Does Madfoo3at’s deal with the Central Bank of Jordan signal a new startup-friendly era of government?

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The relationship between startups and the government in Jordan is complex. On the one hand, it’s one of the most well-established entrepreneurship ecosystems in the Arab world, with the earliest startup accelerator in the Middle East and a plethora of support organizations that help to usher startups from idea phase to expanding into the Gulf and abroad. The ICT sector in particular has grown to supply a healthy 14% of Jordan’s GDP, and, as of last year, had created 80,000 jobs.

On the other hand, this year has also seen the government dismiss the protestations of IT entrepreneurs against strict new censorship and press laws, while rising electricity costs and an income tax hike from 14 to 25% have placed a bigger burden on fledgling companies.

Frustration hit fever pitch publicly when The Jordan Times published an article documenting Nour Khrais’s aspiration to move his gaming company Maysalward to Turkey or Dubai, citing “challenges that are impossible to overcome,” driven by government policy. Maysalward, which Khrais founded over 12 years ago, is the biggest gaming company in Jordan that’s still open (while three others have closed for various reasons). With an internal culture that rapidly trains talent, the company’s move loss would be a blow to the local ICT ecosystem as well as a harbinger of bigger changes to come.

Yet the tides may be shifting, if the awarding of a government tender to a startup is any indication.

Earlier this month, Madfoo3at, an online payment platform based in Jordan, won a tender with the Central Bank, to build, operate, and facilitate the country’s national electronic bill payment gateway, Through the platform, citizens in Jordan will be able to “inquire and pay bills for services in telecommunications, water, electricity, education, health, insurance, taxes, and, government fees, according to the Central Bank’s website.

Winning the contract was no easy feat for the small startup, which graduated from local accelerator Oasis500 in 2011, and secured around $1 million in follow-on funding in early 2012 from Oasis500’s venture capital arm, OV1 and several angel investors. With only 15 employees, 4 of which are part-time, the payment company was competing with five other companies, including one from Egypt and one from Central Europe; a few were decades old with a fully global scope.

“[Winning] was a big challenge for us,” explains Madfoo3at’s founder, Nasser Saleh, “But it’s a turning point in the life of the company.”

The advantage that Madfoo3at had, he says, was a focus solely on payment software- “the other companies had a variety of products,” a team with hands-on experience building payment platforms in the U.S. and Saudi Arabia, and a partnership with EMP, a company that manages Visa credit card processing in Jordan as well as the country’s national ATM switch. “We provide the solution, the software, and the skills to run it,” Saleh explains. EMP, which takes a percentage of the revenue, under a joint venture agreement, supplies the infrastructure and connectivity.

While EMP is larger, with 70 employees, lending more heft to Madfoo3at’s proposal, the startup remains the main contractor. Over the next year, Saleh expects that the payment company will scale to 40 employees, and begin targeting other markets, including Bahrain, Oman, Kuwait, and the Maghreb, especially because “strong interest is coming in from Algeria,” he says.

The fact that the Central Bank has chosen a local startup over much larger, more established companies may signal new appreciation by government ministries for the ICT sector.

It may also simply reflect Madfoo3at’s perseverance. Although the company first tried to pitch to the Central Bank through connections, management changes- thanks to Jordan’s revolving door of governments- meant that any traction quickly evaporated with new appointees. Yet the startup finally gained the Central Bank’s attention by going back to that most traditional of methods: the fax.

Sometimes, it’s just that simple. “We sent a fax, telling them, this is, and they called us and said, we're really interested to hear more,” Saleh explains.

“If there is a will, there is a way,” he advises entrepreneurs. Resistance against policy can seem futile, but the battle for startups in the Hashemite Kingdom is hardly over, and the Central Bank’s move to acknowledge the need for online payment, and award a tender to a startup is a step in the right direction.

Saleh urges his peers on: “Don't take it for granted that the government will stop you, do your best, and you will do it.”

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