Jordan’s Economic Crisis Deepens: Businesses Close and Unemployment Soars

The economic crisis in Jordan has reached a critical point, with businesses closing and unemployment soaring to unprecedented levels. The country’s fragile economy has been battered by the COVID-19 pandemic, leading to a sharp decline in demand and revenue for most enterprises.

The Human Impact

According to official statistics, more than 1 million people out of Jordan’s population of 10.1 million are living below the poverty line, with many more unable to secure basic necessities like food and shelter. The economic situation is so dire that even the government’s own social safety nets have been found wanting, leaving many individuals and families in a desperate state.

The Rise of Informal Lending

To make ends meet, people are turning to loans from informal lenders, who charge exorbitant interest rates and often use coercive methods to recover debts. Human Rights Watch has documented cases of borrowers being subjected to violence, intimidation, and even detention by creditors seeking to recover their money.

The Plight of Small Business Owners

The situation is particularly dire for small business owners and entrepreneurs, who have seen their livelihoods destroyed by the economic downturn. Many are now forced to default on loans they took out to start or expand their businesses, leaving them vulnerable to harassment and exploitation by creditors.

Testimony from a Jordanian Woman

“We lost everything - our house, our sheep, everything,” said one woman, who was forced into debt after her family’s livestock was seized as collateral for a loan. “We were desperate, and we couldn’t pay rent or buy food or anything. Then one of my friends introduced me to her sister and her husband. They are lenders. The woman would lend me money, and then when the time came to pay, her husband would say, I will pay my wife back on your behalf, but sign this additional paper [a blank promissory note] for me.”

The Need for Action

The economic crisis in Jordan is a pressing humanitarian issue that requires immediate attention and action from the government and international community. It is imperative that measures are taken to support small businesses and entrepreneurs, as well as individuals and families who are struggling to make ends meet.

Key Findings

• More than 1 million people out of Jordan’s population of 10.1 million are living below the poverty line.
• Many individuals and families are unable to access basic necessities like food and shelter.
• Small business owners and entrepreneurs are particularly vulnerable to economic hardship, with many forced to default on loans they took out to start or expand their businesses.
• Informal lenders charge exorbitant interest rates and often use coercive methods to recover debts.
• The government’s credit bureau, CRIF Jordan, has been criticized for its limited scope and inability to effectively monitor and regulate lending activities.

Recommendations

• The government of Jordan should take immediate action to support small businesses and entrepreneurs, including providing access to affordable financing and other forms of assistance.
• The government should also establish a comprehensive social safety net that provides access to basic necessities like healthcare and education for all individuals and families.
• International organizations and donors should provide financial assistance to support the economic recovery efforts in Jordan.
• Efforts should be made to regulate lending activities and protect borrowers from exploitation by informal lenders.