Economic Growth and Private Sector Engagement in Iraq

Speeches Shim

Tile Factory in Mosul, Iraq
USAID is providing individualized business development services to SMEs to boost their access to different markets and attract new private sector investment opportunities.
IGPA/Takamul for USAID

Working hand in hand with the Government of Iraq, economic and civil society leaders, and vulnerable communities, USAID is helping to pull households out of poverty and promote long-term economic growth by diversifying and strengthening the Iraqi private sector and improving the business investment climate.

Context

Iraq’s economy faced dramatic deterioration as a result of the social and economic destruction caused by the war with the so-called Islamic State of Iraq and Syria (ISIS), compounded by falling oil revenues. Economic growth is a critical component to ensuring long-term prosperity for all Iraqis and to promoting greater self-reliance. While the private sector has the potential of becoming an engine for growing the Iraqi economy and creating jobs, lack of access to private investment capital, insufficient financial and institutional support, and political instability all hamper this reality.

USAID Response

Working hand in hand with the Government of Iraq, economic and civil society leaders, and vulnerable communities, USAID is helping to pull households out of poverty and promote long-term economic growth by diversifying and strengthening the Iraqi private sector and improving the business investment climate. 

Through the Durable Communities and Economic Opportunities (DCEO/Tahfeez) project, USAID is supporting micro, small, and medium-sized enterprises (MSMEs) to develop local business associations and networks, identify barriers to growth and trade, and advocate collectively for policy changes to improve the local business environment. Through the Marla Fund, USAID supports Iraqi war victims through entrepreneurship, business acceleration, and enterprise growth services. 

The Funding Facility for Economic Reform supports the Federal Government of Iraq and the Kurdistan Regional Government’s efforts to design and implement economic reforms that respond to citizens’ demands for more responsive public financial administration, greater financial stability and market diversity, and improved integrity and transparency. 

USAID’s Iraqi Governance and Performance Accountability (IGPA/Takamul) project provides individualized business development services to SMEs to boost their access to different markets and attract new private sector investment opportunities.

The USAID-funded Middle East and North Africa Investment Initiative (MENA II) supports businesses in Iraq with access to capital investment and business development services to improve firm-level competitiveness, grow their revenue and create jobs.

USAID, along with many other donors, is supporting the return of internally displaced populations in Ninewa through the Enterprise Development Fund (EDF) that promotes economic recovery and private sector revitalization by providing small grants to SMEs.

Through the New Partnerships Initiative (NPI), USAID supports the Iraqi firm Top Mountain to promote entrepreneurship and improve Iraqis’ employability and job readiness through a wide array of initiatives including a business incubator and a youth-focused employment program.

Results to Date

Doing Business During COVID: 

  • USAID has invested $4 million to support SMEs in the north of Iraq to counter the negative economic impacts of the pandemic.
  • The shift to digital formats for certain USAID-supported business training programs has resulted in a 100 percent increase in female participation.

Supporting Iraqi SMEs and Entrepreneurs to Catalyze Inclusive Economic Development: 

  • USAID is assisting hundreds of SMEs across various sectors to gain access to finance and build their capacity in business development, management and marketing.
  • USAID is providing business development services to 195 religious and ethnic minority-owned businesses and 200 women-owned businesses. 
  • Over 700 entrepreneurs have received business support services from USAID programs, including support for setting up, formalizing, and sustainably scaling up their businesses. 
  • Nearly 800 individuals have participated in the USAID-funded business training programs. 

Providing Access to Finance:

  • The USAID-supported MENA II activity has disbursed $11.1 million in loans to 30 Iraqi SMEs. 
  • 50 businesses in Ninewa have been approved for $700,000 in grants to recover from ISIS’s occupation.

Promoting Transparency and Competition in the Public Sector:

  • USAID supported the GOI to develop bidding documents for over 400 capital investment projects worth $2.39 billion.
  • USAID assisted Wasit and Babil, the first two Iraqi provinces authorized by the Ministry of Finance, to open their own local revenue bank accounts in order to generate and manage their own revenues. These bank accounts are also used as a depository for a donor grants fund for capital projects. 

Last updated: February 22, 2021

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