| 2007: Business Leaders meet to help Iraqi Banking System get back on track |
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August 5, 2007 Banking institutions are vital to any country's economy and stability. Iraqis have been working steadily over the past four years to stabilize their country's security and essential services, but some Iraqis are focusing their efforts now on the country's banking system. A bankers' forum was held and attended by more than 30 leaders from state, privately-owned banks and other Iraqi financial entities, as well as business leaders and district council members, in eastern Baghdad's Karadah District July 28. Representatives also included members from Embedded Provincial Reconstruction Team and leaders from the 2nd (Infantry) Brigade Combat Team, 2nd Infantry Division. The event was the brainchild of Dr. Muhammad, Karadah District leader, and Kathryn Herhusky, a business and financial advisor for the 2nd IBCT. "This event is Iraqi-driven and we are just here to provide support in case they need it, Herhusky said." The banking system in Iraq has not been independent in (the) past 30 years due to the former regime and recently, for security reasons. Currently in Iraq, cash is still king but the bankers in Baghdad would like to change that and not only get citizens to trust in the system, but also help them rebuild former businesses which have been lost. Unlike in the United States, where you can bump into an automatic teller machine on nearly every street corner, a number of banks in Baghdad are still not open, much less ATMs. One major concern for all attendees is the loan rates offered to restart their business. Most banks are willing to offer loans, but due to the fragility of the market and security concerns, they are asking double digits percentages in return. For businessmen like M.J.Shakery, the owner of Dijlha Leather Industry, a renowned traditional Iraqi footwear maker since 1936, the rate is too much. "A loan with lower interest rates would enable him to buy machinery, spare parts and start paying staff," he said. Shakery has six production lines that could work today and can produce more than 600 pairs of shoes per day, if fully operational. "We could hire anywhere from 450 to 600 workers soon, which would greatly help the unemployment rate," he said. Currently, personal loans rates are offered at four percent, but business loans are being offered at four times that amount, which most of those in attendance felt needed to be changed. Provincial Council Economics Chairman Dr. Shabibi, who chaired the "Iraqi Financial Institutions and their Role in Economic Reconstruction"-themed event added, "In these times of unusual circumstances, it's better to reduce the rates, get more businesses going, and the immediate objective is to reduce unemployment." "Other factors, such as investment laws, must be implemented, reduce imports and ensure everything goes through quality checks," said the president of the Industrial Union. "It is something Iraq should strive for." Many of those in attendance at the forum agreed with that assessment. While not every topic was fully agreed upon, this event is a major step to helping businesses get started since the majority of the major banks are in Baghdad. "We need to be like other countries around the world," Shabibi said at the end of the session, "and regulate interest rates to help out all Iraqis." Source: Multi-National Force-Iraq |