Iraq is heavily reliant on oil, as oil revenues have been the spine of the economy and the main contributor to exports and remain so even with the halt of oil prices and market demand. This led to neglecting the opportunities that lie in other sectors that could diversify and support the economy.

Agriculture is an essential sector that has a great potential that can be exploited to revitalize the economy, developing this sector would accelerate non-oil growth, promote food security and self-sufficiency, and create job opportunities, decrease poverty and unemployment.

The report provides an overview of the agriculture sector and explores its different aspects.

Click here to download the full report.

(Source: Kapita, in partnership with GIZ)

The post New Report on Iraqi Agriculture first appeared on Iraq Business News.

KAPITA launches the first Iraqi dedicated Angel Network

The Iraqi entrepreneurship ecosystem receives a major boost with the launch of the first Iraqi angel investors network

KAPITA is launching Iraq’s first Angel Investor Network – IAIN ( https://iraqangels.net/ ) that is dedicated to connecting startups with angel investors in order to develop the Iraqi entrepreneurship ecosystem. The network is sponsored by the German Government through GIZ (German Agency for International Cooperation).

The network is the first attempt at an institutionalized investment vehicle for Iraqi startups. It helps founders access the knowledge, experience and connections they require, along with funding to scale and grow their business. The network is also technically supported by the World Bank.

It has some of the most prominent Iraqi angel investors including Shwan Taha and Mohammed Khudairi; both of whom have recently invested in the leading e-commerce platform in Iraq – Miswag. The network also includes Yazen Abu Galal, Amar Shubar and Ahmed Tabaqchali, in addition to a group of distinguished Iraqi entrepreneurs and leading businessmen.

Mujahid Waisi, the CEO and founder of KAPITA has played a key role in shaping up the ecosystem of Iraq. He commented:

“The Iraqi ecosystem has grown and expanded rapidly over the past few years, Kapita aims to support startups along their journey from incubation to funding.”

Ali Al Suhail, the Fund Manager at the Network and who has recently completed his MBA at London Business School added:

“Access to finance remains one of the key issues facing Iraqi entrepreneurs, the network will provide startups with an institutionalized path to access capital for all Iraqi entrepreneurs”.

Active investors in the Iraqi Angel Investors Network:

  • Shwan Ibrahim Taha, Chairman of Rabee Securities
  • Mohammed Khudairi, Managing Partner of Khudairi Group
  • Yazen Abu Gulal, Managing Partner at YAG Capital
  • Dr. Alaa J Mousa, CEO of EarthLink Telecommunications
  • Jaafar Al Musawi, CEO of Atlas Plast
  • Mohamed Al-Hakim, General Manager of Careem in Iraq and Jordan
  • Bahaaddin Salim, Co-founder and CEO of NASS Al-Iraq Holding
  • Hasan Al-Yassen, CEO of Baghdad Gate Services
  • Ali Tariq, Executive Director at Iraqi Private Banks League
  • Nour Sabri, Associate Partner at IBM
  • Omar Al-Handal, Asset Management Executive at Al-Handal International Group
  • Hadi Al-Haidari, CEO of Rawnaq Aldur Company
  • Ali Beyatli, Owner of Green Hills
  • Amar Shubar, Partner at Management Partner
  • Ahmed Tabaqchali, Economic Expert
  • Samer Abed, Managing Director at PetrolLog Technologies
  • Halat Aziz,
  • Rawaz Raouf, Commercial and Regulatory Advisor at Fanoos Telecom
  • Zaid Fadhel, Founder of Iraqi Cinema
  • Mohammed Shaikley, Senior Director of Investments and M&A at AMEA Power
  • Ammar Al Sharifi, Managing Director ALTAYM General Trading Ltd.

About Kapita

Kapita is a private sector development company that aims to empower small and medium-sized enterprises (SMEs) through investment, research, incubation/acceleration, and market development programs. It has recently announced the graduation of 20 startups from its incubation program “Orange Corners Baghdad” in collaboration with the Netherland government and is currently accepting applications for the next edition of the program. Kapita is also running an accelerator program in partnership with GIZ and AsiaCell that focuses on scaling and growing existing startups.

For more information visit, http://www.kapita.iq/

(Source: Kapita)

The post KAPITA launches Iraqi Angel Investor Network first appeared on Iraq Business News.

This article has been originally published in the GIZ magazine ‘akzente’ at https://akzente.giz.de/en/artikel/iraqs-digital-innovators. It is reprinted here by kind permission of GIZ.

A new generation of young Iraqi entrepreneurs are confronting the country’s challenges, even during the coronavirus pandemic.

Text und Fotos: Olivia Cuthbert

The streets are eerily silent in Mosul’s old city. A fierce nine-month battle against Isis in 2017 left this once-bustling quarter in ruins and reduced its historic buildings to rubble. Even now, Iraq’s second-largest city is still reeling from Isis occupation, but there are visible pockets of progress.

Climbing the stairs to the Mosul Space innovation hub, the atmosphere lifts. The door opens onto a modern, open-plan room where young Maslawis, as the city’s residents are known, work to develop ideas that look ahead to the future.

