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)

UNHCR, the UN Refugee Agency, welcomes a new donation of USD 5.6 million from the Kingdom of the Netherlands for 2019 and 2020 to assist internally displaced persons (IDPs), returnees, and Syrian refugees in Iraq.

This contribution is part of the global PROSPECTS Partnership aiming at joining partners’ efforts to develop a new paradigm in responding to forced displacement crises through the involvement of development actors. While Iraq recovers from conflict, the needs of its population diversify. Some 4.4 million people have returned to their homes and are restarting their lives; however, the conditions for sustainable return are not yet met across all the country.

Continued assistance for the 1.4 million displaced Iraqis and over 286,000 refugees, and the host communities, is essential to ensure a stable and peaceful recovery. The generous contribution from the Kingdom of the Netherlands will ensure the provision of legal assistance and civil documentation to internally displaced persons across Iraq, along with the provision of specialized individual and group-based psychosocial support for children.

In addition, the donation will contribute to improve the access to formal primary and secondary education for Syrian refugee children in the Kurdistan Region of Iraq. H.E. Mr. Eric Strating (pictured), Ambassador of the Kingdom of the Netherlands to Iraq, emphasized the importance of the urgent recovery and strengthened resilience of those who have been affected and displaced by conflict. “If we truly want to assist Iraq in achieving durable stability, we cannot leave anyone behind. Assistance in the field of civil documentation, access to education, but also psychosocial support, is part of the most basic needs for people who are trying to rebuild their lives.”

Within this context, the Netherlands initiated the PROSPECTS Partnership in Iraq, aimed at strengthened cooperation of humanitarian and development partners, in order to achieve durable solutions for the 1.4 million displaced Iraqi’s and the 286,000 refugees on Iraqi soil.The recent Multi-Cluster Needs Assessment conducted from June to August 2019, shows that nearly 2.9 million individuals, including camp-based and out-of-camp IDPs as well as returnees, are missing at least one form of civil documentation.

With the generous donation from the Kingdom of the Netherlands, UNHCR will continue assisting IDPs to access legal assistance and civil documentation in collaboration with the Government of Iraq, helping them establish their legal identity, access public services, return to their homes, and exercise their basic rights.

Moreover, this contribution will support the provision of case management and psychosocial support for children survivors of violence, exploitation and abuse, and will complement education assistance aimed at ensuring access to formal education opportunities and obtaining official learning accreditation for Syrian refugee children.

“While the situation in Iraq has notably improved during the past years and the country is steadily transitioning and advancing into a new post-conflict phase, we need to continue supporting its people in their recovery and national reconciliation efforts. Particularly the more than 1.4 million Iraqis and over 286,000 refugees still affected by displacement and wishing to rebuild their lives. This generous contribution enables us to be responsive and compassionate with those that continue relying heavily on humanitarian assistance. With ongoing support, we will stand with all those affected by displacement in Iraq until complete recovery is achieved.” said Ayman Gharaibeh, UNHCR Representative in Iraq.

(Source: UN)

The Dutch Government Reiterates its Support to Explosive Hazard Management Activities in Iraq

The United Nations Mine Action Service (UNMAS) in Iraq welcomes an additional contribution of EUR 3 million (approximately USD 3.5 million) from The Netherlands to mitigate the threat posed by explosive hazards and enable the return of displaced communities to their areas of origin.

This contribution will mainly focus on the Sinjar district where one of the major problems post-liberation remains the presence of explosive hazards. Faced with military operations to reclaim the Sinjar territory in 2014, members of the Islamic State of Iraq and the Levant (ISIL) deliberately booby-trapped private residences, ensuring that improvised explosive devices (IEDs) continue to haunt the city long after they had left.

These dangerous items are everywhere. Their presence threatens lives and impedes the safe return of internally displaced persons (IDPs). As of 31 October 2019, approximately 25,400 IDPs from Sinjar district are still estimated to remain displaced, with about 11,400 households having returned (International Organization for Migration; Displacement Tracking Matrix).

These remnants of war are also a significant obstacle to all rehabilitation and reconstruction efforts. No humanitarian projects can begin if critical infrastructure such as hospitals, power plants, schools, bridges, and roads are littered with IEDs – often barely visible to the untrained eye.

In addition to explosive hazard management activities, risk education will be delivered to affected communities from the area where clearance operations are taking place, either on site or in the nearby IDP camps. The Netherlands will also support a nine-month risk education campaign that will be implemented throughout 2020 and will be measuring the long-term effect and behaviour change following the delivery of life-saving messages through different channels and targeting specific audiences.

