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In his joint press conference with Iraqi Prime Minister Nouri al-Maliki on December 12, 2011, President Barak Obama noted that “In the coming years, it’s estimated that Iraq’s economy will grow even faster than China’s or India’s.”

Foreign and regional investors interested in Iraq’s economic potential, but uncertain about the country’s investment regulations, arbitration laws and tax structure, should consider consulting a series of recently published Investor Guides. Produced by the USAID-Tijara Provincial Economic Growth Program, Investor Guides are an example of US-Iraqi cooperation to support private sector development and economic growth in Iraq under the auspices of the Strategic Framework Agreement.

Three guides – to Anbar, Kirkuk and Baghdad - are available as practical tools that serve as roadmaps to local investment opportunities. Guides to Basrah, Najaf and Karbala will be published in early 2012.

Each guide contains a detailed accounting of the province’s demography, economy, geography and government structure. Potential investors will find a summary of the privileges and guarantees afforded by Iraq’s prevailing investment law. Specific regulations pertaining to industrial projects also are outlined, as are laws relating to free trade zones and dispute settlements.

“The Investor Guide lets potential investors know that in addition to producing over one million barrels of oil a day, Kirkuk also has modern hospitals, reliable electrical power and a major university producing graduates skilled in nursing, science, mathematics and foreign languages,” says Falah Abdul Rahman Mohammed, chairman of the Kirkuk Investment Commission. “This is the first document about Kirkuk that is useful for foreign investors because it includes instructions on how to obtain licenses and permits necessary to establish an investment project.”

Provincial investment commissions in Kirkuk and Baghdad plan to make their guides available to visiting businessmen with questions about tax rates and the banking system.

The USAID–Tijara Provincial Economic Growth Program published a national investment guide to Iraq in 2009, but realized that provinces also needed a document clarifying their investment procedures. Provincial investment commissions are ready to welcome investors interested in developing hotels, housing, retail shopping malls and recreation facilities.

Please click here to download Investor Guides to Anbar, Baghdad and Kirkuk in both English and Arabic.

Under the patronage of His Excellency the Prime Minister of Iraq, the Ministry of Planning lunched findings of Iraq Knowledge Network (IKN) survey. The Deputy Minister of Planning and Head of Iraq’s Central Statistics Organization, Dr. Mehdi Al-Alak, and the Deputy Special Representative of the United Nations Secretary-General and Resident & Humanitarian Coordinator for Iraq, Ms. Christine McNab, jointly launched the findings of the survey which represent socio-economic statistics collected from around 29,000 households at the district level in all 18 governorates of Iraq.

“The survey represents an important tool for enhancing evidence based planning at the national, sub-national and local government level. It provides a comprehensive socioeconomic database on a key set of indicators in essential services, food security and the public distribution system, as well as Iraq’s labour force and topics related to governance,” Dr. Mehdi said. He also stated that the IKN will inform national development planning and lay a solid foundation for the government to improve socio-economic monitoring and improve service delivery.

“The launch of the IKN is an important event. The United Nations and the Government of Iraq share a common development vision for the country. The completion of this round of IKN survey is a pillar for launching a socioeconomic monitoring system which is a key tool to track progress and help relevant Iraqi authorities to plan and deliver assistance to the Iraqi people and improve services,” Ms. McNab said.

The survey, funded by the United States Agency for International Development, the World Food Programme, the United Nations Population Fund and the United Nations Development Programme, has been implemented by surveyors of the Central Statistical Office and the Kurdistan Regional Statistical Office.

The Government of Iraq and the United Nations underscored their continued commitment to cooperate on Iraq’s socio-economic development in the framework of Iraq’s National Development Plan and the United Nations Development Assistance Framework for the years to come.

The IKN is the result of a collaborative process between the Central Statistics Organization, the Kurdistan Region Statistical Office, the United Nations Population Fund (UNFPA), the World Food Programme (WFP), the United Nations Development Programme (UNDP), the United Nations Office on Drugs and Crime (UNODC), the United Nations Educational, Scientific and Cultural Organization (UNESCO), the United States Agency for International Development (USAID), the World Health Organization (WHO) and international non-governmental organization Mercy Corps, under the overall coordination of the Inter-Agency Information and Analysis Unit.

(Source: UNAMI)

Last month the Central Bank of Iraq co-hosted a conference with USAID’s Iraq Financial Development Project on “Integrating the Banking and Financial Services Sector in Iraq.” This event, which was held in Istanbul from November 18-19 covered two upcoming changes to the payments system that have the potential to revolutionize Iraq’s banking sector.