Salih Mahmod

One of them is 23-year-old electronic engineering graduate Salih Mahmod, who devised the concept for the innovation hub back in 2014. He was in the first year of his engineering degree and frustrated with learning solely from books rather than also developing practical skills. Reading about makerspaces, that is, high-tech workshops offering digital training and opportunities to engage in dialogue and implement ideas, in Germany and elsewhere, he was inspired.

‘I thought, why not in our city.’ So he ordered computers and printers, but 20 days after taking delivery of the first computers, Isis descended on the city and he had to put his dream on the backburner for the time being.

Mahmod’s family fled the terror group, finding refuge in the northern Iraqi countryside. Determined to continue, he and his friends offered improvised computer and programming workshops for people from the region. When Mosul was liberated in summer 2017, he returned and hosted an engineering festival that drew more than 500 participants. The tremendous response spurred Salih Mahmod on to set about realising his original dream once again.

He decided to work with like-minded individuals to create a meeting space where young technology enthusiasts would be taught the skills they need, such as programming, the use of new robotics technology and business aptitude. The space would offer them inspiration and an environment in which to develop their innovative ideas, paving the way for the establishment of Iraqi start-ups. Mahmod found a small room and began by launching a project to produce parts for broken hospital machines.

Using a 3D printer, a group of young people created plastic screws and wheels that couldn’t be sourced locally, fixing incubators and other devices that had fallen into disrepair during the Isis occupation. ‘It was a clear example of how an innovative idea can be implemented in the field,’ said Mahmod.

Rapid response to the coronavirus pandemic

The young creatives were able to build on this experience when looking for ways to support the country’s medical professionals in the fight against the coronavirus pandemic. The makerspace in Mosul quickly switched to developing face shields and is now working with Iraq’s four other innovation centres. Over 10,000 of these shields have already been manufactured and delivered to hospitals throughout the country in recent weeks.

This was all achieved by the Mosul Space, as the innovation centre in the old city is now known, having grown from small beginnings. Salih Mahmod had already made contact with GIZ several years ago. The federal enterprise is working throughout Iraq on behalf of the German Development Ministry to promote the establishment of an ecosystem for tech start-ups and young computer enthusiasts.

There are now five innovation centres in the country where Iraqis can be trained to meet new requirements on the labour market or prepare for self-employment. Over 5,500 people have now completed courses or attended events at these centres. Offerings include workshops and mentoring programmes for aspiring start-up entrepreneurs looking to find solutions to the challenges facing the country.

Talent platform in Erbil

It’s not just in Mosul either. An hour down the road in the autonomous Kurdistan region, another hive of entrepreneurship buzzes with creative energy. Re:Coded House is pioneering the co-working concept in the city of Erbil. Prior to the coronavirus lockdown, a growing community of young people used the space to develop projects. ‘People tend to come here with ideas and we support them to make them a reality,’ said Wafa Al-Attas, Iraq Innovation Advisor at non-governmental organisation Field Ready.

Wafa Al-Attas

She runs the makerspace in Re:Coded House and manages the fund for Mosul Space. Al-Attas explains that the concept is quickly catching on in Erbil, fuelling a fledgling creative ecosystem that, five years ago, didn’t seem possible. But strict regulations, cumbersome bureaucracy and limited infrastructure have dampened creative ambitions. Nonetheless, she says things have started to get off the ground. With GIZ’s support, Re:Coded House, which opened in April 2019, has become a platform for talented youth who want to bring their ideas to life.

Refugee refines handbag design

Before the outbreak of the coronavirus pandemic, the space was busiest in the evening, when students came after university classes to work on their projects. Book shelves and indoor plants add a cosy touch. Re:Coded House is normally also a social hub. ‘I don’t have many friends here in Erbil, but in the makerspace it feels like a family,’ said 26-year-old Sliman Khazal, who fled Syria before the war.

Sliman Khazal

He dreams of one day launching his edgy, geometric handbag designs onto the market. ‘Everyone in here is supporting me to work harder and dream bigger.’

Online courses during the lockdown

Mallak Al-Rifaie

Re:Coded House, Mosul Space and the other Iraqi innovation centres are focusing during the pandemic on online courses and video presentations on subjects such as ‘software products for the post-Covid 19 period’. 24-year-old computer expert Mallak Al-Rifaie has been working on these kinds of ideas for some time. As the only female on her university degree course, she initially met with a lot of opposition. ‘At first, all the boys told me that I didn’t have a right to be there.’

But classmates quickly changed their minds when she gained top grades for her project which saw her develop a digital system to allow individuals with limited mobility to stay at home and receive rapid assistance in an emergency. Al-Rifaie also specifically promotes training for children. One of her teams of school pupils even won a national robotics competition last year. ‘I taught them university-level coding and they grasped it incredibly quickly. This generation is really smart,’ she says. And she doesn’t appear to be worried about the future.

Contact: Inga Niere, inga.niere@giz.de

The research in Iraq was conducted prior to the outbreak of the coronavirus pandemic. The young people used digital media to update the editorial team on their initiatives during the lockdown.

