#GrowingProspects – Part 2: Boosting access to loans for businesses in Iraq
‘Bloom’, a project initiated by the Kurdistan Regional Government has just distributed first loans to small and medium-sized enterprises. Learn more about the importance of access to financial services to boost economic development and how GIZ has supported the project.
Access to financial resources is essential for businesses to grow in the long term, for example by investing in new equipment or hiring more staff. Business growth supports the circulation of money, creates jobs, and encourages innovation. In Iraq, challenges such as the war against the so-called Islamic State, recent economic slowdown, and the malfunctioning financial system have created an inadequate climate for businesses to thrive. Accordingly, financial services tailored to the needs of small and medium-sized enterprises (SMEs) are much needed.
One evident example to enhance financial services is the ‘Bloom’ project. From 2014 to 2016, the Kurdistan Regional Government supported SMEs by providing small loans for small projects. However, efforts stopped due to the war and the economic downturn. With the support of GIZ, the current cabinet has relaunched the ‘Bloom’ project to facilitate businesses’ access to finance. While governmental authorities have initiated and monitored the activities, this project is implemented entirely by the private sector and is only supported and monitored by the government in the initial stages. Bloom offers SMEs loans of up to IQD 150 million (EUR 106,000) with low management fees of two percent and no collateral requirements via its partner, Cihan Bank. The project also supports businesses in opening a business bank account. Participating businesses benefit from free, tailored consulting services through the business accelerator firm Top Mountain. In its pilot phase, 25 SMEs were identified as eligible for lending. The businesses are based in all four KRI governorates and include both women-owned and men-owned businesses.
Building skills and knowledge among partners is a central element of the Bloom project. The business accelerator offers tailor-made trainings to SMEs that build the financial skills of entrepreneurs, for example, in determining financial flows of their businesses and making smart investment decisions. GIZ provides expertise to governmental partners directly involved with entrepreneurs to monitor cash flow analysis. Besides that, the business accelerator trains the SMEs in monitoring their cash flow systems. The technical support is twofold: It will support the analytical skills of business owners while also creating trust between the banks and the businesses.
As part of the Team Europe Initiative TAEUFIQ, GIZ supported the ‘Bloom’ project by developing the project’s strategy and approach and setting up a system to monitor and continuously improve the project’s effectiveness and outreach. This included the selection of the partners Cihan Bank and Top Mountain business accelerator, defining the eligibility criteria for the SMEs to be funded, as well as overall advisory to the governmental partners.
The development of financial services tailored to the needs of SMEs in Iraq, particularly in the Kurdistan Region, stands as a crucial step towards promoting economic growth and resilience in the face of challenges such as conflict and economic downturns.
The ’Bloom’ project is supported by Financial Inclusion for Economic Restart Project, implemented by GIZ and funded by the German Government and the European Union.