The first is the introduction of a “national switch” for processing credit card and ATM transactions. The switch—essentially a router and some specialized software—will connect all of Iraq’s ATM machines and credit card point-of-sale scanners to a common platform. At present, each card-issuing bank operates its own system. Because not every point of sale is connected to every system, no one card will work everywhere. Little wonder that almost everything is paid for in cash.

The second is the establishment of the Iraq Interoperable Mobile Payments System (IIMPS). This system will reach out to people who do not have a bank account by making it possible to bank by mobile phone. Users will open accounts by calling a number and speaking with a representative. They may then make cash deposits and withdrawals either at branches or at venues such as retail shops that the banks will designate as their agents. Making a payment will require nothing more than a phone call to transfer funds to the payee's account. There will no longer be any need to pay for anything with “blocks” of hundred dollar bills.

Both systems are supposed to begin operations in 2013. Of the two, the mobile system seems particularly promising. Even with the national switch in place, merchants may be reluctant to accept credit cards because of the associated fees and the paper trail they leave for the tax authorities. The IIMPS, however, should be readily adopted by anyone with a mobile phone. That’s a lot of potential new customers for the banks. By an interesting coincidence, it turns out that mobile phone users and people without bank accounts both account for about 80% of the Iraqi population.

The U.S. government through the United States Agency for International Development (USAID) participated this week in the 4th Iraq Agro-Food Expo in Erbil, showcasing the success of the USAID-Inma Agribusiness Program and highlighting beneficiaries. The success of this program is an example of US-Iraqi cooperation, under the auspices of the Strategic Framework Agreement, in support of domestic agricultural production in Iraq.

The Iraq Agro-Food Expo, one of the largest agricultural trade shows in Iraq, got underway November 21 with hundreds of industry-related businesses, associations, and government representatives gathering in Erbil. The expo offered an excellent opportunity for Iraqi farmers, processors, and distributors to make vital international contacts that can help develop Iraqi agribusinesses. It also offered international companies the opportunity to gain a foothold in a lucrative Iraqi market that will be expanding and developing for decades to come. Product groups showcased at the expo included agricultural products and machinery, food and beverages, fertilizers and pesticides, food additives, processing technology, and packaging materials.

The U.S. government’s exhibition at the Expo was organized by the USAID-Inma Agribusiness Program. Staff members at the exhibit showcased a number of USAID-supported products and programs including the Euphrates Fish Farm, the Rabee Transplant Nursery, Vano Feed Mill products, Al Basrah Dates, olive oil from the Al-Zaytoon Olive Association in Ninawa province, strawberries from nurseries in Sulaymaniyah, Anbar Rice samples from the Al-Rawadi Widows and Orphans Welfare Organization from Baghdad, mushrooms from the Hameedyah Mushroom Farm in Anbar province, and meat products from the Blann Butcher Shop in Dahuk.

The Iraq Agro-Food Expo, which ran from November 21 to 24, was established in 2008 to exhibit agriculture technology, food, food processing, and packaging. The event attracts decision-makers from the industry, as well as officials from the central Government of Iraq and the Kurdistan Regional Government. Last year’s event marked one of the largest in its history with more than 350 exhibitors from 17 countries. The event attracted more than 18,000 visitors from 25 countries as well as 40 media representatives.

(Source: US Embassy)

By T. Keyzom Ngodup, co-founder and Executive Director at Ideas sYnergy www.ideas-sYnergy.net, a local multiple bottom line advisory enterprise, driving innovation for social impact.

According to the recently released World Bank Report The Republic of Iraq: Financial Sector Review, “SME and microfinance is not well developed in Iraq”.

Over 85% of lending to Iraq SMEs is conducted through NGOs: the 12 NGO-MFIs (see www.imfi.org; supported by USAID grants) and Iraq Middle Market Development Foundation (IMMDF). The remaining is facilited through bank lending supported by USAID grants and technical assistance through NBFI vehicles (part funded through USAID start-up grants) Iraqi Company for Financing SMEs (ICF-SME) and Iraqi Company for Bank Guarantee (ICBG).  The above developments were indeed important milestones, but some say have become obsolete, with many aspects leaning towards something resembling 'oligarchy' and part of the fault lies with donors' complacency and not the implementing partners, i.e. contractors or local impementers (they are just carrying out their contractual agreements).

The Report rightly points out that under Banking Law article 4(2), CBI has the power to regulate lending institutions, microfinance institutions and any other non-bank financial institution not otherwise regulated under Iraqi law. Within this context, Iraq Insights October issue had reported that CHF Iraq’s, an NGO MFI, application for an NBFI license was rejected by CBI based on the NGO Office’s ‘discomfort’ with an NGO owning shares in the newly created entity as well as the transfer of NGO assets and loan portfolio to a for-profit company despite the earlier verbal go-ahead received from the NGO Office.