This article has been originally published in the GIZ magazine ‘akzente’ at https://akzente.giz.de/en/artikel/iraqs-digital-innovators. It is reprinted here by kind permission of GIZ.

A new generation of young Iraqi entrepreneurs are confronting the country’s challenges, even during the coronavirus pandemic.

Text und Fotos: Olivia Cuthbert

The streets are eerily silent in Mosul’s old city. A fierce nine-month battle against Isis in 2017 left this once-bustling quarter in ruins and reduced its historic buildings to rubble. Even now, Iraq’s second-largest city is still reeling from Isis occupation, but there are visible pockets of progress.

Climbing the stairs to the Mosul Space innovation hub, the atmosphere lifts. The door opens onto a modern, open-plan room where young Maslawis, as the city’s residents are known, work to develop ideas that look ahead to the future.

Salih Mahmod

One of them is 23-year-old electronic engineering graduate Salih Mahmod, who devised the concept for the innovation hub back in 2014. He was in the first year of his engineering degree and frustrated with learning solely from books rather than also developing practical skills. Reading about makerspaces, that is, high-tech workshops offering digital training and opportunities to engage in dialogue and implement ideas, in Germany and elsewhere, he was inspired.

‘I thought, why not in our city.’ So he ordered computers and printers, but 20 days after taking delivery of the first computers, Isis descended on the city and he had to put his dream on the backburner for the time being.

Mahmod’s family fled the terror group, finding refuge in the northern Iraqi countryside. Determined to continue, he and his friends offered improvised computer and programming workshops for people from the region. When Mosul was liberated in summer 2017, he returned and hosted an engineering festival that drew more than 500 participants. The tremendous response spurred Salih Mahmod on to set about realising his original dream once again.

He decided to work with like-minded individuals to create a meeting space where young technology enthusiasts would be taught the skills they need, such as programming, the use of new robotics technology and business aptitude. The space would offer them inspiration and an environment in which to develop their innovative ideas, paving the way for the establishment of Iraqi start-ups. Mahmod found a small room and began by launching a project to produce parts for broken hospital machines.

Using a 3D printer, a group of young people created plastic screws and wheels that couldn’t be sourced locally, fixing incubators and other devices that had fallen into disrepair during the Isis occupation. ‘It was a clear example of how an innovative idea can be implemented in the field,’ said Mahmod.

Rapid response to the coronavirus pandemic

The young creatives were able to build on this experience when looking for ways to support the country’s medical professionals in the fight against the coronavirus pandemic. The makerspace in Mosul quickly switched to developing face shields and is now working with Iraq’s four other innovation centres. Over 10,000 of these shields have already been manufactured and delivered to hospitals throughout the country in recent weeks.

This was all achieved by the Mosul Space, as the innovation centre in the old city is now known, having grown from small beginnings. Salih Mahmod had already made contact with GIZ several years ago. The federal enterprise is working throughout Iraq on behalf of the German Development Ministry to promote the establishment of an ecosystem for tech start-ups and young computer enthusiasts.

There are now five innovation centres in the country where Iraqis can be trained to meet new requirements on the labour market or prepare for self-employment. Over 5,500 people have now completed courses or attended events at these centres. Offerings include workshops and mentoring programmes for aspiring start-up entrepreneurs looking to find solutions to the challenges facing the country.

Talent platform in Erbil

It’s not just in Mosul either. An hour down the road in the autonomous Kurdistan region, another hive of entrepreneurship buzzes with creative energy. Re:Coded House is pioneering the co-working concept in the city of Erbil. Prior to the coronavirus lockdown, a growing community of young people used the space to develop projects. ‘People tend to come here with ideas and we support them to make them a reality,’ said Wafa Al-Attas, Iraq Innovation Advisor at non-governmental organisation Field Ready.

Wafa Al-Attas

She runs the makerspace in Re:Coded House and manages the fund for Mosul Space. Al-Attas explains that the concept is quickly catching on in Erbil, fuelling a fledgling creative ecosystem that, five years ago, didn’t seem possible. But strict regulations, cumbersome bureaucracy and limited infrastructure have dampened creative ambitions. Nonetheless, she says things have started to get off the ground. With GIZ’s support, Re:Coded House, which opened in April 2019, has become a platform for talented youth who want to bring their ideas to life.

Refugee refines handbag design

Before the outbreak of the coronavirus pandemic, the space was busiest in the evening, when students came after university classes to work on their projects. Book shelves and indoor plants add a cosy touch. Re:Coded House is normally also a social hub. ‘I don’t have many friends here in Erbil, but in the makerspace it feels like a family,’ said 26-year-old Sliman Khazal, who fled Syria before the war.

Sliman Khazal

He dreams of one day launching his edgy, geometric handbag designs onto the market. ‘Everyone in here is supporting me to work harder and dream bigger.’

