CODE OF CONDUCT AND ETHICS ADOPTED AT IRAQI MICROFINANCE INDUSTRY NETWORK INAUGURAL MEETING

BAGHDAD - Leaders of 12 Iraqi Microfinance Institutions (MFIs) assembled in Baghdad recently for the inaugural meeting of the Iraqi Microfinance Industry Network. The main item on the agenda was the signing of a Code of Conduct & Ethics that mandates ethical behavior and a commitment to low-income Iraqis.

The Code of Conduct & Ethics is a governing document that will provide guidance to the Iraqi microfinance industry on ethical lending practices and consumer protection principles. Endorsed by all MFIs operating in Iraq’s 18 provinces, the code obligates MFIs to uphold core values such as high quality financial services, transparency, respect for religion, fair lending and collection practices, privacy of client information and integration of social values into business decision making.

The Iraqi microfinance industry became the first working in the Middle East and North Africa (MENA) region to formally endorse a Code of Ethics and Conduct aimed at promoting transparency and fair practices.

The Iraqi microfinance industry has seen remarkable growth in the last few years. Since 2003, it has disbursed 212,437 loans worth $488 million. As of June 2010, it had 65,830 active clients and an outstanding portfolio of $92 million. Iraq’s MFIs facilitate access to finance for a diverse range of client segments among the 1.4 million households living below the poverty line of $2.20 per day. Young people, women, internally displaced persons, micro and small enterprises and small-scale rural farmers are typical of the micro-loan client base. Islamic Al-Murabaha microfinance loans also are available upon request.

Supported by the USAID-Tijara Provincial Economic Growth Program, the representatives of 12 Iraqi MFIs created the Iraqi Microfinance Industry Network to further strengthen the microfinance industry infrastructure. The microfinance network will provide services aimed at expanding MFIs’ institutional capacity and speeding the implementation of emerging best practices. At the policy level, the network will be an advocate for an improved business enabling environment and engage government regulators on policies aimed at building an inclusive financial sector in Iraq. The network will provide the critical link between donors, MFIs, and other stakeholders, representing a central point for information sharing and collaboration.

“The Iraq Microfinance Network will be a vital institution that will serve as an advocate for the industry as well as ensure its transparency,” said Temather Hamad Kadum, Chief Executive Officer of the Al-Bashaer Iraqi Organization for Microfinance. “By working collectively we hope to create an enabling environment that will allow Iraq’s microfinance sector to become fully sustainable.”

Prior to the signing of the Code of Conduct & Ethics, microfinance industry executives discussed the future directions of the Microfinance Industry Network and its role in supporting the development of an inclusive financial sector. “We are glad that USAID-Tijara is supporting our initiative to formalize the Iraqi Microfinance Industry Network,” said Mr. Ahmad Abdul Kareem, General Manager of the Izdiharona Microfinance Institution. “This initiative is very important for maintaining the sustainability of the industry and will act as the focal point for coordinating best practices and industry development.”

According to Jeffrey Cochrane, USAID/Iraq’s Director of Economic Growth and Agriculture, the biggest benefit of Iraq’s microfinance industry is probably job creation. “I saw examples in Northwestern Iraq, for example, where a small loan of just two thousand dollars from a microfinance institution was used to buy a freezer, tables, chairs and floor tiles for a restaurant,” he said. “The restaurant owner then hired two new workers to help with the increased flow of customers.”

“Two thousand dollars for two permanent jobs in the economy,” said Cochrane with a smile. “That’s a pretty good ratio.”

Temather Hamad Kadum, Al-Bashaer Iraqi Organization CEO signs Microfinance Industry Network code of conduct as Mohammed Junaid, director of USAID-Tijara’s sustainable microfinance program and Mohamed Hajij Toama, Ramadi branch manager of the Al-Takadum Organization look on.

Photo by Saeed Lateef

Temather Hamad Kadum, Al-Bashaer Iraqi Organization CEO signs Microfinance Industry Network code of conduct as Mohammed Junaid, director of USAID-Tijara’s sustainable microfinance program and Mohamed Hajij Toama, Ramadi branch manager of the Al-Takadum Organization look on.