In Iraq, a country most recognized for its oil production, it’s the micro – small – and medium-enterprises (MSMEs) that bring life and colour to the streets. Despite being the ‘small’ players in business, the private sector (excluding oil) accounts for close to 60% of employment, with MSMEs active in the widest range of sectors and with the greatest opportunities for youth.

In Basra City and Al-Qurna, two cities in the largest oil producing region in the nation, the unemployment rate has risen to at least 30% in recent years. Largely attributed to the lack of government employment opportunities and the skills mismatch of the growing youth demographic, investment in micro- small- and medium-enterprises is bringing new hope and opportunities for economic development.

Since mid-2019, the United Nations Development Programming (UNDP), in partnership with the Norwegian Refugee Council (NRC), has provided targeted support to 319 new and established MSMEs across Basra City and Al-Qurna through business development training and cash-grants. The training worked to build skills that would enable enterprise growth, such as finance and accounting, marketing, human resources and employment management, as well as soft skills such as communication, leadership, negotiation skills, decision making and problem solving.

“I learned the importance of good leadership,” says Labieb, 57, father-of-5 and owner of a cherry and nuts store in Basra City. “I also learned how to best deal with customers and be part of a team.” Following completion of his training and receiving his cash-grant, Labieb was able to hire an additional staff member to manage increased stock and customers and enjoyed a 15% increase in profits.

But like most other cities around the world, the socio-economic impact of COVID-19 was also felt in Basra and Al-Qurna. Businesses took all precaution to prevent the spread of the virus, ensuring the safety of both staff and customers by wearing personal protective equipment (PPE) and adhering to the government curfews, with limited operating hours. By demonstrating solidarity, these business owners were not only able to continue making a livelihood for themselves and their employees, but to set an example for the community.

“As a business owner, I am empowered to build something successful – that I created the plan for, and that enables me to give back to the community,” explains Hisham, 40, father-of-2 and owner of a small five-a-side football stadium in Abu Al-Khaseeb.

For Kawthar and Jenan, both mothers-of-five and owners of successful beauty salons in Basra and Al-Qurna respectively, hygiene and care are always a big part of their daily work. “After receiving the grant, I was able to hire three new staff members and saw my profits increase by 40% – this is because I put together a good business plan, but also because we take the necessary precautions to keep ourselves and others safe,” says Kawther.

MSMEs continue to face challenges to their growth during COVID-19 pandemic, limiting their capacity to hire additional employees, but with the recognition and support they need, could MSMEs be the way forward for economic growth in Iraq?

Sustainable livelihoods through small business development and job placement in Basra

Together with NRC, and generous funding support from the Government of Japan, UNDP has supported 319 MSMEs through training and cash-grants and placed 125 individuals in jobs through private sector partnerships, since mid-2019.

(Source: UNDP)

You are invited to help IBBC and World Bank to introduce Iraqi SME’s to FREE business training courses

WHEN: 29th June, 6pm to 8pm Iraq time

Please share this free business training initiative and the course registration with any SME in your network, however small, and encourage them to sign up.

Arabic version for sharing with your contacts here
WebEx Link: Join Using WebEx

YouTube Livestream: https://www.youtube.com/watch?v=RxeuaarijuE

The Iraq Britain Business Council (IBBC) has been asked by the World Bank to support them in the promotion of business resilience and training courses for SME’s in Iraq.

The driver behind this initiative is to give Iraqi SME’s support to ride out and survive the business effects of COVID-19 pandemic and the effect it has particularly on the smaller businesses in the economy.

The support is in the form of four free business training courses that SME’s can take via Webex or Youtube, provided they sign up.

As a partner to the World Bank, IBBC is contacting our Chambers of Commerce and Union contacts, and those businesses we can alert.

The courses cover four topics :

  1. Business Planning.
  2. Accessing Finance.
  3. Communicating.
  4. Thriving.

We recognise that your suppliers are most likely to be already well prepared, but if there are some who may be finding the current economic climate challenging, these courses will provide a good sense check to best practice.

Please follow this link for the WebEx how-to manual in English

Please follow this link for the WebEx how-to manual in Arabic

Please let us know if there are any further questions by contacting london@webuildiraq.org

We very much hope that your teams will be able to share these courses with your supplier and business ecology.

(Source: IBBC)

Small and Medium Enterprises (SMEs) have been heavily affected by the COVID-19 pandemic, due to the closures and reduced working hours recommended to curb the spread of the virus.

