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Private Sector Development

CPA - Private Sector Development APO, AE 09335, USA
+1 (703) 343-8108

Private Sector Development is responsible for developing the private sector economy in Iraq, with the goal of increasing and diversifying wealth and income to provide the foundation for a stable and durable democratic government. Private Sector Development has specific responsibility for helping the state-owned enterprises resume normal operations, developing foreign investment, and stimulating growth of all businesses, particularly small and medium-sized businesses.

Current Activities

Private Sector Development is currently working to help all Iraq businesses resume normal operations. Our efforts include helping to repair damaged facilities and restore electricity and the supply of other disrupted goods and services. We are working to re-establish the availability of credit and investment capital to state-owned enterprises and private sector businesses of all sizes. We are helping to write a new set of commercial laws covering property rights, bankruptcy and company law. We are helping to streamline various registration and permitting processes and we are assisting in the formation and development of a government asset registry. We are also creating new Iraqi jobs by facilitating reconstruction, stimulating business investment, establishing private sector credit, attracting foreign investment and technology, and supporting the growth of an entrepreneurial culture.

Credit Initiatives and Loan programs

A major obstacle to the growth of the Iraqi economy, and the creation of jobs, is the limited availability of credit to the private sector.  PSD is working to alleviate the credit shortage in a number of ways.  CPA has funded micro-lending programs totaling approximately $17 million.  These micro-loans are being made available throughout Iraq, primarily through NGOs, but also directly in a few pilot programs in private banks being overseen by PSD.  For larger firms, CPA is working to ensure that Iraqi firms that win subcontracts under the supplemental will have access to sufficient credit to carry out the contracts they are awarded.  Finally, numerous efforts are underway to restore and expand the banking system and to expand their sources of funds for making loans, especially to small and medium-size firms that tend to be the most efficient creators of jobs.

Microlending programs have been established around the country to provide local business men and women with the capital to start new businesses and invest in existing enterprises.  These lending programs provide immediate funding for local entrepreneurs which creates new jobs and improves local economies. Microloans are available in Hillah, Karbala, Najaf, Baghdad, Diwaniyah, and will soon be available in Basrah, Fallujah, Samarra, Ba'aqubah, and Kirkuk. There are plans underway to expand these programs.

Business Associations

Through various business centers throughout Iraq, PSD is working to bring to bring together local businessmen.  We are also involved in other programs, such as the Destination Baghdad Exposition, that are focused on improving communication and creating business relationships between businessmen of all nationalities.

Iraq Stock Exchange

The Iraq Stock Exchange (ISX) is due to open in the first quarter of 2004.  The ISX is due to open in space provided by a local hotel on a temporary basis, before moving to a permanent site later in 2004.  A new securities law and new regulations and procedures will put the ISX in compliance with normal international standards.  A well-functioning ISX is central to the success of a new economy – for pricing and valuing companies, for companies to raise capital, for facilitating foreign investment, and for the privatization process, should that occur in the future.

Direct job creation

PSD is committed to ensuring maximum Iraqi participation in the execution of the Supplemental.  We are working to see that jobs at all levels (i.e. low skill, professional, engineering and managerial) go to Iraqis and Iraqi companies that employ Iraqis. We believe the following is important to achieve those goals: training for Iraqi companies (e.g., RFP bidding, reporting procedures, loan application and other business training), training for Iraqis (i.e., professional and vocational skills training, licensing, certification, etc.), providing credit to Iraqi companies, ensuring that contract requirements aren’t unnecessarily onerous to Iraqi bidders, developing an effective communication strategy and registering Iraqi companies with Prime contractors.  PSD is working on all those fronts to make Iraqi participation a reality.

Training programs

PSD is working on a number of training programs that will help to rejuvenate the private sector.  We are developing management training to include modern accounting, budgeting, marketing, labor and contract law. 

As part of our micro-lending initiatives, we are also developing a program to train Iraqi private banking credit/ loan officers.  The first program will be implemented in the Tikrit and Fallujah areas.  Follow on programs will be implemented across Iraq

In addition, the Ministry of Labor and Social Affairs is working on repairing and upgrading vocational training centers throughout Iraq.

Corporate registration and commercial laws

In order for Iraq’s formal economy to flourish, the difficulty of establishing a business, whether foreign or domestic, must be reduced.  The first step to becoming a company is registration with the state, which historically has been a laborious and confusing process in Iraq.  PSD is working with the Ministry of Trade to streamline the procedures and eliminate many of the difficulties related to corporate registration.  PSD is also helping to review and revise other commercial laws and regulations.

Foreign investment

A new Foreign Direct Investment laws was passed in September, permitting unrestricted ownership of Iraqi companies by foreigners in most sectors of the economy.  Foreign ownership is not permitted in oil and mineral extraction or initial processing.  The retail sector allows 100% foreign ownership, but US$100,000 must be deposited in a licensed Iraqi bank prior to conducting business.  Foreign capital and expertise are essential for rebuilding the Iraqi economy and generating private sector growth which will provide the jobs and higher incomes sought by all Iraqis.  PSD is working to ensure an environment necessary to attract foreign investment is established and is fair to all investors, regardless of nationality.

PSD Programs and Services 
Business Opportunities and Support


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