There are two troubling factors that are true for development initiatives addressing access to finance in Iraq:

1. There is tremendous willingness from GoI to scale-up financing (of different types and through different vehicles) SMEs as a means to support economic diversification, private sector development and employment generation, however weak institutional capacities, minimal exposure to global best practices, and lack of inter-agency coordination/collaboration serve as critical impediments for doing what is in Iraq’s best interest. External and supportive stakeholders are cautioned to address this challenge (both directly and indirectly in the form of one voice and meaningful consensus building) as critical to their goals’ success.
2. Donor coordination, albeit improving, and support of innovation outside usual methodology of programme implementation warrants review. Ideas sYnergy has spoken to many young entrepreneurs/aspiring entrepreneurs, and over and over again, what we have come to conclude that Iraq’s needs something like an ‘innovation lab’ where innovation can be supported through access to consolidated and strategic resources, replicated, and used as inspiration for the eager youth. Ideas/initiatives such as creating an Iraqi tea brand through direct linkages with Sri Lanka or supporting the successful initiative of a young Iraqi entrepreneur’s start-up business to disburse government pension (and some salaries) through a technology driven ‘key’ card (more about these entrepreneurs in Iraq Insights’ upcoming November issue).

T. Keyzom Ngodup is co-founder and Executive Director at Ideas sYnergy www.ideas-sYnergy.net, an Iraq based multiple bottom line advisory enterprise committed to economic and social development through market-based solutions that help build and scale innovative businesses for sustainable and inclusive private sector development.

Business is flourishing for some of Iraq’s strawberry farmers thanks to higher-yield varieties and new growing techniques provided by the U.S. government through the United States Agency for International Development (USAID).

The success of this program is an example of U.S.-Iraqi cooperation, under the auspices of the Strategic Framework Agreement, to support domestic agricultural production in Iraq.

Iraq had some marginal strawberry production prior to 2009 based on old technology and outdated varieties, which proved to be of little profit for producers. During 2009, the USAID-Inma Agribusiness Program introduced to Iraq efficient production techniques and a high-yield plant variety developed in California that is suited to the local market due to its firmness, size and tolerance of heat.

USAID started by training nine farmers, and with the permission of Iraq’s Ministry of Agriculture, introduced just over 120,000 new plants.

Since the program’s inception, the two most successful farmers have expanded their strawberry operations and have substantially increased their income. One of them has tripled his production and is selling the high-value crop to private retailers throughout the country.

One of the largest supermarket chains in the world is opening a new store soon in Erbil and has expressed interest in selling his strawberries. In addition, approximately 30 other growers have adopted USAID’s model this year, and they are all planting new strawberry crops on their farms without direct USAID assistance.

Based on the success of this program, Iraqi strawberry growers recently ordered 500,000 new plants, which will cover 37 donums or approximately 20 acres of land. Each of the plants averages 800 grams of strawberries. Estimates on the final yield of the new plants range from 150 to 400 tons, with a value ranging between $600,000 and $1.6 million.

(Source: USAID)

The University of Dubai (UD) recently won a grant of $500,000 (Dh 1,836,500) for its proposal to help two Iraqi universities improve the quality of their business education. The grant, awarded to UD last week by the United States Agency for International Development (USAID), was created to improve the educational system in Iraq, with an emphasis on finance and banking.

University of Dubai President, Dr. Omar Hefni, said it is part of the school’s social responsibility to support the rebuilding of Iraq. Faculty at UD saw the grant as an opportunity to use their experience and expertise to do something helpful, he said, and they took it.

The University of Dubai will assist Al Monsour University College (AMUC), located in Baghdad, in assessing its potential for obtaining an accreditation from the Association to Advance Collegiate Schools of Business (AACSB) – an accreditation UD holds, along with other notable schools, such as Harvard Business School and Stanford University.

“We know this is a very big challenge,” UD Chief Academic Officer, Dr. Ananth Rao, said. “But it is one of our responsibilities as an accredited university. If we are asked, ‘What did you do as an accredited university,’ we would like to say, ‘we helped two business schools raise their standards.’ And those two business schools will then have the ability to raise the standards of two more business schools in the region.”

Reuters reports that the former head of a New Jersey-based engineering consulting firm was charged with leading a scheme to overbill the U.S. government by hundreds of millions of dollars for international reconstruction contracts, including work in Iraq and Afghanistan.

