Iraq’s Al-Thiqa Recognized for High Transparency and Disclosure Standards

Country’s Second-Largest Microfinance Institution Shows Increased Capacity

In the early years, Al-Thiqa’s annual planning conference in Iraq was a joint production, with ACDI/VOCA in a leading role and the management of the institution more of a supporting role. Steady progress toward self-sustainability has been evident in recent years, but in 2011 a corner was clearly turned.

"They ran through a well-organized agenda, including an incisive SWOT analysis. It was clear they were in charge,” says ACDI/VOCA Technical Managing Director Doug Leavens.

Sustainability at Stake

Being truly sustainable for a microfinance institution is not just reaching operational and financial self-sufficiency. In order for an MFI to survive and prosper in the long run, it has to have strong governance, management and operations, and an ability to sustainably respond to opportunities and threats. For seven years ACDI/VOCA’s role has been to build the institution’s capacity to become truly sustainable.

Al-Thiqa has been operationally self-sufficient since 2007 and financially self-sufficient since 2008¹ .

Al-Thiqa received a number of awards from the USAID Tijara Provincial Economic Growth Program and the Microfinance Information Exchange (MIX) for its financial and social transparency and operations. Al-Thiqa received a high score in a recent 2011 institutional assessment by Tijara, which commented on Al-Thiqa’s progress since its previous assessment in 2008. It has $29 million in portfolio outstanding to 14,648 borrowers out of which 15 percent are women. It has 14 outlets in 7 governorates of Iraq and 146 well-trained and competent staff².

Every day Al-Thiqa is demonstrating more and more its leadership in Iraq's microfinance sector.

Beyond the Numbers—a Mindset

“But beyond the numbers,” says ACDI/VOCA Senior Technical Director Nadia Namken, “Al-Thiqa has collectively inculcated a mindset that says we are capable, we can do it ourselves. It owns the title of first Iraqi-registered and -run microfinance institution in the country, and it demonstrates its eminence every day.”

Achievements are coming fast and furious. The MFI just received a Microfinance Excellence Award 2011/Transparency in Financial Management and Operations from USAID Tijara in recognition of achieving higher transparency standards and adopting CGAP disclosure guidelines.

Al-Thiqa has passed two rigorous assessments by USAID Izdihar and Tijara programs. Its General Manager, Abbas Saedy, was recently named chairman of the Iraq’s microfinance network.

A Gender Milestone

In a development that has outsized cultural significance, three out of the nine branch managers are women. Namken says, ”I’ve worked overseas, and I’ve worked here in the States. That’s a pretty good percentage anywhere, and we see it igniting the entrepreneurial spirit of women in the Iraqi communities being served.”

ACDI/VOCA set up the locally registered financial institution in early 2004 and provided technical assistance, first under a grant from the Coalition Provisional Authority. In fact, the CPA’s capital was repurposed cash from Saddam Hussein’s personal treasure. Later Al-Thiqa received support under a number of grants from USAID and the U.S. Department of State.

ACDI/VOCA’s Current Role

Capacity building and continued expansion, both in scale and outreach, has continued under a recent USAID award under which, in a twist, Al-Thiqa serves as the prime implementer and ACDI/VOCA provides technical assistance to Al-Thiqa under a services agreement. This arrangement will cement the MFI’s role as a valuable economic development resource.

Since its inception, Al-Thiqa has disbursed 65,000 loans valued at over $85 million. Loan products include taxi loans, agricultural loans, housing loans, and micro and small enterprise loans. Loan sizes range from $500 to $25,000, with the average being about $3,200.

Learn more about ACDI/VOCA's work in Iraq.

^2. Operational self-sufficiency measures an MFI’s ability to cover its costs with its operating revenue. Financial self-sufficiency measures how well an MFI can cover its costs, taking into account a number of adjustments to operating revenues and expenses. The purpose of most of these adjustments is to model how well the MFI could cover its costs if its operations were unsubsidized and it were funding its expansion with commercial-cost liabilities.

^2.Numbers are as of the end of October 2011.

Pictured at left: Staff from ACDI/VOCA and Al-Thiqa, an Iraqi-led microfinance institution, hold an award for microfinance excellence at the 2011 Iraqi Microfinance Industry Conference.