Iraq’s economy sustained serious damage and material losses during the Islamic State in Iraq and the Levant (ISIL) occupation from 2014 to 2017. After the Iraqi army reclaimed control of the occupied areas, owners of small and medium-sized enterprises (SMEs) found themselves with limited resources and a lack of financial support to recover.
In 2018, the International Organization for Migration (IOM) in Iraq established the Enterprise Development Fund (EDF) programme, a financing mechanism to provide SMEs with access to capital and support large-scale economic recovery following the war with ISIL. Grants aim to stimulate growth, increase demand for workers and provide new job opportunities.
Jobs increase incomes, stimulate spending, revitalize the economy and give people a sense of purpose and dignity.
“I got moral support from my brother and family to go to Lebanon to study this profession, and then I returned to Iraq to work in it,” she continues.
Indeed, after graduating with a diploma in cosmetology in 1973, Nadia worked in a hair salon until 2004, when she left the country due to increasing instability and violence.
Nadia returned to Baghdad in 2016, where she opened her own business — Nadia Salon — but with only three employees, she was unable to accommodate the number of clients seeking beauty services.
“When I returned to Iraq, there were battles to liberate cities from ISIL control,” she tells us. “We were receiving few customers.”
Economic recovery following ISIL’s defeat was brought to a halt when the COVID-19 pandemic arrived in country. Both businesses and patrons were impacted by curfews and mobility restrictions put in place to curb the spread of the virus. This combined with volatile oil prices and the decreasing value of the Iraqi dinar spelled trouble for business owners like Nadia.
"Things were very bad for us due to economic deterioration, market fluctuations and a lack of customers. Since we deal with [clients] directly, things were quite dangerous with the possibility of infection so high. Many of our customers disappeared, so there were periods when I could not cover workers' salaries,” Nadia recalls.
Enterprise Development Fund financing to SMEs was scaled up between 2019 and 2021, including in response to the COVID-19 pandemic.
"I heard about the EDF grant programme through a friend who works in a humanitarian NGO. She encouraged me to apply and use the grant to develop my [salon]. After receiving the grant, I also created job opportunities,” Nadia continues.
"I have plans to expand my project and work on increasing the number of female employees; and I will try to keep pace with developments in modern equipment for the salon business."
Elsewhere in Baghdad, Haider Mirza Kadhum works running his own metal can factory.
“My beginnings were as a young worker in my father’s paint company. I loved iron cans, and I used to collect them in [various] shapes and bright colors,” he remembers. “When I grew up, I decided to realize my dream and in 2000 opened this factory in partnership with my younger brother, in which we invested our shares of the money we got from the family’s inheritance.”
The business grew steadily but simply didn’t have enough employees to keep up with increasing demand. “We currently have five production lines. Our total number of workers is twenty, but the processing procedure requires six workers in each line.”
The factory’s clientele continued to grow in number until it reached almost all governorates in Iraq — with many customers representing famous Iraqi shops and companies.
Then, ISIL rose to power. “The period of ISIL’s occupation was very difficult — sales were affected by about 25% because many of our customers came from the governorates occupied by ISIL. Many companies and factories were closed in the [now] previously occupied governorates.”
Haider describes the next dramatic setback his business faced: "Work stopped completely during the COVID-19 period, which brought us a lot of financial losses, especially during the lockdowns. We were unable to move freely, and the [procurement] of raw materials was very difficult, even during the partial lockdown. The difficulty of workers' access to the factory led to low factory productivity and delayed delivery of materials to companies and customers.”
One day, Haider heard about IOM Iraq’s EDF programme. “There was a group on WhatsApp in which people working in the field of manufacturing in Iraq meet, and there was a person who spread news about the grant [opportunity] in the group. I said to myself, ‘this is an interesting thing'.”
Haider applied and was selected to receive a grant, which he found to be an encouraging incentive to further develop the factory. He used some of the capital to buy new machines for making modern designs, which led him to hire twenty new employees — employees he could now afford with the help of the grant.
Since the EDF programme was first launched, grantees have employed a total of almost six thousand people. And over 90% of people hired by EDF grantees were either unemployed or previously in precarious day jobs.
Istabraq Jabbar Mahdi, a 66-year-old father of two from Baghdad, owns a company that manufactures and supplies furniture to schools and universities.
"When I founded my company, we had only two employees, but soon our business prospered, and we had many customers — including public and private schools,” says Istabraq, who established his company in 1972 with the support of family and friends. “The work continued until 2014. When ISIL occupied some cities in Iraq, the security situation became very dangerous, and we had to stop the [work entirely] because of the security restrictions that affected many of our customers.”
After sustaining huge financial losses over the course of two years, Istabraq resumed his work.
"In 2016, the security situation improved, and we were able to return to work, but we faced challenges that stopped us from rising to the level of performance we worked at before."
Several years later, government measures to curb the spread of COVID-19 meant the closure of schools and universities for long periods of time.
“When the COVID-19 pandemic hit, the business was knocked again significantly, as [the number of] organizations that made up the bulk of my client base — and the levels of demand for equipment and materials that my company had previously supplied — went down,” Istabraq explains.
“After hearing about IOM’s EDF programme through a call for expressions of interest, I submitted an initial application for business recovery support. Upon meeting the eligibility criteria for the programme, I then submitted a complete application and was successfully selected to receive a grant to support the integration and expansion of my business and allow me to buy more advanced equipment and hire ten more workers."
The Enterprise Development Fund has supported over 1,200 Iraqi SMEs across the country to help create more than 5,700 jobs for men and women, returnees and host community members alike in key economic sectors.
Nada, Haider and Istabraq received grants to expand their businesses through the EDF, thanks to generous support from the Government of Germany via KfW Development Bank.