Promotion of Small and Medium Sized Enterprises (SMEs) in Iraq

Project information

• Objectives

  The overall objective is to contribute to Iraq’s private sector development through enhancing the productivity of SMEs and hence their potential for job creation. The project aims to provide sustainable access to financial services for already operating SMEs as well as for Start-ups in Iraq with a special focus on youth and women. 

• Strategy

  The project aims to enhance sustainable access to financial services for existing SMEs and startups in all of Iraq, with a particular focus on youth and women. This will be achieved through activities such as establishing a credit guarantee fund within the Iraqi Company for Banking Guarantees (ICBG), providing capacity building for national partners including ICBG and participating financial institutions, and injecting funds into ICBG. By reducing collateral requirements for SME loans, the project aims to enhance private sector development, improve SME productivity, and stimulate job creation. Building on the successful ILO pilot program "PROSPECTS," which focused on facilitating SME access to finance through capacity building and collateral reduction, the proposed project combines three components: establishing SME windows within private financial institutions, implementing an effective credit guarantee scheme through ICBG, and providing technical assistance to capacitate PFIs, ICBG, and SMEs. Further details and amendments to the proposal will be specified in the course of 2024.

• Activities

  To meet the project objectives, the project will undertake three main activities including.

  • The establishment of a credit guarantee fund within the Iraqi Company for banking Guarantees (“ICBG”). 
  • The establishment of a SME window by selected private financial institutions PFIs through their own capital fund. 
  • Technical assistance to capacitate the PFIs, ICBG, as well as the SMEs.
     
• Indicators

  By 2028, the project aims to achieve the following key results:

  • Provision of 1,000 loans, totalling €45 million disbursed by the project PFIs, with 25% allocated to women beneficiaries.
  • Creation of 2,200 jobs, including 400 specifically for women. Sustaining 3,000 jobs as a direct result of the project loans. 
  • Selection of three banks to participate in the guarantee fund, each maintaining a portfolio at risk of less than 3%.