Online courses during the lockdown

Mallak Al-Rifaie

Re:Coded House, Mosul Space and the other Iraqi innovation centres are focusing during the pandemic on online courses and video presentations on subjects such as ‘software products for the post-Covid 19 period’. 24-year-old computer expert Mallak Al-Rifaie has been working on these kinds of ideas for some time. As the only female on her university degree course, she initially met with a lot of opposition. ‘At first, all the boys told me that I didn’t have a right to be there.’

But classmates quickly changed their minds when she gained top grades for her project which saw her develop a digital system to allow individuals with limited mobility to stay at home and receive rapid assistance in an emergency. Al-Rifaie also specifically promotes training for children. One of her teams of school pupils even won a national robotics competition last year. ‘I taught them university-level coding and they grasped it incredibly quickly. This generation is really smart,’ she says. And she doesn’t appear to be worried about the future.

Contact: Inga Niere, inga.niere@giz.de

The research in Iraq was conducted prior to the outbreak of the coronavirus pandemic. The young people used digital media to update the editorial team on their initiatives during the lockdown.

KAPITA has compiled a study about the economic effects resulting from the COVID-19 Pandemic.

The research aims to provide insights and recommendations to tackle the challenges and opportunities that currently face the various segments of the Iraqi market. This will aid governmental organizations and authorities in devising effective policies to make a faster economic recovery.

Our team studied the magnitude of the current economic crisis resulting from plummeting oil prices and the preventive measures taken against the virus. The research surveyed over 500 people from various professional backgrounds such as public and private sector employees and business owners. Also the research includes insights from experts from a range of fields such as finance, economy, construction and business development.

The study discusses attitudes towards the financial situation and the extent of the impact on different sectors such as, Energy sector, Travel sector, E-commerce, Banking system etc.

Here are some key highlights from the study ‘Surviving the COVID-19 Crisis: Preliminary Findings of the Economic Impact on Iraq“:

  • More than 30% of respondents had their salaries cut-off and over 25% were laid off, stopped working or closed their businesses.
  • Over 27% of the respondents said that their savings would last between 2-4 weeks.
  • Public sector employees are considered to be in a better financial position while a heavier toll was inflicted on private sector employees.
  • Over 40% of employers believe that 1-3 months will be needed to recover from the crisis and 50% of employers believe that zero interest loans could help in a faster recovery.
  • 90% of e-commerce and delivery services were paralyzed due to the curfew imposed.
  • Around 70 private bank activities have been limited due to government debt, and shortage in liquidity affecting revenue, deposits, and profits.

KAPITA’s research team deeply thanks and appreciates its partners who majorly contributed to the completion of this study. We sincerely thank Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) for being an outstanding enabler for us, Iraqi Innovation Alliance (IIA) for their contribution in data collection and Iraq Business News (IBN) for being our media partner.

We would like to thank all the people who filled out the survey and contributed to the shaping of this study to highlight the impact of the COVID-19 crisis on Iraq’s economy.

KAPITA’s research team would like to express its deep gratitude to the interviewees for their help in making this research possible (The following order is the order of the interviews):

  1. Ammar Al-Khatib, Executive Director of The Station
  2. Anas Morshed, Economics Blogger & Business Development Consultant
  3. Mahmoud Al-Daghir, Former Director General of Financial Operations and Debt Management, Central Bank of Iraq (CBI)
  4. Samir Al-Nosery, Banking & Economics Consultant
  5. Tamara Hussein, Head of Traders at Rabee Securities
  6. Omar Salam, Secretary-General of Engineers Syndicate
  7. Abdul Ghani Al-Hassani, Financial Expert & Investment Manager at GroFin
  8. Ayser Jabbar, Media manager of the Central Bank of Iraq (CBI)
  9. Hyder Zahid, Financial Advisor at PMO
  10. Ali Sabeh, President of the Iraqi Federation of Industries
  11. Hamid Ridha, Owner and CEO of Royal Nuts Company.
  12. Mustafa Sirri, Business Environment and Policy Development Advisor in the PSD project of GIZ
  13. Zuhair Sabri, Secretary-General of the Iraqi Contractors Federation
  14. Ahmed Tabaqchali, Senior Fellow at the Institute of Regional and International Studies (IRIS)
  15. Alaa Jassim, Vice President of Earthlink

Please click here to download the full report.

By Alice Bosley and Patricia Letayf, Co-Founders of Five One Labs. Any opinions expressed are those of the author(s), and do not necessarily reflect the views of Iraq Business News.

Iraq’s Startups will Overcome Coronavirus – And Be More Important Than Ever

Over the past months, coronavirus has changed the world as we know it. Almost every person’s family, community, and livelihood has been affected. Societies have had to adapt to social distancing, and economies have suffered the consequences.

After forecasting that the world’s economy would contract by 3% in 2020 – the worst downturn since the Great Depression – the Chief Economist at the IMF noted, “The magnitude and speed of collapse in activity that has followed is unlike anything experienced in our lifetimes.

As is happening across the world, startups in Iraq are suffering from the ripple effects of coronavirus and the country-wide lockdown, which, in Iraq, has included closing all non-essential businesses and restricting movement between and within cities. At the beginning of April, Five One Labs sent out a survey to all of our alumni, startups that have graduated from our full-time startup incubators, and community  to see how they were affected by coronavirus.