Last week, representatives from the Dutch Embassy in Baghdad were able to see first-hand explosive hazard management and risk education activities conducted by UNMAS implementing partner in Ramadi, Al-Anbar Governorate. Commenting on the visit, Mr. Tsjeard Hoekstra, Chargé d’Affaires, underlined the essential importance of mitigating the risks posed by explosive hazards left behind by Da’esh during a dark period in the recent history of Iraq. “The work of UNMAS and its partners is crucial in the light of the safe return of those that have been displaced during the conflict, and enabling affected communities to rebuild their lives. The liberated areas, such as Anbar and Sinjar, need our continued support towards stabilization and recovery, and the Netherlands is proud to strengthen its partnership with UNMAS in this regard.”

“We eliminate the explosive threat along roads, under bridges, from power and water plants, from schools, from critical infrastructure, so that those displaced by conflict can return to their homes, begin again to work, to educate their children, to contribute to society, to live a normal life. This would not be possible without the support from our donors. We are utmost grateful for the adiitional contribution from the Dutch Government,” added Pehr Lodhammar, UNMAS Iraq Senior Programme Manager.

(Source: UN)

The Dutch Government Reiterates its Support to Explosive Hazard Management Activities in Iraq

The United Nations Mine Action Service (UNMAS) in Iraq welcomes an additional contribution of EUR 3 million (approximately USD 3.5 million) from The Netherlands to mitigate the threat posed by explosive hazards and enable the return of displaced communities to their areas of origin.

This contribution will mainly focus on the Sinjar district where one of the major problems post-liberation remains the presence of explosive hazards. Faced with military operations to reclaim the Sinjar territory in 2014, members of the Islamic State of Iraq and the Levant (ISIL) deliberately booby-trapped private residences, ensuring that improvised explosive devices (IEDs) continue to haunt the city long after they had left.

These dangerous items are everywhere. Their presence threatens lives and impedes the safe return of internally displaced persons (IDPs). As of 31 October 2019, approximately 25,400 IDPs from Sinjar district are still estimated to remain displaced, with about 11,400 households having returned (International Organization for Migration; Displacement Tracking Matrix).

These remnants of war are also a significant obstacle to all rehabilitation and reconstruction efforts. No humanitarian projects can begin if critical infrastructure such as hospitals, power plants, schools, bridges, and roads are littered with IEDs – often barely visible to the untrained eye.

In addition to explosive hazard management activities, risk education will be delivered to affected communities from the area where clearance operations are taking place, either on site or in the nearby IDP camps. The Netherlands will also support a nine-month risk education campaign that will be implemented throughout 2020 and will be measuring the long-term effect and behaviour change following the delivery of life-saving messages through different channels and targeting specific audiences.

Last week, representatives from the Dutch Embassy in Baghdad were able to see first-hand explosive hazard management and risk education activities conducted by UNMAS implementing partner in Ramadi, Al-Anbar Governorate. Commenting on the visit, Mr. Tsjeard Hoekstra, Chargé d’Affaires, underlined the essential importance of mitigating the risks posed by explosive hazards left behind by Da’esh during a dark period in the recent history of Iraq. “The work of UNMAS and its partners is crucial in the light of the safe return of those that have been displaced during the conflict, and enabling affected communities to rebuild their lives. The liberated areas, such as Anbar and Sinjar, need our continued support towards stabilization and recovery, and the Netherlands is proud to strengthen its partnership with UNMAS in this regard.”

“We eliminate the explosive threat along roads, under bridges, from power and water plants, from schools, from critical infrastructure, so that those displaced by conflict can return to their homes, begin again to work, to educate their children, to contribute to society, to live a normal life. This would not be possible without the support from our donors. We are utmost grateful for the adiitional contribution from the Dutch Government,” added Pehr Lodhammar, UNMAS Iraq Senior Programme Manager.

(Source: UN)

The Embassy of the Republic of Iraq in The Hague organized a seminar titled: “Capacity Building in the Iraqi Higher Education Sector for Sustainable Development” with the participation of a large number of major Dutch universities, representatives of the Dutch Foreign Ministry, the Nuffic Foundation for the Internationalization of Education, the Foundation for the Netherlands Universities, VNSU, and the presence of the Undersecretary of the Iraq Ministry of Higher Education Dr. Hamed Khalaf Ahmad, President of Kirkuk University, Prof. Sabah Ahmed Ismail, and President of the University of Technology, Prof. Emad Al-Husseini.

The Undersecretary presented a briefing on Iraqi higher education and the challenges facing it, calling for the importance of cooperation and efforts to support this sector, stressing Iraq’s desire to work with the Dutch side to expand bilateral cooperation, especially in the field of fellowships, joint research, exchange visits and training courses.

The President of the University of Kirkuk and the President of the University of Technology also touched on the possible cooperation frameworks needed by the two universities in environment, medicine, agriculture, water resources management, energy and humanities fields.

