USAID-Tijara Working to Overhaul Iraq's Economy
Arbil, Kurdistan, December, 13 2009 -
While no silver bullet exists for eradicating poverty, access to financial products specifically tailored to low-income individuals has helped to reduce extreme poverty rates by 13% in just seven years in developing countries like Bangladesh, according to the World Bank.
Microcredit, in the form of loans ranging from 100 USD to a few thousand USD, is traditionally offered to emerging entrepreneurs lacking collateral, reliable employment, and credit history. It is a key component of the microfinance industry that continues to have a positive impact on economic growth throughout the developing world.
Begun in 1976 by Muhammad Yunus and Grameen Bank in Bangladesh, microfinance enables capable entrepreneurs to move away from dependence on government welfare programs and subsistence living toward economic independence and prosperity. In his 1999 autobiography Banker to the Poor, Mr. Yunus wrote: "I firmly believe that all human beings have an innate skill. I call it the survival skill. The fact that the poor are alive is clear proof of their ability." Mr. Yunus and Grameen Bank were awarded the Nobel Peace Prize in 2006 for their efforts in pioneering the microfinance industry.
The public sector in Iraq is the country's largest employer with 60% of total full-time employment, according to a United Nations report released earlier this year. With the Iraqi government's shallow coffers-a result of the steady decline in oil prices since 2008-and soaring rates of unemployment, there is no doubt that robust private sector development is desperately needed throughout Iraq's provinces in order to keep up with the hundreds of thousands of new entrants into the workforce every year. Continued reliance on the expansion of government jobs as a strategy for remedying these acute problems is simply unsustainable and will only further strain provincial budgets.
The United States Agency for International Development (USAID) launched the Tijara Provincial Economic Growth Program in 2008 in order to address the most critical issues facing Iraq's economic future: a dominant public sector, stagnant job growth, and implementation of the investment law. Tijara (tee-JAH-rah), which means "trade" in Arabic, aims to gradually move Iraq from a primarily state-controlled economy, dependant on the sale of oil, to a balanced economy with private sector entrepreneurship leading the way. Tijara accomplishes its mission by providing seed capital to emerging microfinance institutions throughout Iraq, enabling them to significantly increase their loan volume and to diversify their client base. As of October 31, 2009, Tijara's total outstanding loans in Iraq were 55,446 with a total value of 81,576,700 USD. Tijara is also assisting the Iraqi government with accession to the World Trade Organization, which will lure foreign investment into local businesses.
David DeVoss, Director of Communications for Tijara, said, "The poorest of the poor who have friends, integrity, and a desire to start a business to make life better for their families" are typically the microfinance institutions' clientele. With local small-business development centers in almost every province of Iraq, Tijara provides training for emerging and pre-established microfinance institutions on strategies like financial product development and marketing as well as English-language courses. According to Mr. DeVoss, some of the most dynamic people in microfinance in Iraq are in the Kurdistan Regional Government (KRG). "They're very professional and aggressive with trying to make these loans work," he noted. One of Tijara's partner microfinance institutions, Bright Future Foundation, is funded completely by the KRG. Out of 12 microfinance institutions operating in Iraq today, Tijara has provided seed capital to 11 of them.
Tijara is also placing a special focus on women entrepreneurs who typically have better loan payoff rates and tend to invest more in education and nutrition for their families, both important components of overcoming the ravages of poverty. Ardemis Owhanis, Senior Program Manager for Microfinance of Tijara, says, "New initiatives, such as group lending, have been introduced to target specifically women micro-entrepreneurs with small loans in order to increase cash flow and also to facilitate character development, micro-business growth and capital sufficiency. Other approaches to increasing the participation of women in microfinance include the introduction of loan products that specifically target female borrowers."
Next week, USAID-Tijara will host its second microfinance partners' conference of the year in Duhok from December 15-17. Kurdistan Region-the provinces of Dohuk, Erbil, and Sulaymaniyah- accounts for nearly 25% of Tijara's total loan portfolio for Iraq. Representatives from Tijara, managers from Iraqi microfinance institutions, commercial bankers, politicians, and international experts will convene to discuss "making microfinance more inclusive, transparent, diverse and based on internationally agreed upon microfinance best practices," according to Ms. Owhanis, who also noted: "These conferences help young microfinance institutions to learn from more experienced ones regarding transparency and best practices, microfinance institutional governance, and the use of technology in microfinance."
Relief International (RI), which participates in Tijara's seed capital program for microfinance institutions, is a participant in the upcoming conference. Arafat Dajani of Sulaymaniyah, Chief of Party for RI's microfinance program in Iraq, explained that "this conference is important for RI to exchange ideas and views on how to go forward." Mr. Dajani considers Tijara the "godfather" of the microfinance industry in Iraq. "Tijara has played a big role in establishing and supporting the microfinance industry in Iraq, in addition to funding and technical assistance given to microfinance institutions and RI in particular," he stated.