Cash Only: Why the Messy Banking Sector Endangers Iraqi Development

Iraq could be one of the richest countries in the world. Yet over three quarters of Iraqis do not have bank accounts. So where do they keep that wealth, asks this article from NIQASH, and can the Iraqi banking system be dragged into the 21st century?

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

The banking sector in Iraq reflects the economic mess that the country is in. Basic modern banking practices – like electronic funds transfers for payroll or other banking needs - are almost non-existent and credit facilities are hard to come by. Automatic teller machines remain a novelty while mortgages and loans are a rarity.

Iraq has only a few banks with the ability to transfer funds electronically and the number of branches able to undertake this sits at around 240. Transferring funds directly to Iraqi banks remains a patchy process and it is more often done through other banks in the region, such as more reliable sister bank in Jordan or the United Arab Emirates.

Latest research estimates that around 80 percent of Iraqis do not have a bank account or even access to one. The public's trust in the Iraqi banking sector remains low. Which is why most banks in Iraq simply act as a glorified safety deposit box.

Meanwhile Iraq is on track to become one of the wealthiest countries in the world, with the fourth largest oil reserves in the world and the potential to be one of the globe's leading oil exporters, eventually matching, or even surpassing, Saudi Arabia, currently one of the largest oil exporters in the world. But despite incoming revenue and the potential for growth, economic progress remains slow - and this is partly due to dysfunctional banking sector. There is talk of sector reform and new electronic banking systems - yet this vital sector is still underdeveloped.


4 Responses to Cash Only: Why the Messy Banking Sector Endangers Iraqi Development

  1. Uruki-the-Iraqi 3rd March 2012 at 00:54 #

    "Looking around the world, it is clear that a strong banking sector is essential to a successful economy" ... This is an absolutely false statement and a mirage reality … Once the World Bank, the IMF and other big financial corporations in London, New York and Tell Aviv (behind them) enter a country, a total monetary collapse follows … We have seen such disastrous results in Greece, Italy, Spain, Portugal, Ireland, Malaysia and many other countries … Iraq must not be manipulated by these so called world financial institutions… Iraq must follow the Chinese financial model, since CHINA is anticipated and posed to become the next super power in 2015 and beyond … Iraq should also keep its finances CLOSED to these international robbers… Iraq MUST oppose ALL foreign interventions in its economy… Iraq must also create a new Iraqi GOLD dinar and force the rest of the world to trade with it instead of trading in Dollars, Euros and British Pounds!!

  2. Jaydee 3rd March 2012 at 10:54 #

    Iraq's weak currency is killing their economy. I'm inclined to say the Iraqi politicians really don't care for their people like they lead the world to believe. A boost in currency value would allow the Iraqi citizens to trade and have more buying power. Everyone knows the stronger your currency the more you empower your people, the more folks spend and stimulate the economy. Its a shame what these Iraqi politicians are doing. The U.S. has done what it was suppose to liberated the country. It's time for Iraq to stop acting like baby's(that need breast milk).

  3. Stew 3rd March 2012 at 19:59 #

    That's interesting Jaydee.
    Why does Japan have one of the top economies in the world with a yen rate of about 100:1?
    How did Italy have one of the top economies in the world for years with a Lira valued at 1500:1 prior to them joining the E.U.?
    There are also many coutries at the bottom of the economic ladder that have great exchnage rates. Why is that?

  4. Uruki-the-Iraqi 4th March 2012 at 06:44 #

    Jaydee, it appears that you do not know much about Iraq’s economy or even its history… The Iraqi Dinar was (at one point in TIME) worth 4 Dollars (that is a rate of 1:4)… Iraq is also somewhat a semi-socialist country (Islamic society dictates that), meaning the Iraqi government is STILL the biggest employer of Iraqis in Iraq… The problem of Iraq was the senseless WARS (three successive wars) which depleted Iraq’s national GOLD reserves (currently 5 tons)… Here are some examples: USA (8133 tons), Germany (3396), China (1054), Iran (907), Russia (883), Japan (765), India (557), Saudi Arabia (322), UK (310), Lebanon (286), Algeria (173), Libya (143), Kuwait (79), Jordan (12) and so on… As you can see Iraq stands at the bottom list of gold reserves and small countries such as (Lebanon, Kuwait and Jordan) hold even more GOLD than Iraq, which by the way is larger (in size, population and economy) than these 3 Arab countries combined!!!... As to your suggestion of liberating Iraq, well we also wanted to liberate your (countries and peoples) from BUSH, TONY BLAIR and most definitely the BILDERBERG GROUP … Yes we are babies feeding on breast milk but the million dollar question is “What is it to you?” And what are your babies feeding on then?? BLOOD!!