MICROCAPITAL STORY: New Microfinance Institution in Iraq Kicks Off Lending with Thirteen Loans

A new microfinance institution in Salah ad Din, Iraq, established with the support of the IZDIHAR project funded by the United States Agency for International Development (USAID), kicked off its lending activities with thirteen loans totaling to USD 35,600.

The establishment of the MFI was a joint effort by the USAID-funded IZDIHAR project, the Provincial Reconstruction Team (PRT) in Salah ad Din, and the U.S. Military. IZDIHAR (prosperity in Arabic) is a comprehensive three-year project funded by USAID to promote private sector development and a market-based economy in Iraq. Components of the project include: sustainable microfinance, privatization, investment promotion, business management services, and small and medium enterprise (SME) bank lending programs, among others.

In the area of microfinance, IZDIHAR has contributed USD 10.9 million in operational grants to three international non-governmental organizations (NGOs) involved in providing micro-loans in all eighteen provinces throughout Iraq. These NGOs have a combined loan portfolio of USD 29.1 million with over 2,000 active clients. IZDIHAR has also provided USD 750,000 in loan capital grants for the establishment of the first three MFIs in Iraq. Since 2006, these institutions have awarded 505 loans totaling to USD 881,950. The MFIs do not currently report to a third-party performance evaluator, such as the Microfinance Information eXchange (MIX) Market.

The new MFI, initially registered as an NGO, opened for business on October 31, 2007 after receiving IZDIHAR assistance in changing its by-laws to accommodate microfinance activities. IZDIHAR also provided extensive staff training, supplied loan capital, and established policies and procedures of the institution. The new MFI is seeking to establish four satellite offices in Bayji, Al-Dhlouiya, and Al-Dour. It is the fourth Iraqi MFI established by USAID through the cooperation of IZDIHAR with the PRT and the U.S. Military.

Provincial Reconstruction Teams (PRTs) are composed of U.S. and Coalition Partner members who work with local Iraqi leaders to build capacity, with the ultimate goal of Iraqi self-reliance. They currently operate in ten of Iraqi’s eighteen provinces and range in size from 35 to 100. U.S. team members come from the Department of State, USAID, Department of Defense, Department of Justice, Department of Agriculture, and the U.S. Army Corps of Engineers. The team leader for the PRT in Salah ad Din is Stephanie Miley, a 16-year U.S. Foreign Service officer.

By Mary Fu

Additional Resources:

IZDIHAR: News Highlights

IZDIHAR: Overview

IZDIHAR: Activities

U.S. Department of State: “Helping Iraqis Rebuild Iraq: Two Provincial Reconstruction Teams”