Tijara Provincial Economic Growth Program
Program Snapshot
- Award Amount: $80.8 million
- Start/End Dates: January 2008 - March 2011
- Implementer: Louis Berger Group
Microfinance Helps Address Credit Needs
There is little tradition of credit or bank lending in Iraq, so the Tijara program fills a major gap in business development. Access to financing bolsters the economy by enabling the start-up or expansion of small-and-medium enterprises. These loans help re-open stores, create jobs, and support local businesses, encouraging Iraqis to invest in their country.
USAID's Tijara program supports nine new Iraqi-owned microfinance institutions (MFIs) established by its predecessor Izdihar project and three international MFIs. In addition to loan capital, the program provides training, technical assistance and other capacity building. These institutions offer one year loans averaging $1,500 at 15 -18 percent annual interest. The repayment rate is more than 98 percent, and demand continues to outstrip supply. These institutions cover all of Iraq's 18 provinces.
As of June 2009, the outstanding loan portfolio is nearly $72 million in lending to about 45,000 active clients. Since 2004, the USAID's supported microfinance institutions have distributed more than 137,000 loans worth $316 million. In managing the loan portfolios, Iraqis at the new microfinance institutions are learning financial and management skills, building the foundation for a sustainable credit industry in Iraq.
In addition, Tijara, which means "trade" in Arabic, has helped establish the Iraqi Company for Bank Guarantees. Currently, 16 member banks, 13 of which are shareholders, have approved and disbursed 405 loan guarantees for the total amount of $7.6 million.
Business Development Centers Build Entrepreneurs' Management Skills
The program has established nine new small business development centers in addition to five established under the USAID-funded Izdihar project. They provide training in business management, budgeting, strategic planning, and other professional skills. More than 2,000 Iraqi entrepreneurs, 25 percent of whom were women, have taken advantage of their services.
The centers have provided roughly 25 percent of their students with referrals to banks and microfinance institutions to obtain financing for their businesses. These small business development centers are located in Baghdad, Erbil, Hilla, Iskandariya, Kirkuk, Kut, Najaf, Numaniyah, Tal'Afar, Nasiriyah, Fallujah, Ramadi and Tikrit.
New Policies Promote Trade and Investment
Tijara builds the Government of Iraq's capacity to develop and put in place trade policies that meet international standards and treaty obligations. The program provides training and advisors to help Iraq join the World Trade Organization, so it can build new and effective trade relations with the rest of the world.
In addition to trade assistance, USAID has assisted the government in standing-up a National Investment Commission. This has included helping the Commission develop by-law and implementing regulations for investment law, one-stop-shop that promote international investment in Iraq.
Program Highlights:
- More than 137,000 loans distributed, totaling more than $316 million;
- Repayment rate averages over 98 percent;
- Currently, nearly 45,000 active loans;
- 14 Iraqi-owned Small Business Development Centers established;
- Nine Iraqi-owned microfinance institutions established; and
- 405 guarantees through eight private banks approved.
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