Microfinance in Iraq
By Caroline Pattinson, KF13 Iraq/Lebanon
Today I had the opportunity to interview a couple of members of staff from the Iraq offices of Access to Credit Services Initiative (ACSI), with my Kiva co-ordinator translating I got to learn a lot more information about microfinance and the development and reconstruction in Iraq.
Both Adel and Mohammad have worked for ACSI since it started offering microloans eight years and have seen a number of changes over this period. ACSI was one of the first microfinance institutions to operate in Iraq. Initially, the company began by offering only one type of loan to established businesses, but over time they have started to offer a range of financial products, including home improvement loans and loans to start-up businesses.
When asked what they most enjoyed about working in microfinance, they explained that they genuinely like helping people to take loans, that microfinance is more accessible for borrowers than banks and offers a different service. (They also like receiving a salary!) They have watched as their borrowers successfully develop their businesses. Around 50% of borrowers have taken subsequent loans to fund further expansion.
They have helped the company expand from four to 13 branches to cover 60% of Iraq and enabling them to offer loans to an ever increasing number of people. Occasionally, the security situation means that it is not possible for the loan officers to go to meet the borrowers. However, as the political situation becomes more stable, they find that an increasing number of people are applying for loans, as there is increasing confidence that they will be able to run their businesses in relative safety.
The increase in entrepreneurship and self-sufficiency will in turn lead to enhanced stability in the country as people feel able to start planning for their long-term futures. People are beginning to have confidence in the local economy and to invest in their businesses and futures. This is apparent by the increase in demand for new and repeat loans. Government analysis has shown that, where people have more job opportunities and sources of income, terrorism has decreased.
In the past though, there have been some security issues. Mohammad advised that his parents received personal threats in 2005 and he was accused of being ‘unfaithful to his country’ by working with an American organization (at its inception ACSI was funded by USAID). However, since 2007/8 the situation has improved greatly and he feels that there is a lot more stability in the country.
It is not always the easiest of countries to work in: the internet connections are slow at the best of times and failed completely for a couple of days recently. Since the branches use a web-based information system, this meant that they were unable to process any loans or repayments until the connection was restored. New servers are being used which will hopefully improve the speed and reliability greatly.
Working together with Kiva provides ACSI with a new source of funds allowing them to provide a greater number of loans. Whilst the security situation has improved greatly in the last couple of years, the safety of loan officers and borrowers is still a huge concern and therefore borrower images and full names are obscured. Borrowers are also given the choice of whether or not their loan will be funded through Kiva. If they decline, they are given a loan from other ACSI funds.
Caroline Pattinson is currently serving as a Kiva Fellow with CHF Access to Credit Services Initiative Iraq, based at their head office in Beirut, Lebanon.