In principle, economic success cannot be achieved without strong institutions and infrastructure. Yet, Iraq’s situation cannot wait for stability to be achieved and costly conflicts to end, so that the state can accomplish major, comprehensive development projects. In this case, the state can provide financial support and administrative facilities to help small businesses succeed and perhaps expand into big businesses in the future.
Toward this end, the government must undertake four steps.
The first is to facilitate and strengthen banking transactions so that citizens have access to investment loans. World Bank statistics for 2014 showed that only 11% of Iraqis have accounts in Iraqi banks, and only 4% of Iraqis were provided formal bank loans. The reason is the underdeveloped, bureaucratically controlled banking system. Most Iraqi banks do not provide electronic banking, and opening new accounts is a lengthy, multistep process. In addition, most of the banks do not provide credit and debit cards or ATMs.
The second step is to develop efficient public transportation so small businesses can afford to transport their goods. The postal service is still inefficient in Iraq, and private mailing services such as DHL are expensive and unavailable in many areas.
Al-Monitor asked a number of small-business owners about the challenges they face. Most of their answers focused on reaching and communicating with clients. Baqir al-Ahmed Rashid, a young man from Baghdad, opened a web-based business selling books, magazines and other publications. He envisioned his business becoming a kind of local Amazon, but his project failed after two years because of delivery problems.
The third step Iraq must take is to find a startup platform to host and support pioneers of microeconomic projects and put them in contact with potential investment partners. In other countries, many successful small businesses have been launched from such coworking spaces.