Updated Snapshot of liwwa's Borrowers

As liwwa's portfolio has grown, the types of businesses we lend to have evolved as well. The snapshot of businesses provided below encompasses data from our 100 most recent borrowers who have taken loans within the past 6 months. For historical comparison, we will refer back to what our average borrower business looked like a year ago.

Owner/Manager Characteristics

The median age of a liwwa borrower is 41-45 years old with an average of 12 years of management experience in their field.

Business Characteristics

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.^[Circular No. (10/5/436), 2011 & Instructions For Licensing Microfinance Companies No. (2016/62), 2016, Central Bank of Jordan]

Number of Employees:

• 41% of liwwa borrowers have fewer than 5 employees, classified as Micro Enterprises. (down from 50% a year ago)
• 46% of liwwa borrowers are Small Enterprises, with between 5 and 20 employees. (up from 40% a year ago)
• The remaining 13% of liwwa borrowers have between 21 and 100 employees, classified as Medium Enterprises. (up slightly from 10% a year ago)

Based on the most recent 100 borrower businesses, the average business has 13 employees. This is an increase of more than 60% from the average of 8 employees a year ago.

This average is skewed by three large businesses with over 100 employees each. By taking the median, the outsize effect of the three outlier businesses is mitigated. The median liwwa borrower business employs 6 people.

Annual Sales:

• 2% of liwwa borrowers are Micro Enterprises with less than 100K JOD ($141K) in annual sales. (down from 14% a year ago)

• 61% of liwwa borrowers are Small Enterprises with between 100K JOD ($141K) and 1 million JOD ($1.4 million) in annual sales. (down from 72% a year ago)

• 37% of liwwa borrowers are Medium Enterprises with between 1 million JOD ($1.4 million) to 3 million JOD ($4.2 million) in annual sales. (up from 14% a year ago)

The average liwwa borrower has 1,228,426 JOD ($1,735,065) in annual sales which is more than double the annual sales of the average liwwa borrower from one year ago of 543,616 JOD ($767,819). This average is skewed by some outlier businesses with very high annual sales including 4 businesses with more than 4 million JOD in annual sales. A more reasonable measure is the median annual sales of 552,456 JOD ($780,305).

Therefore, 63-87% of liwwa borrower businesses in Jordan can be classified as Micro & Small Enterprises, and the remaining 13-37% can be classified as Medium Enterprises, depending on the metric chosen to measure these classifications.

Business Age:

The average liwwa borrower has been in business for 8.5 years (median: 7.5 years). While this is almost 2 years longer than the year-ago average of 6.7 years in business, it is still well below the average age of all Jordanian SMEs which is 15 years.^[ Enterprise Surveys (http://www.enterprisesurveys.org), The World Bank, 2013]

Net Profit Margin:

The average liwwa borrower has an 8.6% net profit margin (median: 7%). The net margin is estimated internally by taking into account the borrower's stated gross profit margin, financial documents, and sector benchmarks. 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.

Annual Income:

The average liwwa borrower business earns an estimated annual income of 78,809 JD ($111,312) with the median annual income at 44,352 JD ($62,644). This is a 42% increase from a year ago when the average annual income was 55,475 JOD ($78,355).

Characteristics of Conducting Business

The average liwwa borrower business:

• Makes 45% of sales to retail customers and 55% of sales as wholesale trade to other businesses.
• Conducts 98.5% of sales in the local Jordanian market and 1.5% of sales as exports to foreign markets.
• Collects payments from customers via 60% cash and 40% cheques.
• Purchases 57% of inventory/raw materials from the local market and imports 43% of inventory/raw materials from foreign markets.
• Pays suppliers using 33% cash, 37% cheques, and 30% transfers.

Conclusion

Overall, in the past year, the average liwwa borrower business has become larger, older, and increased its annual sales and income. 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.