Tuesday, May 21, 2019

Postwar Business Situation In Mosul

(Mosul Eye)

Mosul was one of the most heavily damaged cities in Iraq after it was liberated in 2017. The business sector is trying to revive itself but facing major difficulties. That includes the aftermath of the fighting, spotty services, high costs, the lack of credit, and trying to rebuild markets.

During the Islamic State occupation of Mosul and the battle for its liberation many business closed down, and faced a new environment afterward. 46% of businesses said they had suffered war damage and looting. Construction, textiles and metalworking firms said they had been effected the most by destroyed facilities and stolen property. Now that they are trying to re-open they are having problems getting consistent supplies of electricity and water. Companies said they spent up to 50% of their budget paying for services, which are not being delivered. The government has no rebuilding strategy to restore these services. Roads, bridges, etc. are also damaged and need to be fixed as well, but are not. Iraq’s banks have never done a good job offering credit, especially to private owned firms. The largest banks are state run and tend to only gives loans to state owned enterprises. That means companies can’t get access to money to make repairs and replace stolen equipment. The lack of leadership from Baghdad means that the city’s infrastructure will be a in poor state for the foreseeable future. Not only that, but companies are hampered by their bills, which means they don’t have enough to carry out their own investments.

The government has put much more effort into security in post-conflict areas like Ninewa, and that is adding more challenges. There are a plethora of checkpoints along all the major routes through the province. The security forces are notorious for using these as a cash cow, charging illegal taxes on all those passing through. This was always an issue in Ninewa, but now there are even more checkpoints putting additional costs and time on Mosul firms to get their supplies or send their products out.

Mosul is also being flooded by cheap imports. Most of these are coming from Turkey and Iran. They are competing with domestically produced goods such as food and textiles. That is severely cutting into the sales of local companies. This has been an issue for Iraqi companies since 2003 when the Americans got rid of most of the country’s tariffs. The arrival of new foreign products into Mosul however comes at an especially bad time as it could lead to a loss of businesses when the city is attempting to revive. This can only be addressed through government action, but again there is no urgency in Baghdad.

Businesses have re-opened in Mosul, but they are facing a sea of trouble. They don't have the cash or credit to rebuild, and are facing rising costs along with cheap imports that are cutting into their sales. This all calls for the government to intervene, but other hand security, which is actually making the situation worse with checkpoints, no help is coming from the central authorities. This situation is being replayed across other war torn areas of the country. Companies are trying to make a comeback, but are facing a plethora of issue that will make that effort long and hard.

SOURCES

International Organization for Migration, “Mosul Emerging Markets: Opportunities and Challenges,” December 2018

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