The Al-Baydaa Centre profiled in the following article makes the loans at 12 percent interest. The Centre enjoys a high repay percentage, and has only had to take one loan recipient to court. Meanwhile, another bank supported by the US closed down due to poor record keeping of the money going out.
From the Financial Times, reporter Anna Fifield tells us how microcredit operates in Iraq.
Although Iraq has huge oil reserves and large public corporations, small businesses – particularly “mom and pop” stores – comprise 90 per cent of all businesses in the country, US officials say.
Encouraging them is crucial for economic development, says David Shearer, the United Nations’ resident co-ordinator for Iraq.
“Iraq needs to develop the private sector to generate jobs,” Mr Shearer told the Financial Times.
“Our calculation is that 450,000 young people join the workforce every year but the chances of them finding employment are not high, so if this is not dealt with it will create instability.”
The business sector has been held back by an absence of strategic planning, low productivity and efficiency, and rampant corruption.
Credit has also been difficult to come by, especially for owners of small businesses.
As security across most parts of Iraq improves, the US is increasingly using economic aid as a counter-terrorism tool.
It is funding micro-finance schemes, typically loans of a few thousand dollars given to people with between one and three employees. By the end of January, the US had made 41,728 loans totalling $59.7m.
“There is a lot of money to be made in Iraq but there is not a lot of entrepreneurial spirit,” says Jesse Levinson, of the US’s provincial reconstruction team in Salahaddin, which includes Balad.