Out of the over 40 startups that responded, close to 60% of them were experiencing challenges with financing their businesses and funding delays. Another 60% were not able to sell or deliver their product because of the lockdowns, and around 40% responded that they either could not get the materials to make their products anymore or the demand for their products had suffered due to the lockdown and subsequent economic downturn.

In response to the needs of our entrepreneurs, Five One Labs recently published our “Startup Survival Kit: Rebuilding After Corona.” The guide has resources and tools for managing a startup through crisis, but also has case studies and lessons learned from other startups in Iraq in terms of how they’re adapting to the situation.

As the case studies in the Survival Kit and our recent Facebook Live interviews have shown, there’s no end to the resilience of Iraqi entrepreneurs. Entrepreneurs are buckling down and doing what needs to be done to survive: 50% have reduced non-staff expenditures, and 10% laid off staff or reduced salaries to make ends meet. Entrepreneurs are reporting that they’re spending more time communicating with their customers, learning new skills, and working on building out their strategy for the future.

With the lockdown also came an increased demand for delivery and app-based services. In Kurdistan, startups like CharaPlus in Sulaimani (a pharmacy-delivery service) or Tdallal in Erbil (grocery delivery) are experiencing a growth in demand. On-demand delivery service Lezzoo added new features, like delivery of water, gas, and groceries from Carrefour in both Sulaimani and Erbil. With even local governments sharing information about grocery delivery services to encourage their use, the lockdown has introduced a larger part of the population to e-commerce. This shift could have a lasting impact on the success of tech startups moving forward.

What we’ve seen in Iraq is that startups here are built to weather crisis and fluctuation. Many startups have approached growth as “camels,” a new term coined to show a potentially smarter approach than the “unicorns” made famous in the Silicon Valley. Entrepreneurs in Iraq grow sustainably, ensuring that their costs in general don’t exceed the revenue they’re bringing in. They make sure they have reserves on hand to adapt to the ups and downs of the economy, and they’re innovative in the face of obstacles.

This resilience after crises is more important now than ever. In Iraq, coronavirus comes on the heels of the economic hit caused by the global drop in oil prices along with growing regional instability. The coronavirus response has shown the ability of startups to adapt quickly to local challenges.

Moving forward, there’s a chance for startups to have an outsized impact on Iraq’s economy moving forward as they fill gaps in the market and help the country diversify its economy. So, to all the entrepreneurs out there – time to start rebuilding!

If you are interested in reading our Startup Survival Kit, you can find it here. Five One Labs published the Startup Survival Kit with the support of the German Federal Government through the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH. We will also be running a series of brainstorms and workshops for startups on how to rebuild after coronavirus. If you’re interested in joining one of the workshops, please email us at info@fiveonelabs.org.

___________

Five One Labs is a start-up incubator that helps refugees and conflict-affected entrepreneurs launch and grow their businesses in the Middle East. Launching first in the Kurdistan Region of Iraq, we aim to empower individuals to rebuild their lives and livelihoods and to contribute to the economic growth of their communities.

Five One Labs entrepreneurs are provided with training; mentorship by world class entrepreneurs from the USA and the Middle East; and a community of creative changemakers to share their experiences with. 

Our vision is to develop an inclusive network of innovators and entrepreneurs that have the support, skills, and connections to positively change their communities and countries.

By John Lee.

The United Nations has advertised new positions in Iraqi Kurdistan:

(Source: UN)

By Alice Bosley and Patricia Letayf, Co-Founders of Five One Labs.

At Five One Labs, we work with idea or early-stage entrepreneurs from diverse communities to launch scalable, innovative businesses. We’ve had the privilege to work with tech startups like Dada, PHARX, Khanoo and more, and deeply understand the struggles that entrepreneurs who pursue apps, SaaS (software as a service), e-commerce solutions and more face in Iraq’s context.

Based on our work in the Kurdistan Region of Iraq (KRI) over the past two years, we have been able to identify some of the most pressing challenges tech entrepreneurs and the startup community encounter.

The top five challenges are described below:

Challenge 1: Online-based businesses don’t legally exist in Iraq.

Registering businesses in Iraq is a costly and time-intensive process in the best of times, but it is made even more difficult because of the lack of law regulating online or technology businesses. E-commerce sites, SaaS, applications etc are not legally considered businesses, and cannot be registered as such. Entrepreneurs establishing tech startups are often left without the protection and freedom provided by being legally registered.

When entrepreneurs choose to register their tech businesses, they must register as a traditional business and open a brick and mortar location. They could choose to register as an “office,” which is the least expensive choice, but an ‘office’ registration could negatively impact the entrepreneur’s ability to take equity in the future. Other registration choices are more expensive and time-intensive.

The registration challenges that both tech and non-tech business face have been recognized by many, including Orange Corners, an initiative launched by the Dutch Government. In November Five One Labs and Orange Corners will release a “Roadmap” for business registration in the KRI, which will also highlight the registration experience of tech businesses. A similar roadmap will be published by KAPITA on the business registration process for Federal Iraq.