Participants also made presentations on universities and some international programs offered by them, affirming their readiness to increase coordination and cooperation with Iraq in this sector.

(Source: Ministry of Foreign Affairs)

 

The Embassy of the Republic of Iraq in The Hague organized a seminar titled: “Capacity Building in the Iraqi Higher Education Sector for Sustainable Development” with the participation of a large number of major Dutch universities, representatives of the Dutch Foreign Ministry, the Nuffic Foundation for the Internationalization of Education, the Foundation for the Netherlands Universities, VNSU, and the presence of the Undersecretary of the Iraq Ministry of Higher Education Dr. Hamed Khalaf Ahmad, President of Kirkuk University, Prof. Sabah Ahmed Ismail, and President of the University of Technology, Prof. Emad Al-Husseini.

The Undersecretary presented a briefing on Iraqi higher education and the challenges facing it, calling for the importance of cooperation and efforts to support this sector, stressing Iraq’s desire to work with the Dutch side to expand bilateral cooperation, especially in the field of fellowships, joint research, exchange visits and training courses.

The President of the University of Kirkuk and the President of the University of Technology also touched on the possible cooperation frameworks needed by the two universities in environment, medicine, agriculture, water resources management, energy and humanities fields.

Participants also made presentations on universities and some international programs offered by them, affirming their readiness to increase coordination and cooperation with Iraq in this sector.

(Source: Ministry of Foreign Affairs)

 

On 20th October, a handover ceremony was held at Albwardy Damen, in Sharjah, UAE, marking Damen’s delivery of thirteen tugs to Jawar Al Khaleej Shipping.

The tugs will be operated at various offshore terminals in Iraq, in a joint cooperation between Jawar Al Khaleej Shipping and General Company for Ports of Iraq (GCPI). The contract for the order was signed end of March 2019. Damen has delivered all the vessels within a seven month period.

The thirteen-vessel order consisted of four ASD Tugs 2813, two ASD Tugs 3212, three RSD Tugs 2513 – all state-of-the-art vessels from Damen’s Next Generation Tugs series – three Stan Tugs 2208 and a Shoalbuster 2609. The ASD tugs are fully equipped, including FiFi 1 and an escort towing notation.  Furthermore, the contract includes spare part packages, training, a computerised planned maintenance system and a remote monitoring system on board of all tugs.

The vessel order will serve to fulfil a 20 year contract between Jawar Al Khaleej Shipping and GCPI. The contract gives Jawar Al Khaleej Shipping responsibility for marine service at the oil terminals.

With this agreement, the two parties will secure Iraq’s ability to handle the constant flow of tankers entering and leaving the country.

Jawar Al Khaleej has been successfully providing marine services in Iraq for the last ten years, and has a modern fleet of a Damen Stan Tugs, three Damen ASD Tugs 3213 and a Fast Crew Supplier 5009.

Jawar Al Khaleej chairman Eng. Baydaq Al Jazaeri, speaking during his speech at the handover ceremony, said:

This Mission was not an easy one, it was a great challenge. However, we had a big confidence in our partner in business, Damen, who met and exceeded our expectations in making it happen despite all challenges.

“I would like to thank all the Damen team and a special thanks to Mr Bram Langeveld area director Middle East and Mr Pascal Slingerland Damen sales director Middle East for their continuous support and follow-up. Jawar is grateful to GCPI for their confidence in us for such a big contract, which is related to the economy of a big country such as Iraq.

Pascal Slingerland, Damen sales director Middle East, added:

It has been an honour to extend our long lasting relationship with Jawar Al Khaleej Shipping and to support Jawar in this prestigious contract with GCPI. On behalf of Damen I congratulate both parties on their cooperation and on the delivery of their new tugs.

“This delivery includes some of the most state-of-the-art tug technology on the market, including cutting edge innovations in safety, design and remote monitoring. We have every confidence that these thoroughly fit for purpose tugs will meet the offshore terminal requirements and enables save and reliable operation.

(Source: Damen)

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.

Foreign Minister Mohamad A. Alhakim received a copy of the credentials of the Dutch Ambassador to Baghdad Mr. Eric Strating.

The bilateral relations between Baghdad and The Hague were discussed, as well as methods for enhancing fruitful bilateral cooperation in various fields, in addition to cooperation and coordination in international forums to meet the aspirations of the two people.

Minister Alhakim stressed Baghdad’s aspiration to develop cooperation with the Netherlands in economic fields, especially infrastructure and and energy and expressed the readiness of the Foreign Ministry to provide everything possible for the success of the Dutch mission in Baghdad in the framework of the development of bilateral relations.

(Source: Iraqi Foreign Ministry)