To better understand the impact of COVID-19 on SMEs, IOM Iraq conducted a survey with 456 enterprises active in different sectors in urban areas of Iraq in April 2020.

The study focused on governorates with the highest rates of displacement, returns, and ex-combatants as identified by IOM; a stratified sampling strategy was applied to a database of urban employers in the areas where IOM Iraq’s Enterprise Development Fund (EDF) has been implemented.

The analysis found a significant impact on economic outcomes at the firm level. Effects on sales and production among firms have been the most acute, with temporary reductions in paid employment also observed. These have been especially noticeable within the construction and manufacturing industry, followed by the food and agriculture industry.

For more details, please visit: http://edf.iom.int/home/covsme/en

Click here to Download Report

(Source: IOM)

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.

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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.

Investing in Iraq: Lessons Learned from 2 Startup Deals in 2019

2019 showed an exciting development for Iraq’s entrepreneurial ecosystem: the investments in two Iraqi tech startups – e-commerce company Miswag, which received investment from Iraq Tech Ventures, and Lezzoo, the first Iraqi startup to join Silicon Valley’s premier accelerator Y Combinator.

In October 2019 Five One Labs hosted its second delegation of regional and international investors to the Kurdistan Region to expand understanding of the Iraqi business environment and startup ecosystem; to build bridges between international and Iraq business communities; and to expose local entrepreneurs to global best practices.

Through conversations with both early- and growth-stage entrepreneurs and discussions with local businesses and government representatives, the group of 17 investors received first-hand information about the business environment and entrepreneurship ecosystem on the ground in Iraq.

We spoke with the investors from the trip and had conversations with Yadgar Merani, co-founder of Lezzoo, and Laura Olivier, Executive Director of Iraq Tech Ventures, to dive into key challenges and opportunities for investment in Iraq, from the investor and entrepreneur perspectives.

Iraq’s lack of market data and challenging regulatory environment make it hard for investors and entrepreneurs to agree on the level of risk and opportunity.

According to Merani, one of the main challenges Lezzoo faced when speaking to investors outside of Iraq was convincing them of the country’s market size and providing them with accurate answers to specific market-sizing questions. Obtaining accurate estimates of the market is of course important for investors as it impacts projections of cash flow and potential valuation.

While data on numbers of pharmacies or schools, for example, are publicly available in other countries, the lack of easily-accessible market data and the reluctance of certain government ministries to provide this data has forced entrepreneurs in Iraq to rely on assumptions when sizing the market. Merani says that while Lezzoo tried to gather this information from various ministries, the team was often told that the information Lezzoo was seeking was either unavailable or confidential.

Additionally, the lack of general understanding of the Iraqi market and the risks of investing in a post-conflict environment mean that entrepreneurs may need to provide potential investors with additional information — and this is a point that has been expressed by a number of Iraqi startups seeking to raise their seed rounds. Merani said that on multiple occasions when trying to raise funds in the US, he was repeatedly asked questions like, “What happens if the internet goes out in the whole country? What would you do?” And this uncertainty or concern over volatility in Iraq may result in lower valuations for startups.

This added scrutiny also extends to the investment itself. The syndicate of investors that invested in Miswag’s seed round (four angel investors and one institutional investor) experienced legal challenges from the outset. When trying to create a special purpose vehicle (SPV) for Miswag in the financial free zone Abu Dhabi Global Market (ADGM), ADGM repeatedly asked for more documentation given the startup was incorporated in Iraq. After several months, the investors eventually decided to invest directly into Miswag’s bank accounts in Iraq rather than through this SPV.

Olivier of Iraq Tech Ventures also mentioned another challenge:

“One difficulty we experienced recently was that many of the investors’ transfers were heavily delayed due to banks needing extra documentation due to the scrutiny that goes into processing transfers to Iraq.”

However, local and regional investors are willing to put in the work, and entrepreneurs are rising to the challenge.

One of the Five One Labs investor trip participants, Anas Elayyan, said:

“Since inception, iMENA Group has been on the lookout for extraordinary founders and startups operating in under-served markets. The new wave of founders and entrepreneurs that we met in Iraq in the last few months are the real assets for Iraq’s future. Those entrepreneurs have been hustling in the system to mark a new digital era for Iraq. We, at iMENA Group, are very excited to be part of that era.” 

