About ICFSME

ICF-SME is an Iraqi company created with the financial assistance from USAID and the American people. USAID-Tijara is the technical advisor.

Overall Impact: Commencing operations in June 2009 with a $6 million USAID grant as starter capital, ICF-SME facilitates lending to SMEs through its private bank shareholders in two important ways:

• Through 18 months of operations at 31 Dec 2010, ICF-SME member banks had lent $15.136 million to 781 SME borrowers spread out over 17 of 18 provinces. They achieved this by only $7.0 million of resources through full utilizing of the $7.0 in grant funding, complemented with participating bank co-funding and through efficient recycling of repayments into a new “generation” of ICF-SME loans.
• ICF-SME strengthens Iraq’s private commercial bank lending culture, already evolving through USAID-Tijara’s technical and material support, to expand financing to Iraq’s small business sector.

ICF-SME Activity Diagram—How it Works

Pricing: Donor starter capital financing to ICF-SME has enabled shareholders to charge SMEs below-market interest rates, presently averaging around 10% p.a., or approximately 20% below general market rates. ICF-SME charges a 4% p.a. management fee on all allocations to its shareholder banks, leaving them a gross margin of approximately 6% p.a..

Loan Origination Dynamic: In its first 18 months (through 31 Dec 2010), ICF-SME has demonstrated a critically important loan origination dynamic built into its design and operation. With only $7.0 million in resources, it has already facilitated the creation of $15.136 million of loans, thanks both to the co-funding of individual loans and the re-lending from loan repayments by the ICF-SME participating bank network. Co-funding and re-lending are among numerous other quantitative and qualitative features which ICF-SME monitors very closely.