GroFin, with the support of USAID through a gift from the American people, is extending $1.5 million in financing to help small businesses in northern Iraq overcome the crippling impact of the COVID-19 pandemic.
Ashraf Esmael, GroFin Chief Investment Officer: Middle East, says the pandemic has placed economies under immense pressure and has hit SMEs especially hard. “The sudden halt in trading caused by strict lockdown measures has left many small businesses in Iraq’s Nineveh governate struggling to cover their expenses. We are providing them with the working capital they need to survive and to preserve jobs and livelihoods.”
The Fund offers loans of between $10,000 and $100,000 to existing businesses. The loan tenor is between 12 and 48 months, where the first 12 months is interest free and a concessionary interest rate of 5% is levied for the remaining term.
Esmael says GroFin has moved quickly to adapt its existing programme in northern Iraq to respond to the urgent financing need created by the COVID-19 crisis. In 2019, GroFin launched Northern Iraq Investments (NII) to help rebuild the local SME sector after the severe damage inflicted on the region’s infrastructure and economy when it was invaded by ISIS.
“Our work in northern Iraq has shown us that access to financing is a major obstacle for local entrepreneurs who are trying to rebuild their businesses in a very difficult environment. We knew that we had to adapt our approach in the wake of COVID-19 for NII to fulfil its goal to help grow sustainable small businesses that create jobs,” Esmael explains.
USAID has committed a total of $7.5 million to NII to support business activities and SMEs in northern Iraq as part of its Middle East and North Africa Investment Initiative. This amount includes the $1.5 million set aside for the COVID-19 SME Support Fund.
“USAID is happy to support northern Iraq businesses recover from the economic shock caused by this pandemic,” says USAID Mission Director Dana Mansuri. “This flexible small business loan program is another example of the longstanding U.S. commitment to the people of Iraq. Small businesses are an important driver of growth and recovery, and thus, our ongoing support to private enterprise and entrepreneurship in Iraq is important in helping Iraqis grow, prosper, and build their futures,” Mansuri concludes.
GroFin has been operating in Iraq since 2013 and its funds have already invested $7.5 million in SMEs in the country, helping these businesses to sustain 658 jobs. Its staff in Iraq have also provided technical assistance to over 100 Iraqi entrepreneurs, assisting them in setting up and formalising their businesses to contribute to economic growth and stability. GroFin Iraq currently has offices in both Basra and Erbil, with plans to open a third in Baghdad.