ILO and KfW Formalise SME Financing Partnership with Iraq

The Ministry of Labour and Social Affairs welcomed senior representatives from the International Labour Organization (ILO) and the German Development Bank (KfW) for a high-level visit to reaffirm their joint commitment to Iraq’s small and medium enterprise (SME) sector. The meeting, held with Minister Ahmed Al Asadi, focused on the progress of the ongoing “Promotion of the Development of Small and Medium Enterprises in Iraq” project, funded by the Federal Republic of Germany through KfW.

During the meeting, KfW announced an additional €20 million in funding to expand its support for SME lending initiatives across Iraq. Minister Al Asadi emphasised the importance of the project in strengthening economic inclusion and social equity. “Strengthening small enterprises is essential for fostering a more equitable and inclusive economic future. Through collaboration with our partners, we strive to equip young people and women with meaningful opportunities to unlock their potential,” he said. “By providing assistance and improving access to sustainable financial services, we enable them to create employment opportunities for themselves and others.”

KfW’s Country Director for Iraq, Marc-André Hensel, expressed strong confidence in the partnership and the initiative’s future. “We are pleased to see the tangible progress this project has achieved in laying the groundwork for a viable SME financing system in Iraq. Based on this success and the continued commitment of national partners, KfW is increasing its contribution by an additional €20 million. This reflects our joint ambition to boost private sector development and employment across Iraq.”

ILO Iraq Country Coordinator Maha Kattaa highlighted the project’s achievements to date, noting that a solid infrastructure is now in place to facilitate SME financing. She described the initiative as a vital step toward unlocking the potential of SMEs as engines of decent job creation and inclusive growth, particularly for youth and women. Her remarks were echoed by Osama Alkhafaji, Director General of the Department of Labour and Vocational Training, who said, “Empowering small enterprises is the key to building a fairer and more inclusive economic future. We work with a humanitarian spirit to support young people and women in realising their potential, so they can become agents of change in their homeland.

As part of the visit, the ILO, in collaboration with the Ministry of Planning and the Ministry of Labour and Social Affairs, hosted a formal signing ceremony entitled “Formalisation of the SME Financing Partnership.” Participating Financial Institutions (PFIs) including the National Bank of Iraq, Bank of Baghdad, Al Mashreq Al Arabi Bank, and First Finance Company signed agreements to join the initiative. Representatives from the Central Bank of Iraq, the Iraqi Private Banks League, the Iraqi Federation of Industries, and the Federation of Iraqi Chambers of Commerce also attended and expressed their support.

Sabah Jondi, Director General of the Economic and Financial Policies Department at the Ministry of Planning, welcomed the partnership as a model for sustainable growth. “This partnership supports sustainable employment and social protection by linking responsible investment and financial tools to fair development. It also strengthens collaboration between Iraqi financial institutions and the ILO to build a robust and inclusive economy,” he stated.

The day concluded with the inaugural meeting of the project’s Steering Committee, which brought together officials from the Ministry of Planning, Ministry of Labour and Social Affairs, KfW, and the ILO. The committee will oversee strategic direction and implementation to ensure the initiative delivers lasting, wide-reaching impact.

The ILO-KfW partnership is a critical milestone for Iraq’s private sector development, enhancing access to finance and building a more resilient economic environment: one that prioritises inclusive opportunities and decent work for all.

Source: United Nations