Challenge 2: The digital skills gap in Iraq increases the time and cost of launching a tech startup.

Launching a tech business, be it a mobile application or a website, requires a certain level of digital and technical skills, particularly as the business grows past its initial stages. And if an entrepreneur building a tech startup does not have the technical skills herself, she will need to enlist the support of developers and coders to build more complex prototypes to be able to test her product.

While digital skills and literacy are important for entrepreneurs — be they inside Iraq or outside — the skills gap in the Middle East, especially in Iraq, creates challenges for startup founders in the country. Data on computer programming education and skills are not readily available in Iraq, our experience working working with startups and anecdotal evidence suggests that the shortage of coders in Iraq has increased the time and cost of launching an app- or website-based business.

A number of non-technical founders that have gone through Five One Labs’ incubator program have found that coders and developers can be expensive, which increases their startup costs and causes delays in launching their businesses.

Additionally, a number have had to work remotely with developers, either in other parts of Iraq, or outside of the country entirely, to have their technical needs met, and many have gone through multiple freelance coders or developers in the early stages of the development of their products. Some non-technical founders also delay the hiring of CTOs, either because of the cost or because of a lack of understanding of the importance of having one on board from the outset.

The good news is that this reality is changing quickly, thanks to some amazing organizations across Iraq. Re:Coded, FikraSpace, and Preemptive Love Coalition’s WorkWell Program have been offering high-quality digital skill-building programs across the country to ensure that moving forward, the country’s youth are well-equipped to participate in the digital economy.

Challenge 3: The cost of launching a business is high — and there aren’t many ways that entrepreneurs can find financing to cover these costs.

In addition to the fact that the costs of building apps in Iraq can be high, tech founders also face high legal startup costs.

The lack of regulation regulating tech businesses can make registration more expensive, as entrepreneurs are forced to consult with and shuttle back and forth between multiple ministries and chambers of commerce who may interpret their startup as a different type of business, which impacts the cost.

Regulations also stipulate that businesses must have a physical office, and a lawyer and an accountant on retainer, which are immense costs for someone looking to launch a startup. Around the world many early-stage entrepreneurs, particularly tech founders, operate their registered businesses from home or from coworking spaces, but regulations in the KRI stipulate that an office (with four walls) is required, and so renting an office whereby a business can register from will likely add several hundred (if not thousands) of dollars in expenses for a new business depending on where in the country they are located.

Given these high costs — the million dollar question for tech founders (and entrepreneurs more generally) is where do they go to offset these expenses and find enough capital to build their business? While we will discuss this in more detail in future posts, options for financing in Iraq are extremely limited. For instance, Arabnet’s State of Digital Investments in MENA report for 2013-2018 shows no publicly-reported investments in digital business in Iraq during that period.

Many entrepreneurs thus self-finance or look to family and friends for funding, and for those who are able to find angel investors, the terms can often be stringent, or investors may seek a majority, rather than minority, stake in the company.

Challenge 4: Cash on delivery is still the norm.

Mobile and e-payment options are growing in Iraq. Asia Hawala, Zain Cash and Fast Pay are mobile payment methods that can and will change the way businesses in the country operate. Pre-paid credit cards, like Qi Card and Zain WalletCard, are starting to allow Iraqis to purchase things online that they were previously unable to purchase. However, there are still a number of challenges with e-payments that cause headaches and risk to technology entrepreneurs.

Nevertheless, mobile payment methods are not as widely used as in other countries. Debit card penetration remains low and only 11% of Iraqis have bank accounts, which means that the majority of online purchases still happen through cash on delivery. Cash on delivery causes a number of problems: first, there’s the risk that customers will not actually pay for what they ordered, and the startup will be left with the burden. Some startups, like ShopYoBrand, a startup that purchases and delivers items from international brands like Zara, IKEA and Amazon to Iraq, makes customers pay a small amount of the total up front to provide some insurance.

ShopYoBrand founder Randi Barzinji said:

“Cash is hard to manage… there are a lot of transactions on a daily basis to be calculated manually instead of having an automatic system do it for you. And this is because the majority does not use an e-payment method yet on a daily basis…The challenge is to convince people for them to gain our trust, so that they’ll pay us ahead of time [to reduce risk]…It’s also important that the customer understands that we can’t order anything either without knowing the customer [and trusting them].”

The lack of e-payments makes expansion extremely challenging as well. Startups operating across the country, like grocery delivery app Miswag or last-mile delivery service Sandoog, have to transport cash from across the country to their headquarters, which is dangerous and time consuming. Balancing budgets can take months, with delays in customer payments and then additional delays in cash transportation.

Challenge 5: Lack of international e-payment options makes international expansion challenging without a foreign bank account.

Iraq, to all intents and purposes, is still disconnected from the international financial system for reasons relating to sanctions and the risk of money laundering. While Iraqis can use prepaid cards to pay for some services – like freelance coders – online (though often these cards do not work), it is very hard to receive money from abroad in Iraq.

