SME’s in Iraq

Small and medium enterprises (SMEs) are the largest provider of employment in most countries and a major source of technological innovation and new products. In Iraq, though, an unfavorable environment over the years and a lack of institutional support has impeded their development and success. Today, however, the outlook for a stable economy with long-term growth prospects is positive. The importance of SME’s as Iraq rebuilds its economy, and the potential for SME finance, is underscored by the following:

  • Overall data on credit and other available indicators clearly shows that access to credit in Iraq is low. Although growing rapidly, credits to the economy only amount to 10 percent of GDP compared to 55 percent for the MENA region.
  • A 2005 ILO estimate put the total number of registered SMEs with 3 or more employees at 622,000. An additional 719,000 SMEs are registered as self-employed. Another 1 million SMEs were not registered according to the ILO estimate.
  • A USAID Project team estimated that less than 5 percent of the SMEs in the formal sector have ever received a bank loan and that fewer than 10 percent of them have a bank account.

(Source: Financial Sector Review, Republic of Iraq – 2012 World Bank Report)

ICF-SME is well positioned and resourced to enhance its role as an important facilitator and conduit for finance into the SME sector:

  • It functions as an important catalyst for reviving SME activity in the credit market.
  • It stimulates lending to SME’s through its ability to support and strengthen capacity in the institutions it serves whilst making it possible for SME’s to borrow at below market cost.
  • A flourishing SME sector can contribute significantly to addressing much needed job creation; and
  • Diversify Iraq’s economy with less reliance on its oil sector and state supported institutions.