Iraqi en­trepreneurs find busi­ness suc­cess in smart­phone apps

The Hamilton Spectator - - BUSINESS - SI­NAN SALAHEDDIN

BAGHDAD — It didn’t take long for Ahmed Subhi and his friends to fig­ure out the best project to launch amid Iraq’s acute eco­nomic cri­sis. They just looked at their phones. Subhi be­came the co-founder of Baghdad’s pop­u­lar food or­der­ing and de­liv­ery app called Wa­j­bety, or My Meal.

“When we were mulling busi­ness ideas to be in­tro­duced in Iraq, mo­bile apps came first to our minds, given the wide ac­cess to In­ter­net and smart­phones by Iraqis and the ab­sence of such busi­ness,” the 40-year-old Subhi said in his of­fice in Baghdad’s up­scale Man­sour neigh­bour­hood.

As he spoke, em­ploy­ees wear­ing head­sets typed away at lap­tops, pro­cess­ing or­ders for restau­rants.

Iraq’s young, tech-savvy en­trepreneurs are find­ing busi­ness op­por­tu­ni­ties in mo­bile apps at a time when the govern­ment is strapped for cash and look­ing to the private sec­tor to cre­ate jobs.

They have seen the suc­cess abroad of busi­nesses such as food or­der­ing, ride hail­ing and on­line shop­ping, and are adapt­ing them for Iraq, where years of con­flict and eco­nomic hard­ship have taken their toll.

Oil rev­enue makes up nearly 95 per cent of Iraq’s bud­get, but the coun­try has been reel­ing under an eco­nomic cri­sis since 2014, when prices be­gan fall­ing from a high of above $100 US a bar­rel.

The seizure of ter­ri­tory across Iraq by the Is­lamic State group in 2014 wors­ened the sit­u­a­tion. Badly needed re­sources were di­verted from pro­duc­tive in­vest­ment to fight a long and costly in­sur­gency. Growth has been stunted, with poverty and un­em­ploy­ment on the rise.

Iraq has one of the most youth­ful pop­u­la­tions in the world, with about 60 per cent of its 2015 es­ti­mate of 37 million under the age of 25, ac­cord­ing to the United Na­tions.

But decades of war, govern­ment mis­man­age­ment and the fail­ure to en­cour­age private sec­tor ini­tia­tives have made many in Iraq look only to the pub­lic sec­tor as a place for jobs that pro­vide in­cen­tives and pen­sions.

The un­em­ploy­ment rate in 2016 was 16 per cent, up from 15.5 per cent in 2015 and 14.9 per cent in 2014, ac­cord­ing to the World Bank.

“Iraqis have long linked their life to the govern­ment and its bud­get, and there­fore we don’t have the busi­ness men­tal­ity, mainly among youths,” said Mah­moud Daghir, gen­eral di­rec­tor of the Fi­nan­cial Op­er­a­tions De­part­ment at the Cen­tral Bank of Iraq.

“The youths have de­vel­oped an idea that a univer­sity de­gree au­to­mat­i­cally leads to a com­fort­able pub­lic-sec­tor job,” he said.

But that sec­tor is hugely bloated, with about five million em­ploy­ees, in ad­di­tion to the se­cu­rity forces. In fact, the govern­ment has stopped hir­ing, ex­cept in health care.

In a bid to cre­ate up to 250,000 private-sec­tor jobs, the govern­ment last year started a $5-bil­lion ini­tia­tive for small, medium and large projects called Tamwil, or Finance, which is run by the Cen­tral Bank, Daghir said. The loans run for five years with in­ter­est rate of no more than 4.5 per cent.

Subhi de­cided not to seek a pub­lic sec­tor job. In 2009, he es­tab­lished his Baghdad-based IT Train­ing House Co., along with three friends. It of­fered IT ser­vices, ed­u­ca­tion and prod­ucts.

“As con­tracts with govern­ment agen­cies were not avail­able any­more, we had to find an exit,” he said.

“Then, we de­cided to in­tro­duce app busi­ness to Iraq.”

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