Promotion of Small and Medium Sized Enterprises (SMEs) in Iraq

Project information

• Strategy

  The project operates through three mutually reinforcing pillars:

  1. Strengthening credit guarantee governance
     The project supports the Iraqi Company for Bank Guarantees (ICBG) to establish and manage a structured SME credit guarantee facility.
     A €21 million guarantee facility enables risk-sharing between ICBG and participating financial institutions (PFIs). The guarantee covers 75% of eligible exposure, reducing excessive collateral requirements while maintaining prudent risk management.
     The ILO does not provide loans. Participating banks lend from their own capital under national regulatory frameworks. The project strengthens the governance, risk management, and operational systems of ICBG to ensure sustainability and institutional integrity.
     
  2. Responsible SME lending frameworks within banks
     The project works with selected PFIs to:
     • Develop standardized SME lending methodologies
     • Improve credit risk assessment practices
     • Integrate environmental, social and governance (ESG) standards
     • Establish dedicated SME windows for women, youth, persons with disabilities and start-ups
     This ensures that lending expansion is aligned with responsible finance principles, labour standards considerations, and formal enterprise growth.
     
  3. Institutional Capacity Development
     Targeted technical assistance strengthens:
     • Credit and portfolio risk management systems
     • ESG compliance frameworks
     • Monitoring and reporting mechanisms
     • Data systems and management information systems
     • Business development services for SMEs
     

  The focus is on building long-term institutional capacity so that responsible SME finance continues beyond the project period.
  

• Activities

  To meet the project objectives, the project will undertake three main activities including.

  • The establishment of a credit guarantee fund within the Iraqi Company for banking Guarantees (“ICBG”).
  • The establishment of a SME window by selected private financial institutions PFIs through their own capital fund.
  • Technical assistance to capacitate the PFIs, ICBG, as well as the SMEs.
    
• Expected Results by 2031

  By 2031, the project aims to achieve the following key results:

  • 3,000 SME loans issued by participating banks, totaling more than €100 million in SME lending
  • At least 17% of loans benefiting women-led enterprises
  • 300 loans under a dedicated inclusion window (women, youth, persons with disabilities, start-ups)
  • 4,000 new jobs created, including 1,000 for women
  • 5,000 jobs sustained
  • Five participating financial institutions maintaining portfolio at risk below 5%
  • Strengthened institutional capacity of ICBG and PFIs to manage risk responsibly
• Sustainable Development Goals (SDG) Contribution

  The project directly supports four United Nations Sustainable Development Goals, with a focus on inclusive economic growth and equal access to finance.
  

  • SDG 5 – Gender Equality
  • SDG 8 – Decent Work and Economic Growth
  • SDG 9 – Industry, Innovation and Infrastructure

  • SDG 10 – Reduced Inequalities