OFAC lifted the majority of country-wide sanctions against Iraq in 2003, but the risk of somehow funding proscribed groups is still enough of a barrier that most international e-payment methods do not connect to Iraq. Paypal and Stripe, among other payment services, have restrictions against operating in Iraq. This means that freelancers based in Iraq cannot be paid by foreign clients, and it also means that Iraqi entrepreneurs cannot easily provide their products or services to customers in other countries.

Conclusion

We are optimists, and understand the magnitude of the impact that these startups will have if they are able to succeed. It is up to us and other members of the ecosystem in Iraq (and globally) to better understand the obstacles that cause technology startups in the country to stumble, so that we can ensure that we provide them with the support necessary to overcome them. Our job is to ensure that our early stage entrepreneurs have the support necessary to launch scalable, innovative businesses.

This Sunday, we launched our first incubator in Sulaimani that is fully focused on tech startups. This program is only possible through the generous support of GIZ, and in partnership with IOM and AsiaCell, who will be providing seed funding and services to our entrepreneurs.

Donors and actors across the country are excited about tech entrepreneurship, and we are looking forward to positive improvements in the ecosystem as more people work hard to make meaningful change.

___________

Five One Labs is a start-up incubator that helps refugees and conflict-affected entrepreneurs launch and grow their businesses in the Middle East. Launching first in the Kurdistan Region of Iraq, we aim to empower individuals to rebuild their lives and livelihoods and to contribute to the economic growth of their communities.

Five One Labs entrepreneurs are provided with training; mentorship by world class entrepreneurs from the USA and the Middle East; and a community of creative changemakers to share their experiences with. 

Our vision is to develop an inclusive network of innovators and entrepreneurs that have the support, skills, and connections to positively change their communities and countries. 

By Alice Bosley and Patricia Letayf, Co-Founders of Five One Labs.

At Five One Labs, we work with idea or early-stage entrepreneurs from diverse communities to launch scalable, innovative businesses. We’ve had the privilege to work with tech startups like Dada, PHARX, Khanoo and more, and deeply understand the struggles that entrepreneurs who pursue apps, SaaS (software as a service), e-commerce solutions and more face in Iraq’s context.

Based on our work in the Kurdistan Region of Iraq (KRI) over the past two years, we have been able to identify some of the most pressing challenges tech entrepreneurs and the startup community encounter.

The top five challenges are described below:

Challenge 1: Online-based businesses don’t legally exist in Iraq.

Registering businesses in Iraq is a costly and time-intensive process in the best of times, but it is made even more difficult because of the lack of law regulating online or technology businesses. E-commerce sites, SaaS, applications etc are not legally considered businesses, and cannot be registered as such. Entrepreneurs establishing tech startups are often left without the protection and freedom provided by being legally registered.

When entrepreneurs choose to register their tech businesses, they must register as a traditional business and open a brick and mortar location. They could choose to register as an “office,” which is the least expensive choice, but an ‘office’ registration could negatively impact the entrepreneur’s ability to take equity in the future. Other registration choices are more expensive and time-intensive.

The registration challenges that both tech and non-tech business face have been recognized by many, including Orange Corners, an initiative launched by the Dutch Government. In November Five One Labs and Orange Corners will release a “Roadmap” for business registration in the KRI, which will also highlight the registration experience of tech businesses. A similar roadmap will be published by KAPITA on the business registration process for Federal Iraq.

Challenge 2: The digital skills gap in Iraq increases the time and cost of launching a tech startup.

Launching a tech business, be it a mobile application or a website, requires a certain level of digital and technical skills, particularly as the business grows past its initial stages. And if an entrepreneur building a tech startup does not have the technical skills herself, she will need to enlist the support of developers and coders to build more complex prototypes to be able to test her product.

While digital skills and literacy are important for entrepreneurs — be they inside Iraq or outside — the skills gap in the Middle East, especially in Iraq, creates challenges for startup founders in the country. Data on computer programming education and skills are not readily available in Iraq, our experience working working with startups and anecdotal evidence suggests that the shortage of coders in Iraq has increased the time and cost of launching an app- or website-based business.

A number of non-technical founders that have gone through Five One Labs’ incubator program have found that coders and developers can be expensive, which increases their startup costs and causes delays in launching their businesses.

Additionally, a number have had to work remotely with developers, either in other parts of Iraq, or outside of the country entirely, to have their technical needs met, and many have gone through multiple freelance coders or developers in the early stages of the development of their products. Some non-technical founders also delay the hiring of CTOs, either because of the cost or because of a lack of understanding of the importance of having one on board from the outset.

The good news is that this reality is changing quickly, thanks to some amazing organizations across Iraq. Re:Coded, FikraSpace, and Preemptive Love Coalition’s WorkWell Program have been offering high-quality digital skill-building programs across the country to ensure that moving forward, the country’s youth are well-equipped to participate in the digital economy.

Challenge 3: The cost of launching a business is high — and there aren’t many ways that entrepreneurs can find financing to cover these costs.

In addition to the fact that the costs of building apps in Iraq can be high, tech founders also face high legal startup costs.

