An enterprising venture for our friends in the Middle East

Legislation pending before the Senate seeks to strengthen the U.S. presence in the Middle East by laying the groundwork for an “enterprise fund” in Jordan. The fund would operate as a public-private collaboration in which federal money would seed the investment fund, while investment decisions would be made by private-sector management and a board of directors.

The late President George H.W. Bush introduced such funds after the Cold War to support development of the private sector in Eastern European countries transitioning to free-market economies. Former President Barack Obama resurrected the model following the Arab Spring; enterprise funds were authorized in Egypt, Tunisia, and Jordan, but the Jordanian fund never got off the ground. We believe the strong success of the existing enterprise funds provide persuasive reasons for why the Senate should join the House in finally launching an enterprise fund in Jordan.

{mosads}The Egyptian-American Enterprise Fund (EAEF) began in 2013 and just recently sold a part of its first investment in Sarwa Capital, an Egyptian consumer finance firm, valuing the company at three times the initial investment after just two years. Its second investment in an electronic payment service, Fawry, created by Egyptian entrepreneurs when just 15 percent of the population had a bank account, now enables 24 million Egyptians to access financial services. At its current growth rate, Fawry’s payment platform could soon be used by one in two Egyptians.

The results show an enterprise fund’s ability to deliver a healthy return while improving an ally’s economy and stabilizing the Arab Spring — in other words, how we can do well while doing good.

Enterprise funds organically strengthen a country’s economy, and they infuse equity capital in growing companies, connect them to a global network of industry expertise and ultimately help create thousands of jobs. Enterprise funds yield stronger, more sustainable economic growth at a fraction of the amount of funding required by traditional development projects (in fact, we expect EAEF will turn a significant profit for American taxpayers). This kind of financing and expertise provides both governments and the private sector with the ingredients needed to create stable job growth in countries like Egypt and Jordan.

Right now, Jordan desperately needs outside investment and jobs to quell concerns about its current economic lethargy. By investing in its economy and helping small businesses create jobs, we fight terrorism and extremism.

{mossecondads}Government-backed investment financing is not a new phenomenon. The early enterprise funds in Central and Eastern Europe had a mixed record but ultimately recovered all of their funds. Some — for example, Poland and Albania — were highly successful, while others were more controversial. We can debate whether the concept of enterprise funds may have been ahead of their time back then. But in the past 25 years, there have been significant advances in technology, human talent and access to global finance in emerging markets.

The early success of the Egyptian-American Enterprise Fund serves as an example of how to promote long-term growth and prosperity. What is clear today, a quarter-century later, is that EAEF is a model for future enterprise funds in other countries like Jordan, but also potentially in other parts of the world like Africa and Asia as America tries to check China’s growing presence on those continents.

Investing in emerging economies through innovative public-private partnerships like enterprise funds will help secure our national security interests while combating the myopic, zero-sum approach that has sometimes influenced U.S. foreign policy.

James A. Harmon serves as chairman of the Egyptian-American Enterprise Fund. Krish O’Mara Vignarajah served as senior adviser at the State Department and helped establish enterprise funds in Egypt and Tunisia.