Economic reforms : Iraq is making some progress in building the institutions needed for an open economic environment. This legislation includes a hydrocarbon law with two basic aims: a establishment of a modern legal framework to allow Iraq to develop its resources and b enactment of a revenue sharing law to equitably divide oil revenues within the nation. However, challenges of doing business in Iraq abound. As it stands, Iraq rates as one of the worst places in the world to do business, languishing at out of countries, according to a World Bank report.
For starting a business Iraq ranks even lower, at Yet, this has not deterred foreign businesses from coming in. Some of the specific problems are:. Security : The first and foremost problem is security. A shaky federal government, rife with bitter sectarian and political fights, together with weak security services, have allowed militia and insurgent groups to assert themselves time and again, although the incidence of violence has dramatically decreased since the height of sectarian fighting of — Iraq still remains a high-risk place to invest with possibility of renewed violence and political instability.
The security situation in the Iraqi Kurdistan Region IKR , which includes the provinces of Sulaymaniyah, Irbil, and Dahuk, has been more stable relative to the rest of Iraq in recent years, though threats remain. Corruption : As is the case with most developing economies, corruption in Iraq remains high.
Problems in Iraq include a lack of transparency in government regulations, government involvement in bribery and preferential tenders, embezzlement of public funds, a weak judicial system, feeble role for public opinion and the media in confronting corruption, and the ineffectiveness of public sector anti-corruption efforts.
The National Endowment for Democracy in its Iraqi Business Survey Report [3] , names corruption as the topmost factor hindering the growth of the Iraqi business sector. Government contracting is one area where businesses perceive a high level of illegal activity, especially when it comes to contract grants, raising question of crony capitalism rather than free and open competition.
Across the board, there are institutional capacity issues with regard to due diligence, project award, approvals, implementation, financing, and payment. Unequipped banking system : If Iraq is to attract substantially greater foreign investments, banking sector reforms are imperative.
Althoughthe banking sector assets have grown rapidly over the last five years owing to massive oil revenues, banking infrastructures and operations have not kept pace with economic expansion. State-owned banks are inefficient and ridden with bad debts and old losses. Despite being awash with liquidity, they have remarkably low lending rates as compared to the plethora of small, privately owned banks that are undercapitalized and therefore do limited lending.
This highlights an urgent need for a level-playing field for competition from the private sector. Intellectual Property Rights IPR issue : Enforcement and protection of intellectual property rights is another area of concern for business in Iraq. The IPR function is spread over several ministries, which thwarts a coherent policy. Investment in Iraq continues with many international players injecting billions of dollars into the country, as a result of the Investment Law in granting foreign investors the same rights as Iraqis.
Download Brochure. Foreign investment in Iraq is protected Investment in Iraq continues with many international players injecting billions of dollars into the country, as a result of the Investment Law in granting foreign investors the same rights as Iraqis. This analyzes the constraints and drivers of growth and recommends policies for more diverse and inclusive economic models. The framework lays out the main development goals it will support in Iraq and proposes a series of strategic interventions to help the country respond to the pandemic, reform the economy, and rebuild its human capital.
It is organized under two pillars: i improved governance and public service delivery, and private sector participation; and ii strengthened human capital, into which corporate priorities such as citizen engagement, gender equality, and climate change are mainstreamed. The framework of the CPF will be implemented in two phases to allow the flexibility to adapt to changes over the five-year period.
The HD-PER offers evidence-based policy recommendations to inform urgently needed reforms to spur human capital development in the sectors of health, education, and the pension system. The I3RF provides a platform for financing and strategic dialogue for reconstruction and development, with a focus on targeted national reforms and public and private investments in sectors involving socio-economic recovery and reconstruction.
It also aspires to support gender equality, peace building, and citizen engagement. The Fund has played a key role in policy dialogue around reforms in Iraq. Its analytical work provided evidence which informed the GOI reform program, also known as the White Paper. Currently, its focus is on operationalizing the White Paper to support the GOI in making concrete advances in various sectors.
The analytical work funded by the I3RF contributed to informing discourse and programming on economic diversification, the business environment, poverty and vulnerability, the agri-food sector, and education policy in Iraq.
In , the Fund is expected to move ahead with the implementation of recipient-executed projects, based on the analytical work initiated in in collaboration with the GOI. The project aims to strengthen institutions for integrated urban water management and utility management, and to create an enabling environment for private sector management and investment in drinking water supplies and wastewater infrastructure.
In doing so, it supports broader objectives of decentralizing services. A recipient-executed grant to promote the social and economic inclusion of at least 3, conflict-affected Iraqi youth ages 15 to 29 through entrepreneurship and youth-led community development activities.
IFC is looking to expand into infrastructure, gas capture, and Renewable Energy. Additionally, IFC will focus on investment opportunities in financial markets, manufacturing, agriculture, and other sectors. On the advisory front, IFC has a wide program that covers capacity building for banks and financial institutions including Small and Medium Enterprises banking, digital financial services, and risk management , as well as corporate governance and Private Public Partnership engagement.
IFC is also collaborating with the World Bank and working with other development partners through the Prospects Partnership, which supports entrepreneurship, to help Foreign Displaced Persons and Internally Displaced Persons and vulnerable host communities.
And, in FY, it supported a port logistics project in Umm Qasr. The Project Development Objective is to improve road transport connectivity and safety on selected road sections along Expressway 1 and the north-south transport corridor in Iraq.
The Iraq Human Development Public Expenditure Review builds on existing data and exerts an exceptional effort to collect spending and sector information amidst a data scarce and fragmented environment. The Spring issue of the Iraq Economic Monitor provides an in-depth review of the latest macroeconomic and policy developments in the aftermath of COVID and the collapse in oil prices. The substantial borrowing that MENA governments incurred to finance health and social protection measures increased government debt.
Countries must continue spending on health and income transfers, which will add to New report highlights what Iraq can do to sustain future growth, and shows why it has not managed to achieve high growth alongside peace, stability, and better standard of living for the Iraqis.
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