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Report calls for supporting tech start-ups to address sector challenges

By Khetam Malkawi - Dec 23,2015 - Last updated at Dec 23,2015

AMMAN — Jordan’s technology sector is mature and can serve as a platform for the development of a robust start-up tech ecosystem, according to the Jordan Economic Monitor for fall 2015.

The World Bank report, launched on Monday, highlighted the tech start-up ecosystem in Jordan and the sector’s opportunities for growth and employment.

According to the report, more than 500 companies in Jordan’s ICT sector are significant contributors to the economy, its competitiveness and job creation. 

From 2001 to 2013, ICT export revenues (both hardware and services) grew at an annual average rate of 39 per cent, and in 2013 accounted for 51 per cent of the total, surpassing domestic revenues for the first time, the report said. 

Also in 2013, the ICT sector accounted for 11,637 direct jobs. 

The total multiplier effect of the ICT sector on employment (including indirect and induced jobs) is estimated to be around 80,000 jobs, according to the study.

“However, the sector has reached a plateau. Its revenue share of [the] GDP [gross domestic product] has been shrinking and while its contribution to total service exports has recovered slightly since 2010 it is still below the high achieved in 2005,” the report said.

Encouraging Jordan’s start-up tech ecosystem could help address some of the ICT sector’s challenges, the study added. Tech start-ups can revive the domestic market by stimulating demand for online services, making the Jordanian sector more sustainable.

Innovation generated by digital entrepreneurs can in turn make the export market more competitive, according to the report.

However, for this to happen, “mindsets need to change regarding development of the tech sector,” said the report, adding that the previous emphasis on attracting foreign investment from ICT multinationals for a few large companies to develop export-driven services needs to be modified to encourage additional small domestic entrepreneurs who need venture capital to grow.

In addition, the report stressed that start-ups can strengthen the country’s goal of becoming a regional tech hub by injecting innovation, vibrancy and sustainability.

 

“The ecosystem also enhances links between tech and other sectors due to disruptive business models targeting many industries,” the report said, adding that the Jordan 2025 Vision suggests a number of initiatives that would benefit the tech ecosystem such as increasing seed and venture capital funding for start-ups, raising the share of small businesses in government tenders and developing an entrepreneurship mentality at universities. 

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