Financial Crime World

Financial Inclusion in Iraq: Key Findings and Recommendations

Executive Summary

The report highlights the potential for financial inclusion in Iraq, particularly among displaced persons (DPs) and host communities in Dohuk and Nineveh governorates. The findings and recommendations aim to improve access to formal financial services and promote economic empowerment.

Key Findings

  • Significant Demand for Formal Financial Services: There is a high demand for formal financial services among DPs and host communities.
  • Economic Activity and Income: The majority of households in these areas are economically active, possess legal ID/residency, and earn more than IQD 500k/month.
  • Debt and Adjusted Demand: A considerable number of households deduct debt or no interest when estimating their adjusted demand for financial services.

Recommendations

  1. Conduct Competitiveness Study: Conduct a competitiveness study on available financial services in Iraq to understand the market landscape.
  2. Promote Dialogue with Central Bank: Promote dialogue with the Central Bank of Iraq for better integration of financial inclusion strategy and industry.
  3. Stronger Banking Regulations: Support stronger banking regulations and supervision to ensure stability and security.
  4. National Financial Literacy Strategy: Enhance financial literacy among the population through a national financial literacy strategy.

For FSPs to Understand the New Market and Deal with Competition

  1. Segmentation and Appraisal: Formal FSPs need to carefully segment and appraise prospective clients based on economic participation, income generated, and total existing debt levels.
  2. Marketing and Communication: Support FSPs in improving marketing of their services and disseminating more information on access to formal finance.

For FSPs to Improve Their Management and Operations

  1. Strategizing and Market Research: Allocate resources for strategizing, conducting market/segment research, communicating internally with staff and externally with clients and partners, and monitoring performance.
  2. Crafting a Marketing Approach: Recognize the high level of mistrust among DPs and carefully craft a marketing approach ensuring that FSPs transmit an easily understood message about their services and benefits.

Conclusion

The report emphasizes the importance of understanding the needs and preferences of DPs and host communities in order to provide effective financial inclusion services. By implementing these recommendations, FSPs can improve access to formal financial services and promote economic empowerment in Iraq.