The two-day Iraq Finance Expo was opened at Baghdad’s Al Rasheed Hotel on Wednesday, in coordination with the Central Bank of Iraq (CBI) and the Ministry of Finance, to allow access to new business opportunities in financial and banking sectors as well as financial technology and digital transformation in the country.
Iraq’s White Paper, a series of economic reforms introduced by the government in October, “identifies Iraq’s oil-dependent state-dominated command economy and weak private sector as central economic problems,” Ambassador Matthew Tueller said during the conference, reaffirming the US assistance to Iraq in its journey of rebuilding itself from years of war.
In the financial sector, the monopoly of Rasheed and Rafidain bank, and Trade Bank of Iraq “which holds 85% percent of deposits” was identified as an issue by the US official.
The Iraqi Central Bank announced in early February that it has given permission for a “first of its kind” electronic banking service to be rolled out across the country over the next few years. The new service seeks to revolutionize the way Iraqis spend money by providing an alternative to the cash economy currently prevalent across the country.
Similar projects as part of a growing financial technology industry have been hugely successful across the world in countries where the cash economy was entrenched. In Kenya, M-Pesa, a mobile phone-based money transfer, payments, and financing service launched in 2007 has expanded into neighboring countries.
However, the Iraqi banking system riddled with bureaucracy only allows for citizens to open bank accounts in person and only after offering documents and going through a cumbersome process.
Only 23 percent of Iraqi households have access to an account at a financial institution, one of the lowest levels in the Arab world, according to data from the World Bank.
Most companies in Iraq still operate in cash, with only 26 percent using the formal banking system. Roughly 98% of employers pay in hard currency and nearly half pay their suppliers that way.
