By Dr. Layth Mahdi.
The opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.
The Challenges Facing the New Government: The End of Iraq or Its Revival
The liberation of Iraq has given the country freedom; however this democracy has transformed into chaos with the spread of corruption, militias, tribes and outlaws. The root of the looming crisis is the inability of the GOI to successfully implement initiatives to address the dire situation in Iraq.
Iraq suffers from an economic crises after 2003, the most important of which is the decline of non oil GDP, primarily in the manufacturing and agricultural sectors.
The manufacturing sector GDP fell from 14% to 1%. The majority of factories in Iraq are not operating due to the lack of resources, maintenance, or expertise. The Ministry of Industry has 192 major factories including poultry, dairy, cement, glass & steel not operating. The private sector has 40,000 factories, 95% of which are not operational. Prior to 2003 the government would provide subsidized utilities and limit imports to promote domestic production.
The agricultural GDP dropped from 12% to 2% as the programs and policies in place were unable to effectively revive the agricultural farms. This was due to the GOI eliminating the previously subsidized programs and implemented a free market over night. Which led to the farmers abandoning their lands and migrating to the cities seeking employment. Iraq is now faced with a reluctance of their population returning back to the farmlands outside of the cities.
According to official statistics of the Ministry of Planning for 2018 and some other sources, the population of Iraq is 38 million people, and the proportion of youth reached 28% (10.5 million) making up 36% of the workforce (6.7 million). In addition, the percentage of poverty in the areas liberated from ISIS reached 40%, 30% in the south, 23% in the center and 12% in the Kurdistan region. More than 12 million people live below the poverty line ($ 3 / day). The percentage of poor children in the south has exceeded 50% and the illiteracy rate has spread to a large extent and reached 25%, especially in the poor and remote areas.
The Ministry of Planning and the World Bank announced the Poverty Reduction Strategy Project (2018-2022) with the aim to drop the poverty rate 25% by 2022. I believe this is very ambitious and unattainable with the current leadership and government, as the population of Iraq (38 m) will increase by one million annually. The state should provide over 250 thousand jobs annually to alleviate the poverty rate, and this is not possible because the private and public sector is disabled. The poverty rate will instead increase annually.
Previous National Development Programs of 2010-2014 and 2013-2017 have failed to alleviate the poverty rate because of the lack of vision and inefficiency of directors involved in the projects.
Job creation and poverty reduction are linked to several Ministries and other Government Institutions. These Ministries are influenced by different parties are not cooperating with each other, so the proposed poverty reduction project will fail.
The Prime Minister Dr. Adil Abd Al Mahdi, faces major challenges to improve the economy, create jobs and reduce poverty before it is too late. He should establish a centralized office that will lead all Ministries together to achieve the project goals.
Iraq must also cooperate and include the American expertise in line with the 2008 Strategic Framework Agreement between the USA and Iraq.
I presented a proposal and solution personally to the Prime Minster in December 2018, however without success. I still believe that this is the only right path to the success of the Prime Minister's tasks. He has no other choice.