Help MSMEs Rise to the Eco-Challenge

By T. Keyzom Ngodup, co-founder and Executive Director at Ideas sYnergy, an Iraq based private sector development consulting company.

I was pleasantly ‘perplexed’ to learn that Prime Minister Nuri al-Maliki, approved (on February 7, 2011) an agricultural project for developing biofuel from rotting dates. The ‘dates-to-biofuel’ project implemented by an unnamed company based in UAE, is seen as a way to encourage growth in Iraq’s crumbling farm sector, which has suffered from decades of sanctions, isolation and war, further confounded by severe droughts and dust storms, attributed mainly to climate change. Ironically, the farming sector is Iraq’s leading employer but contributes less than 3% to state revenues and gets little investments from the Government. According to United Nations Environment Programme (UNEP), Iraq is among the hardest-hit countries (reference to climate change).

There is nothing new in this analysis; in fact it has been repeatedly appearing as an introduction to Iraq. Instead, I want to focus on how we can convert the challenges of climate change and agriculture into opportunities to develop Iraq’s clean energy market, and the important role of MSMEs – micro-, small- an medium-sized enterprises – in facilitating local and indigenous insights to develop world-class solutions that support access to clean, modern energy services. ‘Clean energy’ refers to products and services that produce energy from renewable resources and emit fewer greenhouse gas emissions than does energy from conventional fuel sources. The lack of a reliable supply of power from the electricity grid and the availability of free and inexpensive fuels, such as wood and kerosene, are key influences on this market. Imagine a samoan (traditional Iraqi bread) shop at every street corner or one of the 1.2 million poor woman leaning over her mud-oven: they represent a huge segment of the clean energy market for MSMEs.

There are two areas of the clean energy market that are high-potential and represent high-growth for MSMEs: clean energy electricity systems and clean energy cooking and light products. Iraq needs MSMEs enabling access to solar lanterns, solar home systems, energy-efficient cookstoves, and electricity generated from decentralized sources, including small hydro power plants and biomass gasifier systems. Working either as ‘developers’ of new products (may not be necessary to re-invent the wheel if ‘right’ product is already present in the global market) or as ‘enablers’, Iraqi MSMEs can, for example, help install solar panels and provide Iraq’s rural population with access to clean electricity.

The Government of Iraq, donors and stakeholders have an important role to play here, to support MSMEs in meeting local energy demand, and contribute to a cleaner Iraq. They can operate focused lending schemes for promoting investment in clean production and energy efficient technologies and production processes, through lines of credit from donors/international development financiers such as OPIC and IFC. In addition, Iraqi MSMEs suffer from a dearth of knowledge on emerging best practices and technologies in this space: the government and donors can support a nation-wide ‘clean energy and MSME conference’, with a focus on partnership models that MSMEs can undertake to develop local capabilities and their impact.

At Ideas sYnergy, we believe that the first necessary step is to understand the energy-related consumption and expenditure habits of Iraq’s poor, un-banked, and ‘under-energy served’ population segments, as well as GoI’s (future?) policies and initiatives in how they interact and facilitate the clean energy industry in the country. Reading through, you may understand why I am ‘perplexed’ with Iraq’s prime-minister: did the (premature?) approval of dates-to-biofuel programme implemented by non-Iraqis set-up Iraqis at an unfair disadvantage? That, and in general the economic decisions taken by people in politics, is a question Iraqis should ponder.

T. Keyzom Ngodup is co-founder and Executive Director at Ideas sYnergy, an Iraq based development consulting company committed to economic and social development through market-based solutions that help build and scale innovative businesses for sustainable and inclusive private sector development.