Financial Inclusion in Fragility: Wealth, Saving, Borrowing and Lending in Iraq

Access to credit and savings are critical to a household’s resilience to shocks. Socio-economically vulnerable populations in Iraq often bear the brunt of the crises and respond by using accessible financial coping mechanisms. By having access to useful and affordable financial products and services that meet their needs, households can use them to cope with crises and invest in pathways out of poverty.

The CCI conducted a mixed methods study on saving, borrowing and lending behaviour in conflict-affected areas of Iraq to understand the characteristics of these behaviours and the factors influencing them. The findings of the research show that people in conflict-affected areas of Iraq save and borrow through informal mechanisms, such as saving cash at home or borrowing from trusted community members. Key challenges including lack of trust, accessibility, suitability and desirability will need to be addressed before conflict-affected populations will engage with formal financial institutions. Community-based saving and borrowing schemes can provide an entry-point to bolster the financial system that exists, promote good financial practices and pilot linkages between informal and formal financial service providers.