Derish Wolff, former president and chief executive of Louis Berger Group Inc is reported to have surrendered to the FBI on Thursday morning, and a judge agreed to release him on a $1 million bond after he appeared in Newark federal court.

Wolff, 76, of Miami, Florida, and Bernardsville, New Jersey, was charged with one count of conspiring to defraud the government and five counts of making false claims.

Last November, Louis Berger Group agreed to pay more than $69 million to the U.S. government to settle charges related to overbilling on contracts for work performed overseas on behalf of federal agencies.

At the time of that settlement, two former top executives at the privately held company also pleaded guilty to participating in an overbilling conspiracy.

Prosecutors said that Wolff was the company's president and CEO from 1982 until 2002 and recently served as chairman of the parent company, Berger Group Holdings Inc.

They said that while at the company Wolff conspired to defraud the U.S. Agency for International Development (USAID) by billing on "cost-plus" contracts for the company's overhead, such as rent, and other indirect costs at falsely inflated rates. The government contends the scheme went on for nearly 20 years.

The lead defense counsel on Wolff's case told Reuters, "Mr. Wolff will plead not guilty because he is not guilty and looks forward to his opportunity to demonstrating that in court."

If convicted, Wolff could face up to 10 years in prison on the conspiracy charge. Each of the false-claims counts carries a maximum penalty of up to five years in prison, according to prosecutors.

Louis Berger Group said in a statement that the individuals associated with the government prosecution are no longer with the company, and that it had made significant changes to its internal controls.

(Source: Reuters)

Previously NGOs were seen as critical to Iraq’s reconstruction efforts. But numbers have dwindled. And not everyone is sad to see them go – many were fakes, siphoning funds, engaged in corruption and deceiving locals, according to this report from Niqash. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

It is highly likely that over the past eight years billions of dollars have disappeared into fake non-governmental organizations in Iraq, never to be seen again or accounted for.

Some of the fake non-governmental organizations (or NGOs) were taken to task but others simply disappeared or ceased to exist. And the directors of some of the NGOs – organizations not a part of the government yet not a conventional, profit-making business – fled Iraq with the money they had collected, others went underground.

The current head of the Iraq government body in charge of registering NGOs in Iraq, Ahmed al-Attar told NIQASH that he has no idea how much cash Iraq’s bogus NGOs have managed to collect since 2003. However he agreed that “these organizations have created a crisis of confidence - between local and international NGOs and organizations, and also between the NGOs and the Iraqi people. They have tarnished the image of civil society in Iraq,” he concluded.

Before the 2003 US-led invasion of Iraq that saw the end of former Iraqi leader Saddam Hussein’s regime, non-governmental organisations did not really exist. This is mainly because there were no institutions that were not affiliated with the ruling Baath party, which Hussein led. For this reason, as the International Centre for Not-For-Profit Law (ICNL), an international body with offices around the world that promotes “an enabling legal environment for civil society” organizations says none of them could “be said to be a truly “non-governmental” organizations.

Iraq’s 12 microfinance institutions in cooperation with the USAID-Tijara Provincial Economic Growth Program are holding an Inclusive Financial Services Stakeholders Conference in Erbil on October 3 and 4. The theme of this year’s microfinance event will be “Transforming Inclusive Financial Services for Increasing Outreach”.

The conference will bring together leaders from 12 microfinance institutions (MFIs) that provide financial services throughout Iraq. The forum will attract Iraqi policy makers, international rating institutions, donors, commercial bankers, and representatives from the U.S. Agency for International Development.

Since 2003, Iraq’s microfinance industry has made 313,300 microloans with a total disbursed value of over $729 million. Iraq’s microfinance industry currently has 84,000 clients, over 16,218 of whom are women, with an outstanding loan portfolio of $123 million. Many borrowers operate subsistence businesses, farms, or cottage industries. Small companies create jobs which contribute to greater stability, economic diversification and prosperity in Iraq.

Participants at the forum will discuss opportunities for making financial services even more inclusive by discussing ways MFIs and the Iraqi industry as a whole can provide micro loans to larger numbers of people.

The forum will discuss ways to make this transformation possible, namely institutional reform, transparency, governance, how to better serve vulnerable groups such as youth and women while developing new, demand-driven products and alternative collaterals. Strategic business planning and the development of a credit bureau also will be studied. Planet Rating, Shore Bank International and the Central Bank of Iraq will be among those participating.

For more information, email [email protected] or visit the Iraqi Microfinance Knowledge Portal at www.imfi.org.

(Source: Tijara)