The International Finance Corporation (IFC) is to provide a US$12 million loan to the Al-Ahli Bank of Iraq to boost the country's ability and capacity to provide banking services for small- and medium-sized enterprises (SMEs).

Al-Ahli Bank, which subject to approvals is 49 per cent owned by Jordan's Export and Finance Bank, will use the facility to back its SME offerings, which include letters of credit (L/Cs), money transfers, letters of guarantee and others services for the Iraqi market.

Capacity building

In addition to a senior loan of US$12 million for onlending to SMEs, the project involves the provision of technical assistance to the Baghdad-based bank for capacity building under the technical assistance component of the Iraq Small Business Finance Facility (ISBFF).

The project is the first approved under the US$105 ISBFF, which is funded by the IFC and donor agencies representing the UK, the US, Japan and Spain, and aims to build capacity in the segment of the Iraqi banking sector that services SME needs.

More to come

The Al-Ahli Bank project is the private sector arm of the World Bank Group's first ISBFF investment, but more are anticipated.

IFC Director of Global Financial Markets Department Jyrki Koskelo says the IFC "expects to do more transactions through the ISBFF to support Iraqi bank lending to smaller businesses. We intend to work with a number of local banks to develop their capacity and to strengthen their operations," he adds.

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