1. 8/16/07 8:11 AMSmall Loans Help Pave Way for Better Lives in Iraq
Page 1 of 2http://www.voanews.com/english/archive/2006-12/2006-12-08-voa…rint=1&textonly=1&&TEXTMODE=1&CFID=176280374&CFTOKEN=44288373
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Small Loans Help Pave Way for Better Lives
in Iraq
By Margaret Besheer
Irbil
08 December 2006
Besheer report (Real Audio) - Download 378k
Listen to Besheer report (Real Audio)
In Iraq, where ethnic and sectarian conflict is killing
dozens of people daily, small business loans are cutting
across ethnic and religious lines to help people move
forward with their lives. As VOA's Margaret Besheer
reports from northern Iraq, while U.S. AID-funded
programs hope to reduce poverty by giving the poor more
opportunity, they are not a cure-all for a country rocked by
violence.
In Majid's neighborhood, and in many others in Iraq, electricity is
in short supply. Here, the government provides residents only
about two hours daily, and most rely on a large neighborhood
generator to provide them with enough power, so they can cook,
wash and watch television.
But 29-year-old Majid has recognized a business opportunity in
the power vacuum, and taken a $3,500 loan to purchase a new
generator, which he says will provide more than 100 houses in his
neighborhood with electricity.
Historically, a society with a strong merchant class, Iraq's private
sector was devastated by decades of mismanagement under
Sadaam Hussein's Ba'athist party, sanctions and conflict. Coupled
with the current daily violence, Iraq seems ripe for the help
microfinance institutions can offer.
Under its umbrella program, known as Izdihar - or "Prosperity" in
Arabic - the U.S. aid agency has invested more than $30 million
in Iraq's nascent microfinance industry since Sadaam was toppled
in 2003.
Microfinance loans are usually given to people who would not
otherwise qualify for a loan from a regular bank, because the
amount is too small, or they are too poor.
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2. 8/16/07 8:11 AMSmall Loans Help Pave Way for Better Lives in Iraq
Page 2 of 2http://www.voanews.com/english/archive/2006-12/2006-12-08-voa…rint=1&textonly=1&&TEXTMODE=1&CFID=176280374&CFTOKEN=44288373
But USAID's Greg Howell cautions that such programs are not
intended to be a magic cure for Iraq's violence.
"In a conflict situation, microfinance is not necessarily a panacea,
but it is certainly a way to promote small business development
at the poorest of the poor level," he said.
Magdy Ismail runs a U.S.-based non-governmental organization's
office in the northern city of Irbil. He says the goal is not just to
help Iraqis in the short term, but to create something that will
become self-sustaining and permanent.
"Our vision is to build an Iraqi institution, to continue providing
small loans to the people and to benefit the community," he said.
Loans average between $1,200 and $2,500, but can go as high as
$10,000, or in some instances even $25,000.
Borrowers can apply for money to make home improvements, to
enhance their small businesses, or to buy a taxi or small pick-up
truck.
Despite the security situation, Ismail says, the rate of repayment
on the loans remains very high.
"The repayment rate is 94 percent, and, sometimes, according to
the security and stability situation, it does not go less than 90
percent," he said.
The standard interest rate in Iraq is about 15 percent, and most
loans must be repaid within one year.
Some microfinance critics argue that such high interest rates can
eventually make the poor poorer.
But the interest rate has not deterred 20-year-old Dilkhwaz. She
owns a small hair-dressing salon, which, she says, desperately
needs renovation and new equipment in order to succeed.
She says the $1,300 she is borrowing is much more than any of
her relatives could ever have loaned her.
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