An innovative bank helps shape the future for Iraq’s small businesses
In the heart of Mosul, where the echoes of conflict still linger, Muhamed Hamid is helping rebuild his community. Nearly three years ago, Hamid launched an app called ‘Daw’ (meaning ‘light’ in Arabic) to support an essential group of entrepreneurs that run generators to provide electricity to other small businesses, as well as residential customers, in a city often plagued by power outages. With his app, Hamid sought to digitize their financial operations.
With limited resources and only a laptop to his name, Hamid began designing and developing Daw on his personal computer in 2021. As the app gained traction, he transitioned it to a mobile application that can streamline operations and integrate accounting functions.
Daw quickly became a valuable tool for business owners, automating their operations and converting cumbersome paper records into digital formats. “Invoicing is now done through the app, which provides immense convenience,” Hamid explains.
To support his growing business, Hamid recognized that he needed additional funding. He found an opportunity through a joint grant and loan program offered by the National Bank of Iraq (NBI). “NBI’s funding helped us further develop the app and invest in business development,” and eventually hire 5 new employees, Hamid explains.
Despite the challenges of persuading traditional generator operators to transition to a digital system, satisfied customers began referring Daw to their peers. “Initially, it was hard to get them to trust technology,” Hamid admits. But as the app demonstrated its value, users began to rely on it for their day-to-day operations. With lingering post-war security concerns, Hamid’s users appreciated the various features available on the app, including secure communication, online transactions and remote access.
“The feedback from generator owners has been overwhelmingly positive,” he states, proud of the impact his work has had. Hamid is excited about Daw’s future and aims to boost efficiency, integrate electronic payment systems in his app, and expand to other provinces.
Small Businesses, Big Opportunities
After four decades of conflict and instability, Iraq is still recovering from a complex mix of challenges, including security and geopolitical risks, an economy heavily dependent on oil exports, and weak private sector infrastructure.
Small and medium-sized enterprises (SMEs) are vital to Iraq’s economic growth and job creation. Nevertheless, these vital businesses face an estimated financing gap of $6 billion and receive only about 9 percent of the country’s overall bank lending, according to a 2021 IFC survey.
Iraq also has one of the youngest populations in the world, with almost 70 percent of the population under 25 years old. About 700,000 young Iraqis enter the job market each year, and youth unemployment is estimated at 32 percent. With better access to credit, SMEs can create the employment opportunities needed to absorb a young and growing population.
A Bank’s Strategic Vision to Empower Iraqi SMEs
The opportunities for private sector growth are significant. Only about 5 percent of SMEs in the formal sector have received a bank loan, while just 18.5 percent of individuals have personal accounts.
NBI, with support from IFC, has made it its mission to provide financial services as well as enhance the digital and educational resources available to entrepreneurs.
In addition to expanding physical services, including opening 15 new branches and hundreds of new ATMs in the past 5 years, NBI has also invested in digital transformation initiatives to improve customer experience and promote financial inclusion, supporting the shift from a cash-based economy. “We recognize that a cash-based economy is not enough for growth. We’re working to transition Iraq towards a credit-based system,” explains NBI CEO Ayman Abu Dhaim. “We’re investing in a new core banking system that ranks among the best globally,” Abu Dhaim says. “This will streamline daily transactions and help our SMEs to manage their finances more efficiently.”
NBI has also introduced a variety of credit facilities and products tailored to different sectors, including healthcare, education, and agriculture, and is leading the way when it comes to supporting women-owned businesses.
The partnership between IFC and NBI, initiated in 2020, receives blended finance support from IFC’s Global SME Finance Facility (GSMEF), funded by the United Kingdom and the Netherlands. IFC’s funds were blended with those from GSMEF to lower NBI’s borrowing costs, enabling the bank to offer more affordable interest rates to small businesses. GSMEF’s advisory services helped NBI scale up its SME lending operations by developing tailored products and an SME-focused credit scorecard, which enabled NBI to extend loans to SMEs that would otherwise have been rejected, particularly in underserved regions.
With financial and advisory backing from IFC and GSMEF, NBI has steadily increased its lending to SMEs, providing $94 million in loans to over 1,200 businesses, creating thousands of jobs.
Each success reinforces Abu Dhaim’s belief in the power of small businesses to drive economic recovery. “We’ve learned that providing advice and technical support is crucial,” he notes. “These are not just loans; they’re investments in the future of our economy.”
For nearly a decade, Dalia Samir Mohammed Al-Baghdadi, Director of NBI’s SME Department, has been involved in reshaping the financial landscape in Iraq. Her commitment to fostering entrepreneurship, particularly among women, has made a significant impact in a country where women face unique barriers.
“Many potential clients lack access to basic financial education,” she explains. “They don’t prepare financial statements or understand accounting principles, which makes it hard for them to secure funding.” Still, she adds “Women are often more committed to paying back loans. They bring a level of organization and dedication that can drive projects to success.”
