Request for Quotation for Final Independent Project Evaluation service, for the project titled “Towards More and Better Employment through Enhanced Support to Private Sectors in Southern Iraq – with a Focus on Green Business”
2. Background information
Private sector development in Iraq is challenged by several factors, as the economy is largely dominated by the oil sector, and state-owned enterprises further impede incentives for private sector growth and diversification in the wider economy. Moreover, local firms struggle to become competitive within national and international markets, and an abundance of cheap imports combined with low levels of investment has hindered the development of nascent domestic activities1. Iraq is also known for a challenging business environment, which makes it difficult for “start-ups” and/or MSMEs to flourish and expand their business in the formal economy and green businesses. According to the World Bank report in 2020, Iraq is ranked 172 out of 190 countries for “ease of doing business”2. This relates in particular to the financial and time-related costs of setting up businesses, which the report estimated take 26.5 days on average and cost about 14.6% of income per capita.
Another factor that halts private sector development is access to credit, where Iraq is ranked 186 out of 190 countries in the world. ILO research on financial inclusion from 2019 highlights several challenges to accessing credit and formal financing services3. The banking sector in Iraq is considered relatively small with limited capacity, leading to strong competition from informal financial service providers. The previous illiquidity of banks has also resulted in low levels of trust among the population in the banking sector, while private-sector banks consider many SMEs to be very high risk, thus reducing the likelihood of lending to what effectively represents most enterprises in Iraq. A survey conducted in 2020 by UNDP on MSMEs, covering Baghdad, Basra and Nineveh (where 20% of the nation’s MSMEs are located) found that only 1 percent of micro-enterprises held bank accounts, rising to 2.6 percent among small enterprises and 16 percent among medium enterprises, while 30 percent of enterprises had attempted but failed to obtain financing, and 55 percent showed reluctance to borrow4. To support SME’s access to finance, the Central Bank of Iraq initiated a “One Trillion Iraqi Dinars Initiative5” in 2014, but uptake was identified as low, partly related to the difficulty of finding bankable projects but also due to the lack of guarantee required by the banks from the MSMEs.
Lack of business management skills and financial literacy, coupled with lack of access to credit and loan services, makes it even more complex for entrepreneurs and enterprises to startup businesses in Iraq. Furthermore, Iraq’s private sector is characterized by high rates of informality and a decent work deficit.
Iraq is characterized by a “demographic window of opportunity” with a very large young population and a working-age population growing at a higher rate than the overall population, but is currently unable to catalyse on this opportunity, as job creation is not keeping up with the growing size of the workforce6. The situation is considered a “jobs crisis of unprecedented proportions”7
Despite all the above-mentioned challenges, the sector has enormous potential for growth and job creation if there is an enabling business environment for MSMEs. The ILO, having the expertise and experience globally, in the region and in Iraq, namely: building on its well-established business and financial management tools, and its previous agreement with the Central Bank of Iraq, aspires to
achieve the following two objectives while creating more and better jobs through this project in two governorates of Southern Iraq, Basra and Muthanna. These are: 1) Improve the business ecosystem for MSMEs in Iraq to grow and thrive through policy options, along with national and subnational dialogue amongst key stakeholders in private sector development; and 2) Capacitate and empower national/subnational financial and non-financial institutions to better support entrepreneurs and MSMEs to unleash their full potential.
The ILO signed the development cooperation agreement with the Italian Ministry of Foreign Affairs and International Cooperation, and the Italian Agency for Development Cooperation (AICS) dated 09 March 2023 to implement the project. The project intends to deliver the following three outcomes while aspiring to attain the aforementioned key objectives:
1. Enhanced business support ecosystem for MSMEs to grow and thrive with a focus on the green economy.
2. Improved business and financial management skills at the meso and micro levels (institutional and individual).
3. Improved financial inclusion of start-up businesses and MSMEs with a focus on the green economy.
The logical framework and Theory of Change (ToC), which depict the underlying results chain, indicators, targets, sources of verification, and assumptions regarding each project objective, can be found in Annex 1.
This project is designed to contribute towards the achievement of several objectives of the current Decent Work Country Programme (DWCP) for Iraq (2019-2023). In particular, it contributes to the achievement of Outcome 4, which is creating more and better employment opportunities, ensuring that private sector development supports the much-needed creation of new jobs.
Moreover, it also contributes to the accomplishment of some important objectives of the ILO Programme & Budget (P&B) 2022-2023, which set out the strategic objectives and expected outcomes for the organization’s work, Outcome 4: Sustainable enterprises as generators of employment and promoters of innovation and decent work. The project’s implementation is also expected to contribute to achieving the Country Programme Outcomes (CPO) IRQ 126 and IRQ 127.
Most importantly, the project contributes to the attainment of the Sustainable Development Goals (SDGs) under the UNSDCF (2020-2024) for Iraq under strategic priority 2: Growing the Economy for All, especially in what concerns the promotion of inclusive and sustainable economic growth, full and productive employment, and decent work for all (SDG 8), target 8.5 “achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value”.
All proposed activities have been looked into through a gender and disability inclusion perspective and reinforce equal consideration of women and Persons with Disabilities (PWDs) while implementing the activities.
Project management set-up and implementation arrangement: The governance structure of the project is led by a project Steering Committee comprised of concerned Ministries from the Government of Iraq (MoLSA, CBI, MoT, MoP), Social Partners (Workers’ and Employers’ organizations), Chamber of Commerce, IFI, MFI, and Trade Unions, which was established in the early implementation phase of the project. The Steering Committee has been overseeing implementation, facilitating
coordination and communication with policymakers, central and local authorities, other service providers and donors. The Steering Committee held one annual meeting to review project progress and capture lessons learned.
At the local government level, the Directorate of Labour and Social Affairs, Directorate of Youth and Sport and Directorate of Environment are the main counterparts of the project. The ILO has also been extensively engaging with Business Development Service (BDS) providers, TVET centres, development partners and civil society organisations) to strengthen collaboration in delivering services through the centre.
The project is implemented under the overall guidance and supervision of the ILO Country Coordinator based in Baghdad, with the project team based in Baghdad and Basra that includes the Project Manager and National Senior Project Officer who are responsible for overall planning, technical guidance, activity implementation, coordination, monitoring and reporting of the project in close collaboration with local implementing partners.
Operational Support Unit (OSU) stationed in Erbil and Baghdad provides administrative and financial services to the project team. The Enterprise Development and Employment Specialists of the ILO Beirut DWT backstop the project. Programme Support Unit at the Regional Office for Arab States (ROAS) – Beirut provides administrative support to the project. ENTRPRISE and SECTOR departments at Headquarters provide technical support to the project.
Short-term International/National experts services were also provided for preparing technical support, guidelines, training materials, supervision and other required assignments.
How to apply
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