Private Sector Growth and Employment Generation
In a joint venture partnership with the Louis Berger Group (LBG), AECOM International Development is implementing the USAID-funded Iraq Private Sector Growth and Employment Generation project, known as Izdihar (“prosperity” in Arabic). In its support to create a nation of stakeholders, the project is designed to help Iraq attain sustained, higher economic growth rates that are led by the private sector and to develop the economy into one that can compete globally and develop a more market-friendly environment for broad-based economic opportunity and business expansion in its war-torn environment. AECOM International Development is providing technical assistance and training in the areas of privatization; investment promotion; value chain analysis and promotion of select agriculture and food processing sector; trade policy and market access, including accession to the WTO; business management services; and micro, small, and medium enterprise (MSME) development through both the bank and non-bank (microfinance) sectors.
Izdihar’s MSME development component addresses two critical objectives: sustainable microfinance development and development of MSMEs through access to credit from private banks. Under the sustainable microfinance practice, the project intends to help establish operational microfinance institutions in 17 of Iraq's 18 governorates. Achieving this ambitious task requires using the capabilities of U.S. NGOs and PVOs in all non-violent areas, as well as assisting groups in violence-prone areas in developing local microfinance institutions. The main sustainable microfinance activities include processing large grants to international NGOs and PVOs, including organizations supporting women’s businesses. Local microfinance institutions in violence-prone areas are being established in collaboration with local business associations and groups, as well as in innovative cooperation with military civil affairs officers to leverage funds and outreach. The project is also developing a loan registration system to promote prudent lending, as a precursor to establishing a credit bureau. All project activities emphasize the importance of building local capacity in relevant subject matters, such as microfinance technologies, operational risk management, interest rate setting, delinquency management, and financial management.
A major project activity under the MSME development/bank lending practice is supporting the establishment of a Loan Guarantee Company (LGC) that will provide loan guarantees to microfinance institutions and SME entrepreneurs. The LGC aims to enhance Iraqi SMEs’ access to credit from private banks and microfinance institutions, and to support the use of modern, sound credit practices in providing loans to Iraqi SMEs. The initiative to create a LGC developed from an understanding that banks would need institutional support to reduce risk until the benefits of servicing the MSME sector through using cash-flow based lending – a new technique for Iraqi bankers – can be demonstrated. The establishment of a microfinance grant program to support microfinance institutions has played a key role in the long-term sustainability of the microfinance initiative country-wide.
Other Izdihar SME development activities include building capacities of Iraqi private bankers, developing a bankers association, and developing an automated management information system for loan applications and portfolio management provided through a piloted approach.
Overall, this project provides training and technical assistance focused on business management services, privatization, investment promotion and facilitation, capital markets development, trade policy and market access, and access to bank lending and microfinance through training, direct technical assistance, and grants. Interventions included drafting legislation, assessing and formulating policy frameworks, establishing institutional frameworks, implementing international best practice solutions aimed at improving the policy-enabling environment for private sector-led growth, and assisting the government in privatization strategies, primarily by supporting the establishment of a relevant government entities and building the capacity of relevant trade associations. Despite the extremely difficult security environment, AECOM International Development has achieved many successes in less than a year of project implementation, including the following.
- Delivered numerous public awareness sessions and training for 1,400 business professionals on management and market reform issues.
- Trained 35 trainers and nearly 900 professional accountants in all 18 governorates on international accounting standards, and trained 38 trainers on auditing methods and international standards.
- Supported the creation of an Iraqi alliance of business associations to advocate for market-friendly policy reforms.
Other consortium partners on this project include Development Innovations Group and The Sandi Group.
