Lenders Rip Off Small Iraqi Businesses

When asked if such transactions affect the national economy, Tamimi said, “This is a practice between individuals in society and has no effect on the national economy. However, it is something we must pay attention to.”

On the other hand, Maitham Luaibi, an economics professor at the University of Mustansiriyah, believes high-interest loans are nothing new to Iraqi society or its economy. “The Iraqi government will not be able to contain this phenomenon by imposing coercive measures to prevent and punish those dealing with riba,” he told Al-Monitor.

“This phenomenon may be countered by revitalizing the banking system, granting soft loans, providing banking activities with e-payment systems and facilitating procedures for clients, especially with regard to short-term loans and small and medium-sized enterprises.”

In the same context, Majid al-Souri, a board member at the Central Bank of Iraq, said there is a problem in extending loans to merchants. He noted the Iraqi Company for Financing Small and Medium Enterprises has capital of about $14 billion, but “the general economy in Iraq does not allow the provision of funds for the development of small enterprises, since [the economy] relies on investments.”

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