Iraqi Microfinance Conference in Erbil to Discuss Expansion, Greater Outreach to Poor

ERBIL, October 3 – A two-day national microfinance symposium opened in Erbil today with speakers pledging to provide greater support for small merchants, neighborhood vendors and farmers often denied financial services from retail banks for lack of credit and collateral.

Organized in part by Erbil’s Bright Future Foundation, the Inclusive Financial Services Stakeholders’ Conference, which takes place on October 3 and 4, brings together more than 100 officials from Iraq’s 12 microfinance institutions (MFIs) that provide financial services throughout Iraq. Forum participants include Iraqi policy makers, donors, the Central Bank of Iraq, the NGO Directorate, private commercial banks and representatives from the U.S. Agency for International Development.

“Iraq’s microfinance industry supports the economic development and political stability of Iraq by increasing sustainable employment opportunities for Iraqi men, women and youths,” says Hoger Shalli, the chairman of the Bright Future Foundation, a Kurdish NGO established in 2007.

Since 2003, Iraq’s microfinance industry has made 313,300 micro-loans with a total disbursed value of $729 million. There currently are 84,000 active clients with an outstanding loan portfolio of $123 million. Many are disadvantaged men and women with incomes close to the national $2.20 a day poverty line who operate businesses, farms or cottage industries. Small but strategic business loans range from $500 to $5,000 in size.

Two years ago, microfinance institutions began making group or solidarity loans to small market and neighborhood vendors who guaranteed each other’s repayment. Today more than 40,388 people – people who couldn’t qualify for a loan in the past - have received nearly $39 million to start or expand a business.

Last year, the Al-Aman Center in Kirkuk began providing Murabaha financing to young couples who wanted to start a family but lacked the money to furnish homes of their own. Now, thanks to Al-Aman’s “marriage loans,” being poor doesn’t prevent newlyweds from starting a new life together.

About 14% of all microfinance loans outstanding in Iraq are based on Islamic Murabaha financing. According to Abbas Saedy, general manager of the Al-Thiqa Organization for Microfinance, Iraq’s microfinance industry in 2011 began providing loans to Iraqi youths hoping to start their first business and increased the number of agricultural loans with flexible alternative collateral options and longer repayment periods linked to seasonal harvests and holiday sales of farm animals.

More than 3,300 farmers presently have microfinance loans collectively worth close to $5,558,017 that allow them to improve their land and diversify crops.

“Thanks to increased staff capacity and strong operating systems,” says Saedy, “the Iraqi microfinance industry as of July 2011 achieved a remarkable 23 percent growth in the number of clients and 28 percent growth in outstanding portfolio compared to the previous year.

“I would like to express my sincerest thanks to USAID-Tijara and the earlierIzdihar program. It is because of USAID’s contributions that the Iraqi Microfinance Industry achieved these outstanding results."

Participants at the forum will discuss opportunities for making financial services even more inclusive by examining the means necessary for Iraq’s microfinance industry to institutionally transform to achieve greater financial service outreach.

The forum will include panels discussing key elements required for successful transformation to take place that include increased transparency, good governance and how to better serve vulnerable groups such as youth and women. The development of new, demand-driven products, alternative collaterals, strategic business planning and the creation of a credit bureau also are on the agenda. Planet Rating and Shore Bank International are among those participating.

Leaders of Iraq’s 12 MFIs last year signed a Code of Conduct & Ethics that endorses ethical principles and contains a commitment to benefit low-income Iraqis. The pledge makes the Iraqi Microfinance Industry the first in the Middle East and North Africa (MENA) region to formally endorse principles aimed at upholding fair practices and self regulation to promote overall transparency.

For more information, email mfconference2011@tijara-iraq.com or visit the Iraqi Microfinance Knowledge Portal at www.imfi.org.