VZCZCXRO0762
RR RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK
DE RUEHGB #2772/01 2411437
ZNR UUUUU ZZH
R 281437Z AUG 08
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC 9106
INFO RUCNRAQ/IRAQ COLLECTIVE

UNCLAS SECTION 01 OF 02 BAGHDAD 002772 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: EFIN ECON PGOV EAID IZ
SUBJECT: PRT SALAH AD DIN:  MICRO-FINANCE PROGRAM STALLED 
BY LACK OF ADMIN FUNDING 
 
Sensitive but unclassified - please protect accordingly. 
 
¶1. (U) This is a PRT Salah ad Din reporting cable. 
 
¶2. (SBU) Summary: On 11 August, the PRT met with the Director 
General of the Ministry of Labor and Social Affairs (MOLSA) 
loan program for Salah ad Din (SaD) to gauge the status of 
the MOLSA credit program in the province.  The MOLSA loans in 
SaD show promising signs to successfully support 
entrepreneurship, but only 6 percent of the allocated program 
funding was disbursed due to the GoI,s failure to allocate 
any administrative funding for the program.  End Summary. 
 
¶3. (SBU) On 11 August, the PRT met with Ms. Veyan Ibrahim 
Bakhish, the Director General of the MOLSA loan program for 
SaD, to gauge the status of the loan application, processing 
and disbursal process for the MOLSA credit program. 
Additional areas of inquiry included identification of the 
future direction and areas of emphasis of the MOLSA credit 
facility.  Veyan reported that 1,832 loan applications were 
jointly approved by her Tikrit Office and the Central Office 
in Baghdad.  Of these applications, 657 have been fully 
disbursed on.  1,441 applications are still awaiting final 
approval from the Central MOLSA Office in Baghdad.  The 
current monthly disbursal rate on approved applications is 
between 100 and 300 while the average loan size is 3,000 
dollars. 
 
¶4. (SBU) These raw statistics suggest that when all 
already-approved and to-be-approved (1,832 plus 1,441) 
applications are funded, roughly 9,819,000 dollars of loan 
capital will have been disbursed.  This prospective and 
maximum disbursal sum is substantially less than the 35 
million dollars which was designated as loan capital for SaD 
within the MOLSA framework.  Similarly, this raw statistical 
data, when combined with the plausible assumption that 200 
loans are funded each month, suggest that it could take 
another 13 months to fund the remaining outstanding 
applications.  The inability to deploy no more than 28 
percent of SaD,s assigned loan capital in an expeditious 
manner is attributable to the fact that the GoI has not 
allocated the incremental monies necessary to pay for the 
increased staffing requirements and office equipment needs 
that new credit initiatives require if they are to be 
efficiently and expeditiously implemented. 
 
¶5. (SBU) Going forward, Veyan notes that there is a 
forthcoming new MOLSA program which, once again, is designed 
to deploy 35 million dollars of loan proceeds in SaD. 
Overlaying this new loan initiative is an additional 
requirement, mandated by the MOLSA Central Office in Baghdad, 
that Veyan,s seven-person staff must travel throughout SaD 
to assess the economic impact of each of the 3,237 loans that 
will have been disbursed.  Veyan stated that, at a minimum, 3 
vehicles and 10 additional employees will be necessary to 
fulfill this new requirement.  Unfortunately, no GoI funds 
have been designated to pay for the anticipated increase in 
administrative and reporting burdens. 
 
¶6. (SBU) Veyan also stated that she has not received any 
information about the twin Ministry of Industries and Mines 
(MoIM) credit facility, which allocated 24 million dollars to 
SaD.  She knows it is there, but has no idea who is tasked 
with administering the program.  She did not have any 
information about a point of contact and was not aware of any 
MoIM disbursements within the Province.  She also noted that 
the branch managers of the Ad Dour and Beiji offices of Al 
Rafidain Bank (disbursement agent for the MOLSA program), 
have refused to disburse on 35 and 20 approved MOLSA 
applications, respectively.  These managers explained that 
their failure to fund the approved loans was due to the lack 
of specific directives from the Central MOLSA Office in 
Baghdad, as well as the lack of technically skilled 
employees. 
 
¶7. (SBU)  Veyan is now able to identify examples where MOLSA 
loans have yielded tangible improvements in living standards 
as well as observable gains in employment.  Entrepreneurs, 
who used MOLSA grants to establish sewing shops, cell phone 
sale and service outlets, computer sale and service centers, 
food stores, iron works and carpentry facilities, have been 
particularly successful.  These entrepreneurs are well into 
their second hiring wave.  Typically, they have employed 
relatives to expand their labor pools and businesses. 
 
COMMENT 
------- 
¶8. (SBU) The low disbursement rate of the MOLSA loan program 
calls for dramatic improvement.  However, unless GoI funded 
credit initiatives begin to first direct some capital to 
program staffing and administrative support, it is unlikely 
 
BAGHDAD 00002772  002 OF 002 
 
 
that dramatic improvement will be seen.  One possible 
solution might be to base future initiatives on a hybrid 
model like the I-CERP program which has circumvented the 
GoI,s organizational weakness by combining GoI funding with 
USG organizational skills to get the money out.  END COMMENT. 
 
BUTENIS