To address existing barriers, NBI launched workshops to educate aspiring women entrepreneurs and pushed for initiatives targeting women-led projects. “With ongoing support from IFC and other financial institutions, we are set to significantly expand our funding programs. We want to ensure that every project we fund has the tools to thrive,” she adds. Al Baghdadi has seen firsthand how empowering women not only creates jobs but revitalizes entire communities.
Blooming Hope: The Story of an Interior Landscaper in Baghdad
A decade ago, interior landscaper Minn Ali found her calling. Iraq was still grappling with instability, and for many, the primary concern was daily survival—providing food and shelter took precedence over beautifying one’s surroundings. Yet for Minn, plants represented growth, hope, and the possibility of a brighter future.
Inspired by this vision, she launched her business, ‘Step’, an interior design company that specializes in creating green spaces in a city that had long been deprived of them.
Starting the business was not without its challenges. Minn faced the dual responsibilities of running a company and caring for her young child. As a woman in a male-dominated society, she encountered skepticism and distrust, making it difficult to establish her clientele. “I had only my work to prove my skill, sincerity, and dedication,” she recalls.
Word of mouth became Minn's most powerful ally. As clients witnessed her high-quality work, they began to recommend her services. Social media also played a pivotal role in showcasing her floral designs and reaching new customers.
Despite the success, Step operated primarily on a cash basis. Minn found that almost all her clients preferred cash payments, with electronic transactions accounting for only about one percent of her business. While familiar, the cash-only model made her anxious. “I always worried about being followed home after collecting payments,” she admitted.
On a trip abroad, Minn noticed how effortlessly materials could be purchased with a credit card, sparking an idea. She envisioned importing products that could enhance her offerings, but the lack of funding held her back. Determined to seize the moment, Minn decided to take a loan.
Initially hesitant about financial commitments, she found the process with NBI straightforward and efficient. “Dealing with the bank was incredibly easy. They facilitated the transfer of funds quickly, and I realized I could get my own credit card for even more convenience,” she says. “This access to capital allowed me to expand my promotional efforts and invest in essential equipment instead of renting.” With no collateral needed, the loan process felt seamless, and she was relieved by how manageable it was.
Each time Minn walked into a space and heard compliments about her work or saw it featured on television or social media, she felt a surge of pride. It affirmed her belief in the transformative power of her business. “That kind of recognition boosts my spirits and gives me a profound sense of accomplishment,” she shared.
With the streamlined support from NBI, Minn has continued to grow her business, which now employs 15 people, and remains committed to fostering hope and beauty in her community, one plant at a time.
Wings of Freedom: An App Transforming Iraqi Travel
Young entrepreneurs across Iraq continue to transform the country’s economic landscape with the use of technology. Among them is Mustafa Alwan, who is helping his fellow Iraqis reconnect with the world through travel. His brainchild, Kawenter, is a travel app that simplifies the process to apply for travel visas. His goal is to open doors for Iraqis longing to explore the world beyond their borders.
Kawenter launched in 2022 and quickly gained traction among users in Middle Eastern countries like the United Arab Emirates and Qatar. “For Iraqis, traveling abroad is often fraught with challenges due to a weak passport,” Alwan explains. “They face bureaucratic hurdles, long wait times, language barriers, and high rejection rates.” To address these issues, Kawenter details visa requirements by country, translates forms and instructions into local languages, and organizes the necessary documentation for users. Currently, the app supports visa applications for 180 countries, in addition to offering travel insurance, tips, and holiday planning.
Alwan’s motivation for creating Kawenter was personal. He envisioned a future where Iraqis could enjoy travel freedom, exploring new cultures and experiences. However, the journey was not as straightforward as he had hoped.
Initially, upwards of 70% of his customers were based outside of Iraq. Kawenter chose an international payment portal to navigate the challenges of e-payments, which often come with high fees and rigid structures. However, he then faced obstacles with the payment portal in Iraq as most Iraqis lack access to online banking and credit cards. Alwan chose to partner with NBI, as the only bank in Iraq offering online services at that time with a focus on expanding digital resources for entrepreneurs, which proved crucial for his business's domestic growth. “With a loan from NBI, my company was able to expand operations, enhance marketing efforts, and access valuable training services.”
Today, Kawenter is thriving, with approximately 200,000 registered users. In recent months, over 55 percent of these users were based in Iraq. Alwan reflects on the evolution of the banking landscape, stating, “When we started, securing a loan was incredibly difficult. Now, the banking system is becoming more reliable.”
Looking ahead, Alwan is enthusiastic about Kawenter’s potential. With a dedicated team of 17 employees, he plans to introduce translation services for Iraqis applying for visas requiring translated identity documents. Alwan firmly believes that enhancing travel freedom for Iraqis will empower them to explore new opportunities and build new connections with the global community.