A Snapshot of liwwa's Borrowers

Over the past two years liwwa has lent $3.9 million across 139 loans in Jordan ($4.2 million in Jordan and the UAE). In doing so we have gained unique insights into the Small and Medium Enterprise (SME) market we serve. This post aims to give a detailed look into the characteristics of the average liwwa borrower, and how they fit within the overall Jordanian SME market segment.

The Central Bank of Jordan segments the SME market by size. There are Micro, Small, and Medium-sized businesses in the country, and they are categorized by number of employees or annual sales.1

Number of Employees:

  • 50% of liwwa borrowers have fewer than 5 employees, classified as Micro Enterprises, on the far left of the chart below.

  • 40% of liwwa borrowers are Small Enterprises, with between 5 and 20 employees, shown in the middle section of the chart below.

  • The remaining 10% of liwwa borrowers have between 21 and 100 employees, classified as Medium Enterprises on the far right.

The average liwwa borrower has 8 employees. This is in line with the average Jordanian Small Enterprise which has 8.1 employees. Jordanian Medium Enterprises are larger with an average of 38.5 employees.2

Annual Sales:

  • 86% of liwwa borrowers are characterized as Micro and Small Enterprises with less than 1 million JOD ($1.4 million) in annual sales.

  • 14% of liwwa borrowers are Medium Enterprises with between 1 million JOD ($1.4 million) to 3 million JOD ($4.2 million) in annual sales.

The average liwwa borrower has 543,616 JOD ($767,819) in annual sales.

Therefore, 86-90% of liwwa borrower businesses in Jordan can be classified as Micro & Small Enterprises, and the remaining 10-14% can be classified as Medium Enterprises, depending on the metric chosen to measure these classifications.

Since the large majority of liwwa borrowers are Micro & Small Enterprises, their sales figures were compared to inflation-adjusted 2013 annual sales figures for all Jordanian Micro & Small Enterprises.3

liwwa Micro & Small Enterprise borrowers have average annual sales of 357,298 JOD ($503,237) compared to 249,559 JOD ($351,492) for all Jordanian Micro & Small Enterprises. As the density chart shows, liwwa borrower sales are more evenly spread throughout the Micro & Small Enterprise segment's sales range, while the overall Jordanian distribution is more tightly clustered toward the lower end of the range.

Business Age:
The average liwwa borrower has been in business for 6.7 years. This is slightly less than half the average age of all Jordanian SMEs which is 15 years.4

Most liwwa borrower businesses have been in business for a shorter duration than the average Jordanian SME. This may be partly due to greater demand for loan products among younger SMEs who are aiming to grow and expand.

Access to Credit:
liwwa borrowers outperform the overall Jordanian SME segment in terms of bank utilization. 100% of liwwa borrower businesses use a checking or savings account, while only 79% of Jordanian Small Enterprises and 92% of Jordanian Medium Enterprises report using a checking or savings account.5

Approximately 61% of liwwa borrowers have a bank loan or line of credit. This is also significantly higher than the overall Jordanian SME segment, where only 12.5% of Jordanian Small Enterprises and 25% of Jordanian Medium Enterprises report having a bank loan or line of credit.6

While over half of liwwa borrowers have access to bank financing, liwwa's unsecured and quick lending process provides flexibility and is a supplement to other sources of capital.

Net Profit Margin & Annual Income:
The average liwwa borrower has a 15% net profit margin (based on liwwa's internal estimates). There is wide variation in borrower net profit margins based on differences in business industry, geography, source of goods and other factors which influence the level of competition and specific net profit margin that the market will bear for a particular business.

The distribution of annual income (below) follows a similar curve to the distribution of net profit margin (above), with the average liwwa borrower business earning an estimated annual income of 55,475 JOD ($78,355).

Overall, compared to the entire Jordanian SME sector, liwwa borrowers are typically small, young and profitable. They are businesses which, when provided convenient access to finance, have the potential to make a big impact on job and income growth in their communities. Our mission at liwwa is to help them do exactly that.

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  1. Circular No. (10/5/436), Central Bank of Jordan, 2011

  2. Enterprise Surveys (http://www.enterprisesurveys.org), The World Bank, 2013

  3. Enterprise Surveys (http://www.enterprisesurveys.org), The World Bank, 2013

  4. Enterprise Surveys (http://www.enterprisesurveys.org), The World Bank, 2013

  5. Enterprise Surveys (http://www.enterprisesurveys.org), The World Bank, 2013

  6. Enterprise Surveys (http://www.enterprisesurveys.org), The World Bank, 2013

Brian Marland

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