Diana Hisham Jassem/researcher.

Executive Summary:

Official institutions in Iraq did not agree on a comprehensive definition of the subject of classifying “small” and medium enterprises, and this is due to the adoption of the capital criterion, which fluctuated (inflated) excessively; Because of the economic crises that passed through the country. The latest law issued in this regard is Law No.20 of 1998.

“Small” projects face obstacles in the degree of market development, systemic obstacles, financing obstacles, fundamental external obstacles to growth, social security problems, and a lack of clarity in government policies to support these projects.

“Small” projects in Iraq represent the largest provider of employment in the country, as about (60-70%) of local workers in the private sector work in “small” projects, and they constitute a high percentage of GDP.

The neglect of these projects led to a decline in their role in the process of growth and development, and their dependence on available local production requirements. This reality has led to the “small” industries being generally concentrated in narrow and limited industrial areas, such as the manufacture of food products, printing and publishing, and the manufacture of nonferrous metal products.

The Iraqi government and the relevant authorities, including the Central Bank, have produced a number of initiatives concerned with developing “small” businesses and absorbing the unemployed, and the necessary funds have been allocated for them. However, the requirements of compliance and its difficult conditions make it more difficult for the organizational management of this type of business and its limitation. This made the ability to organize and promote this sector difficult.

The limitation of initiatives concerned with financing “small” projects to a certain number of banks, the failure to allocate sufficient funds, and the difficulty of subduing the beneficiaries of these funds as a result of regulatory obstacles make the banking system’s ability to contribute to the “small” industries sector limited.


“Small” projects occupy a distinguished position in all economies around the globe (developed and developing countries alike); Because it has a great impact on people’s lives; Because it provides job opportunities, many goods, and services, as well as their contribution to achieving social and economic development, and technological advancement; In addition to integration with major industrial projects in the areas of (production and services), and in order to develop and innovate in these projects, programs and mechanisms must be adopted; To promote and develop “small” projects; It is necessary to provide appropriate sources of financing, as many banks in Iraq, especially commercial ones, have relied on modern methods; To facilitate the access of “small” projects to bank financing through banks establishing a bank guarantee company and the Iraqi Company for Financing “small” projects.

Banks have paid great attention to “small” projects recently; To encourage and nurture them and provide for their financing needs, banks have developed special strategies and multiple policies to deal with “small” projects, as banks grant loans to projects to achieve profits.

First: an overview of Iraqi banks

Banks of all kinds (governmental and private) are an essential part of the structure of the Iraqi economy, and they have a very important impact on its development, the pace of development, and openness to the global economy, as well as their important impact in financing investment and achieving sustainable development. Especially after all banks have started to play a commercial role, and not be satisfied or confined to the practice of traditional functions related to credit. The banking sector undertakes the process of financing financial projects through clients’ money, their participation, lending them, and financing part or all of their projects, according to the bank’s conviction of the feasibility of investment, as well as its importance to the individual or society. Banks have an important role in dealing with crises and economic problems.

Banks have importance in providing various banking services, and the most important characteristic of banking activity is its dealing with cash, and that money is its primary material represented by deposits, and at the same time, its final product is loans and various cash credits. Money is the basic material for its services represented in the forms of non-cash credit, transfers, payment of obligations, and even advisory services where money is the cornerstone.