By John Lee.
The International Labour Organization (ILO) has launched the Credit Guarantee Fund to empower small and medium enterprises (SMEs) in Iraq.
The scheme is a partnership with the Ministry of Labour and Social Affairs (MoLSA), with funding from the German Ministry for Economic Cooperation and Development (BMZ) through the German Development Bank (Kreditanstalt für Wiederaufbau, KfW).
The €40-million Fund, managed by the Iraqi Company for Bank Guarantees (ICBG), will enable up to €100 million in loans to SMEs, addressing Iraq’s long-standing financing gap and encouraging banks to expand lending-especially to women- and youth-led businesses.
It aims to provide 3,000 loans; create 4,000 jobs; sustain 5,000 others; and deliver financial and entrepreneurship training to 3,000 SMEs by 2031.
Full statement from the ILO:
ILO, German Cooperation, and Iraqi Partners Launch the SMEs Empowerment Guarantee Fund to Boost Inclusive Growth in Iraq
The International Labour Organization (ILO), in partnership with the Ministry of Labour and Social Affairs (MoLSA) and with funding from the German Federal Ministry for Economic Cooperation and Development (BMZ) through the German Development Bank (KfW), has launched the Credit Guarantee Fund to empower small and medium enterprises (SMEs) in Iraq.
The Fund represents a major milestone within the project Enhancing and Developing Small and Medium Enterprises in Iraq, which forms part of the ILO’s broader efforts to promote decent work, strengthen the private sector, and support inclusive growth and social justice in Iraq.
After years of instability, many SMEs in Iraq continue to face challenges in accessing finance, with collateral requirements often exceeding 100 per cent of loan values. The Fund, managed by the Iraqi Company for Bank Guarantees (ICBG), aims to address these challenges by encouraging banks to expand lending to SMEs-particularly those led by women and youth.
The launch event, held under the title “A New Page for Decent Work: Launch of the Credit Guarantee Fund to Empower Small and Medium Enterprises”, brought together high-level representatives from the Government of Iraq, the ILO, and development partners.
In his opening remarks, Mr. Ahmed Al-Assady, Minister of Labour and Social Affairs in Iraq, said:
“At the Ministry of Labour and Social Affairs, we highly value the significant role played by the ILO in supporting institutional capacity-building and developing programmes aimed at creating productive and sustainable employment opportunities, in line with the Government of Iraq’s priorities to empower vulnerable groups and promote social justice.”
The event also featured a recorded message from Dr. Ruba Jaradat, ILO Regional Director for Arab States, who highlighted the importance of the Fund as a concrete step toward inclusive finance and job creation, reaffirming the Organization’s long-standing commitment to supporting the resilience of the Iraqi economy and advancing the Decent Work Agenda.
Maha Kattaa, Senior Technical Advisor of the ILO’s PROSPECTS project, added: “This Fund represents a genuine determination to empower small and medium enterprises in Iraq to create decent jobs and achieve inclusive growth.”
The ceremony also included remarks by Mr. Amjad Fouad, Chairman of the Iraqi Company for Bank Guarantees (ICBG), Mr. Marc André Hensel, KfW Country Director and a representative of the German Embassy in Iraq, who stated: “Today we begin a new chapter in this journey. We look forward to working with all partners to ensure the Fund’s growth, deliver tangible results, and strengthen Iraq’s economic foundations.”
The event concluded with the official signing of partnership agreements between the ICBG and four participating financial institutions: the Iraqi National Bank, Bank of Baghdad, Al-Mashriq Al-Arabi Islamic Investment Bank, and Al-Aoula Company for Finance.
With an additional contribution of EUR 20 million from BMZ through KfW, the total size of the Fund now reaches EUR 40 million, enabling up to EUR 100 million in loans to SMEs in the private sector.
By 2031, the Fund is expected to:
Provide 3,000 loans worth a total of EUR 100 million, with 25% allocated to women-led enterprises.
Create 4,000 new jobs and sustain 5,000 existing jobs, including 400 jobs for women.
Strengthen the capacity of the ICBG and participating financial institutions to sustainably support SMEs; and
Deliver entrepreneurship and financial literacy training through the Start and Improve Your Business (SIYB) and Financial Education programmes to around 3,000 SMEs, helping them grow and manage their businesses effectively.
(Source: ILO)
