Iraq has launched a Credit Guarantee Fund to empower small and medium-sized enterprises (SMEs). The International Labor Organization (ILO) partnered with Iraq’s Ministry of Labor and Social Affairs to establish the fund. This initiative aims to increase financing access and strengthen the role of SMEs in Iraq’s economy.
Therefore, fund receives financing from the German Federal Ministry for Economic Cooperation and Development (BMZ) through the German Development Bank (KfW). This support represents a major investment in Iraq’s SMEs, enabling them to overcome barriers that previously limited growth. With the fund, Iraqi banks can lend more confidently to private-sector businesses.
Many SMEs in Iraq struggle to secure loans due to collateral requirements exceeding 100 percent of the requested amounts. The Credit Guarantee Fund will mitigate these challenges, encouraging banks to provide loans to promising small businesses, including those led by women and youth. By facilitating access to finance, the fund strengthens Iraq’s SME sector and promotes inclusive economic development.
The Iraqi Company for Bank Guarantees (ICBG) will manage the fund and coordinate with local banks. Partnerships are already in place with four institutions: the Iraqi National Bank, Bank of Baghdad, al-Mashriq al-Arabi Islamic Investment Bank, and al-Aoula Company for Finance. This collaboration ensures that loan guarantees reach a broad range of SMEs across Iraq.
With a 20 million euro contribution from BMZ via KfW, the fund’s total size now reaches 40 million euros. This allows loans of up to 100 million euros for private-sector SMEs, providing significant capital for expansion, innovation, and job creation. The fund also aligns with Iraq’s broader economic objectives of fostering private-sector growth, improving employment opportunities, and supporting social equity.
Overall, the Credit Guarantee Fund positions Iraq’s SMEs for growth by improving access to finance and strengthening the private sector. The initiative highlights the country’s commitment to supporting entrepreneurship, promoting inclusive development, and boosting economic resilience.