The lack of regulation regulating tech businesses can make registration more expensive, as entrepreneurs are forced to consult with and shuttle back and forth between multiple ministries and chambers of commerce who may interpret their startup as a different type of business, which impacts the cost.

Regulations also stipulate that businesses must have a physical office, and a lawyer and an accountant on retainer, which are immense costs for someone looking to launch a startup. Around the world many early-stage entrepreneurs, particularly tech founders, operate their registered businesses from home or from coworking spaces, but regulations in the KRI stipulate that an office (with four walls) is required, and so renting an office whereby a business can register from will likely add several hundred (if not thousands) of dollars in expenses for a new business depending on where in the country they are located.

Given these high costs — the million dollar question for tech founders (and entrepreneurs more generally) is where do they go to offset these expenses and find enough capital to build their business? While we will discuss this in more detail in future posts, options for financing in Iraq are extremely limited. For instance, Arabnet’s State of Digital Investments in MENA report for 2013-2018 shows no publicly-reported investments in digital business in Iraq during that period.

Many entrepreneurs thus self-finance or look to family and friends for funding, and for those who are able to find angel investors, the terms can often be stringent, or investors may seek a majority, rather than minority, stake in the company.

Challenge 4: Cash on delivery is still the norm.

Mobile and e-payment options are growing in Iraq. Asia Hawala, Zain Cash and Fast Pay are mobile payment methods that can and will change the way businesses in the country operate. Pre-paid credit cards, like Qi Card and Zain WalletCard, are starting to allow Iraqis to purchase things online that they were previously unable to purchase. However, there are still a number of challenges with e-payments that cause headaches and risk to technology entrepreneurs.

Nevertheless, mobile payment methods are not as widely used as in other countries. Debit card penetration remains low and only 11% of Iraqis have bank accounts, which means that the majority of online purchases still happen through cash on delivery. Cash on delivery causes a number of problems: first, there’s the risk that customers will not actually pay for what they ordered, and the startup will be left with the burden. Some startups, like ShopYoBrand, a startup that purchases and delivers items from international brands like Zara, IKEA and Amazon to Iraq, makes customers pay a small amount of the total up front to provide some insurance.

ShopYoBrand founder Randi Barzinji said:

“Cash is hard to manage… there are a lot of transactions on a daily basis to be calculated manually instead of having an automatic system do it for you. And this is because the majority does not use an e-payment method yet on a daily basis…The challenge is to convince people for them to gain our trust, so that they’ll pay us ahead of time [to reduce risk]…It’s also important that the customer understands that we can’t order anything either without knowing the customer [and trusting them].”

The lack of e-payments makes expansion extremely challenging as well. Startups operating across the country, like grocery delivery app Miswag or last-mile delivery service Sandoog, have to transport cash from across the country to their headquarters, which is dangerous and time consuming. Balancing budgets can take months, with delays in customer payments and then additional delays in cash transportation.

Challenge 5: Lack of international e-payment options makes international expansion challenging without a foreign bank account.

Iraq, to all intents and purposes, is still disconnected from the international financial system for reasons relating to sanctions and the risk of money laundering. While Iraqis can use prepaid cards to pay for some services – like freelance coders – online (though often these cards do not work), it is very hard to receive money from abroad in Iraq.

OFAC lifted the majority of country-wide sanctions against Iraq in 2003, but the risk of somehow funding proscribed groups is still enough of a barrier that most international e-payment methods do not connect to Iraq. Paypal and Stripe, among other payment services, have restrictions against operating in Iraq. This means that freelancers based in Iraq cannot be paid by foreign clients, and it also means that Iraqi entrepreneurs cannot easily provide their products or services to customers in other countries.

Conclusion

We are optimists, and understand the magnitude of the impact that these startups will have if they are able to succeed. It is up to us and other members of the ecosystem in Iraq (and globally) to better understand the obstacles that cause technology startups in the country to stumble, so that we can ensure that we provide them with the support necessary to overcome them. Our job is to ensure that our early stage entrepreneurs have the support necessary to launch scalable, innovative businesses.

This Sunday, we launched our first incubator in Sulaimani that is fully focused on tech startups. This program is only possible through the generous support of GIZ, and in partnership with IOM and AsiaCell, who will be providing seed funding and services to our entrepreneurs.

Donors and actors across the country are excited about tech entrepreneurship, and we are looking forward to positive improvements in the ecosystem as more people work hard to make meaningful change.

___________

Five One Labs is a start-up incubator that helps refugees and conflict-affected entrepreneurs launch and grow their businesses in the Middle East. Launching first in the Kurdistan Region of Iraq, we aim to empower individuals to rebuild their lives and livelihoods and to contribute to the economic growth of their communities.

Five One Labs entrepreneurs are provided with training; mentorship by world class entrepreneurs from the USA and the Middle East; and a community of creative changemakers to share their experiences with. 

Our vision is to develop an inclusive network of innovators and entrepreneurs that have the support, skills, and connections to positively change their communities and countries. 

By John Lee.

The United Nations has advertised new positions in Iraq:

(Source: UN)

(Picture: Finger pressing a new career start button, from Olivier Le Moal/Shutterstock)