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Iraq Seeks Financial Inclusion to Combat Crime

Despite having a banking system dominated by seven state-owned banks, a staggering 77% of Iraq’s adult population remains unbanked, with only 23% having an account at a formal financial institution. This lack of financial inclusion has led to widespread financial exclusion, which is increasingly linked to criminal activity.

The Financial Inclusion Project

The Financial Inclusion (FI) project aims to address this issue by promoting sustainable access to inclusive financial services. Commissioned by the German Federal Ministry for Economic Cooperation and Development (BMZ) and co-funded by the European Union (EU), the project will focus on:

  • Developing innovative financial products
  • Improving awareness of financial inclusion among vulnerable groups
  • Enhancing framework conditions for financial institutions
  • Increasing access to financial services for women-led businesses

Project Partners and Budget

The national partners for the project include the Ministry of Planning (MoP) and the Central Bank of Iraq (CBI). The international partner, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, will implement the initiative. The project has a total budget of €18 million, with €11 million funded by the EU and €7 million provided by BMZ.

Quotes

“The lack of financial inclusion in Iraq is not only an economic issue but also a social one,” said Jaafar Aslan, Head of Project at GIZ. “By promoting financial inclusion, we can empower vulnerable populations and reduce the risk of criminal activity.”

“We believe that financial inclusion is key to reducing poverty and promoting economic growth in Iraq,” said a spokesperson for the European Union. “This project demonstrates our commitment to supporting sustainable development and addressing the root causes of criminal activity.”

Project Objectives

The Financial Inclusion (FI) project aims to:

  • Support the development and adaptation of innovative financial products that meet the needs of micro, small, and medium-sized enterprises (MSMEs) and other vulnerable groups
  • Raise awareness about financial literacy, inclusive financial services, and financing renewable energies among target groups
  • Strengthen capacities of the Central Bank of Iraq (CBI) to promote and regulate inclusive financial services
  • Improve institutional prerequisites for financial service access by women-led businesses

Team Europe Initiative

The Financial Inclusion (FI) project is part of the Team Europe Initiative, “Sustainable and inclusive socio-economic perspectives for Iraq” (2021-2026), which aims to promote economic growth, stability, and social cohesion in the country.

Expected Outcomes

The expected outcomes of the project include:

  • The development of financial services adapted to the needs of beneficiaries
  • Improved awareness about inclusive financial services and renewable energy financing among target groups
  • Strengthened capacities of the Central Bank of Iraq (CBI) to promote and regulate inclusive financial services
  • Improved institutional prerequisites for financial service access by women-led businesses