KANSAS CITY, Kansas — COVID-19 has dealt a heavy blow to the Jordanian economy. The pandemic, along with pre-existing Jordanian economic vulnerabilities, has stalled the kingdom’s economic growth and swelled poverty and unemployment. The World Bank, the Asian Infrastructure Investment Bank (AIIB) and the Jordanian Government are funding a $1.1 billion program to accelerate the country’s recovery from COVID-19 while promoting a “climate-resilient and inclusive recovery” as well as long-term Jordanian economic development. The program is called the Inclusive, Transparent and Climate Responsive Investments Programme-for-Results. It builds on previous Jordanian Government economic reform efforts while also assisting Jordan’s most impoverished households. The World Bank and AIIB’s assistance to Jordan comes as the country’s economy faces a multitude of challenges.
Jordanian Economic Challenges
Currently, Jordan is grappling with the impacts of the COVID-19 pandemic while supporting a large refugee population and battling a high unemployment rate. However, Jordan’s economic troubles pre-date the outbreak of COVID-19. Even before the pandemic, a 2019 public survey found that 27% of Jordanians labeled unemployment as the “single biggest problem” the country faces. Another 24% of citizens labeled poverty as the country’s most significant issue.
Before the pandemic, Jordan’s youth population encountered a dismal economic environment. Specifically, the country experienced a spike in the youth unemployment rate (ages 15-24) from roughly 28.5% in 2014 to about 37.3% in 2019. Even before COVID-19 arrived in Jordan in March 2020, low wages, long working hours and a high unemployment rate motivated many highly educated Jordanian youth to consider job opportunities abroad. According to a 2018/19 survey, roughly 42% of Jordanians consider emigration, a rate that has doubled since 2016. Of these potential emigrants, almost 60% are youth between the ages of 18 and 29.
COVID-19 in Jordan
The Jordanian Government declared a state of emergency in March 2021. The measure introduced a lockdown lasting through April 2021 and closed all borders. While the Jordanian Government did introduce cash assistance schemes to help businesses and vulnerable households, the assistance failed to fully ease the economic burdens of workers in the Jordanian informal sector who make up 47% of the workforce. Moreover, the border closures and lockdowns caused interruptions to trade, forced businesses to limit activity and increased layoffs. In particular, Jordan’s response to COVID-19 heavily impacted the country’s tourism sector, which made up 18% of Jordan’s 2019 GDP.
Within just three months of the pandemic, Jordan’s poverty rate saw a massive spike from 15.4% to 26%. Furthermore, the general unemployment rate rose by about five percentage points to 24.7% by the end of 2020. However, Jordanian female unemployment rose at a faster rate than general unemployment from 24.3% at the beginning of 2020 to 32.8% by the end of 2020. The disparity highlights the disproportionate impact of COVID-19 on women in Jordan and across the world.
The Transparent and Climate Responsive Investments Programme-for-Results is a collective World Bank, AIIB and Jordanian Government effort to spur economic recovery and lasting Jordanian economic development. The plan intends to expand opportunities for female labor force participation, strengthen Jordan’s key tourism sector and support environmentally sustainable Jordanian economic development. It will also protect the country’s most vulnerable households from immediate economic shocks.
The project will deploy $290 million to provide emergency cash transfers to vulnerable Jordanian households in the formal and informal sectors. The initiative also aims to ease the burden on Jordanian businesses by providing wage subsidies for employees of companies struggling to keep their doors open as a result of the pandemic. Additionally, emergency cash transfers will benefit roughly 270,000 impoverished households.
Supporting Tourism and Green Sectors
The program will also utilize $70.8 million to manifest the full potential of Jordan’s large tourism sector. To do so, the plan will upgrade the kingdom’s infrastructure, attract private investment to the sector, decrease regulatory obstacles for entrepreneurship in the tourism space and protect Jordan’s cultural heritage sites.
Additionally, the World Bank is allocating $152.5 million to promote public and private investment in Jordanian renewable energy, green technologies and climate-responsive projects. The World Bank and AIIB will use the program to identify and limit the obstacles Jordanian women face when looking for jobs. Specifically, the initiative aims to promote female employment in the “tourism and green sectors.”
The program builds on the Jordanian government’s 2018 five-year reform plan. The plan intends to decrease gendered segmentation in the labor market, promote exports and ease the cost and regulatory burden on Jordanian businesses.
Altogether, the Inclusive, Transparent and Climate Responsive Investments Programme-for-Results has the potential to set a new growth trajectory for the Jordanian economy. Such a change is vital after more than a year of economic devastation. The initiative’s focus on improving Jordanian infrastructure and promoting entrepreneurship in the tourism sector could strengthen one of the kingdom’s most important sectors. Jordan now has the opportunity to invest in creating job opportunities in renewable energy and green technologies. These opportunities could stem the “brain drain” of young, highly educated Jordanians and catalyze Jordanian economic development.
– Zachary Fesen