Introduction

THE CHALLENGE

CHF International began working in Iraq in June 2003, just two months after the end of Saddam Hussein's government. The Iraqi people were facing a host of challenges in rebuilding the political, social, and economic institutions of their society in recovering from years of conflict.

THE RESPONSE

CHF International undertook three major projects in Iraq:

Community Action Program At the request of USAID, CHF began working in three governorates (provinces) in southern and central Iraq on the Community Action Program (CAP). The goal of CAP was to undertake rebuilding projects to establish a sound and sustainable physical and economic infrastructure that would have a substantial impact upon conditions in Iraq.

Access to Credit Services Initiative Owners of small to medium-sized enterprises (SME) and home-owners had traditionally been excluded from mainstream loans and other services, and had to turn to local moneylenders who often charged prohibitively high interest rates. With the aim of stimulating the Iraqi economy, CHF International created the Access to Credit Services Initiative (ACSI), a major development finance program whereby Iraqi entrepreneurs and home-owners had access to the loans necessary to expand their businesses or improve their living conditions.

Iraq Middle Market Development Foundation In 2004, the Overseas Private Investment Corporation (OPIC) saw a market gap in the finance industry in Iraq. Middle Market Enterprises - companies larger than SMEs - were also being excluded from traditional loans and were hitting a glass ceiling. CHF International worked with OPIC to set up the Iraq Middle Market Development Foundation (IMMDF) to give out loans of up to $5,000,000 to growing enterprises that showed promise in the recovering Iraqi economy.

THE LEGACY OF THE CHF INTERNATIONAL APPROACH

In the five years since CHF International began operating in Iraq, its projects have achieved great successes.

- Under CAP, hundreds of community-based, community-driven, infrastructure and economic development projects have been implemented by CHF International.

- ACSI has become the largest development finance program in Iraq, providing between 70 and 80% of the small loans granted in the country with an exceptional repayment rate averaging 99%. By the end of August 2008, ACSI had provided more than 59,000 loans, with a total value of more than $130 million, and had created thousands of jobs.

- IMMDF has loaned, at the end of August 2008, over $68 million to 33 private Iraqi enterprises, also creating thousands of jobs.

But there is an integral element of the CHF International approach that goes beyond statistics and quantitative measurement. At the absolute center of CHF's approach is the principle that every project must be demand-led, community-driven and community-owned. 98% of CHF's Iraq-based staff is Iraqi, giving the organization an Iraqi face and Iraqi sense of pride, accomplishment and ownership.

And the sense of ownership extends to the community projects under CAP. Every project undertaken is the priority and decision of the community. The community is involved in planning and funding the project, in overseeing the work done by local contractors, and the community must sign-off on the contract before anyone is paid. In order to achieve this, CHF uses a democratic methodology of discussion, voting for community representatives and decision making.

Not only does this increase the likelihood of Iraqi buy-in to the projects and thus increase their sustainability, it also introduces on the grass-roots level the experience of the democratic process. CHF International hopes that this will help to build capacity in Iraq for long-term, sustainable community participation in government-the building blocks of democracy.