The bank\'s development is said to mirror that of the Grameen Bank in Bangladesh.

With more than 2.5 million borrowers, Grameen Bank provides services that sustain small and medium businesses. The bank has expanded its work, getting involved in different economic sectors. Almost half of Grameen Bank\'s borrowers are women, a fact representing the drastic economic change developing countries have come to face in the wake of globalization.

Grameen\'s efforts clearly resonate with Queen Rania\'s conception, providing Jordanians living in the remote areas an opportunity to develop their own lives, and by extension, the national economy. If approved, Jordan would be the second Arab country, after Egypt, with banks dedicated to helping the poor.

Economists are somewhat cautious about the idea, suggesting the seven national funds and financial institutions currently operating in the Kingdom provide services similar to what the bank is proposing.

The National Aid Fund, the Development and Vocational Fund and the Rural Development Bank are a few of the institutions, which have been operating in the Kingdom for the last 20 years.

According to most, however, these institutions have failed to fulfill their objectives. \"I believe a bank for the poor in Jordan is a good idea if it demonstrated the required mechanisms and conditions necessary for success,\" said Dr Mohammed Khair Mamser, former Minister of Social Development. \"It must follow up the loans, helping borrowers employ their money in constructive projects that will enable them to repay the money later on.\"

A majority of aid funds in Jordan are facing financial difficulties because many borrowers failed to pay back the loans they obtained. In the past, borrowers took out loans to support their families rather than employing them in profitable businesses that would provide returns and hence a method for repayment.

Mamser pointed out Jordan is facing mounting poverty rates as many families find themselves earning nearly the same annual wage they received 20 years ago.

\"The economy is growing, but Jordan\'s per capita income remains at its lowest levels since the 1980s. Economic growth has served to widen the gap between the rich and the poor in the Kingdom. It has become increasingly difficult for the government to adjust the balance.\"

Economist Ahmed Al Namri, however, believes the government should forget about the bank and instead turn its attention to current national funds. He said the project serves merely to \"throw dust in the eyes,\" distracting many from the issues facing programs that have been already implemented.

\"Why should we waste more money on projects we already have in hand?\" he told The Star. He explained the government could actually save money and effort by reforming current national funds, combining them under the control of the Ministry of Social Development. He says restructuring these funds is necessary to make them more cost-efficient and functional.

\"These funds made significant errors in the past that need to be learned from now,\" said Al Namri, disputing the government\'s decision to make the private sector accountable for the forthcoming bank.

\"Because the government faces problems fighting poverty in Jordan it passes the ball to the private sector to try and fix things. If the private sector fails it will be their fault, not the government\'s. The poor will be left with nowhere to turn.\"

Ghassan Joha
The Star

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