For Miswag, the success of the syndicate’s investment can likely be attributed in part to the fact that the investors were familiar with the market. Four of the five investors were Iraqis who work in Iraq but live outside of the country. Because of their knowledge of the operating environment, they were willing to invest directly rather than establishing an offshore entity.

Both on the investor and entrepreneur side, there are key innovators who are willing to take higher risks in order to show that high-growth startups can be built and grown in Iraq. “There are so many opportunities for entrepreneurs in Iraq to take the lead,” Merani says, “because Iraq needs so much.

Looking ahead to 2020, we look forward to seeing more investments in Iraq’s tech startups and to welcoming another delegation of international investors to the Kurdistan Region later this year.

Please click here to download the full report in pdf format.

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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.

Iraqi government’s finance schemes to support SMEs and business innovation

To support small and medium private-sector projects, the Iraqi government, through the Central Bank of Iraq (CBI) and with the participation of a number of private and state-owned banks, has made available several types of loans.

The loans are available to all Iraqis.

According to a statement from the Iraqi Government, one of the more innovative finance schemes is the Central Bank’s “1 Trillion Dinars Initiative” which is dedicated to supporting small and medium enterprises, as part of the wider Iraqi government strategy to boost economic growth, create new job opportunities, and the production of local goods and services.

(Source: Iraqi Government)

By John Lee.

Forty-five start-ups have presented their projects to a jury at a competition in Baghdad.

They were selected from an initial list of 250 applicants, with a final 20 being chosen to participate in the Orange Corners incubation programme.

Orange Corners Baghdad is an initiative of the Dutch Embassy in Baghdad, and is implemented by the business company KAPITA.

(Source: Orange Corners)

Top Mountain in partnership with USAID is launching a business incubator and employment program. The goal of the program is to promote economic growth and increase employment opportunities to support minorities from Ninewa targeted by ISIS.

Program activities will focus on achieving three core objectives designed to support this goal. Firstly, outreach campaigns will be used to increase interest in entrepreneurship and careers in the private sector.

Secondly, the project will build capacity in both technical and soft skills that will help beneficiaries start businesses and become more competitive in the job market. Lastly, the project will help to build professional networks that increase business and employment opportunities for persecuted minorities from Ninewa.

USAID is the world’s premier international development agency and a catalytic actor driving development results. USAID has funded this program under the New Partnership Initiative (NPI) that aims to assist populations in Iraq recovering from the genocide perpetrated by ISIS.

Top Mountain is a consulting firm based in Iraq focused on stabilization, economic development, and promoting employment and entrepreneurship. This program is aligned with Top Mountain’s mission to support economic development and stability in Iraq.

For more information please contact info@topmountain.co

(Source: Top Mountain)

From the International Committee of the Red Cross (ICRC):

Small projects bring life back to the streets in Mosul

Various small and medium businesses in the Old City of Mosul are supported by the International Committee of the Red Cross as life gradually returns to the streets and people resume their lives.

Some business owners have restored their activities to pre-conflict levels while others are gradually recovering.

And some even earn a higher income than ever before.

Full story here.

Top Mountain LLC hosted the first annual Business Canvas Erbil conference which was attended by 120 participants and took place in the Dedeman hotel.

The conference was funded by the European Union and German Federal Ministry for Economic Cooperation and Development through GIZ.

The event was also sponsored by GroFin Iraq, a financing organization that provides loans of up to $2 million to SMEs in Iraq.

The goal of the conference was to inform the audience about the future of economic development in the Kurdistan Region and promote the services of Top Mountain Business Incubator.

Throughout the conference, speakers and panelists reviewed the challenges and opportunities related to the job market and entrepreneurship.

During his presentation on the future of the startup ecosystem in Iraq, one of the Co-founders of Top Mountain explained that within the next few years startups in Iraq will begin to rapidly multiply and grow as financing and technical skills become more widely available.

This predication is based on the rapid growth in startups that has occurred throughout the MENA region over the last 3 years. Some of the key conclusions reached by panelist and speakers are that companies in Iraq must expand their internship programs to help train the next generation of skilled workers.

Panelists also noted that lack of access to finance is the most critical challenge to SME growth. Despite the challenges facing businesses in Iraq, most of the attendees and panelists remain optimistic and anticipate a bright future for Iraq’s economy.

(Source: Top Mountain LLC)