Livelihoods Policy Brief No. 2: Conditional Cash Grants during the COVID-19 Pandemic in Iraq, January 2022

The Iraqi economy faces a long road to recovery from several recent crises, including the COVID-19 pandemic, which disrupted labour markets and private sector functioning throughout 2020, 2021 and continuing into 2022.

Options available to policy makers to invest in the Iraqi private sector include indirect and direct support to firms, with indirect support including assistance to supporting organizations and market system enhancements, and direct support ranging from skills upgrades to training to conditional and unconditional financial support.

Analysis in this policy brief compares a sample of Iraqi small and medium enterprises (SMEs) that were winners of the Enterprise Development Fund (EDF) – a conditional cash grants programme for firms – with a sample of SMEs that did not receive grants in order to tease out significant differences in coping strategies and outcomes during the height of the pandemic that may be attributable to the assistance received. Findings are taken from the evaluation “Performance of the Private Sector When Supported by Conditional Cash Grants during the COVID-19 Pandemic”, published by IOM Iraq in November 2021.
One and a half years into the pandemic, the sampled EDF-receiving firms reported significant positive revenue and employment impact compared to before the first case of COVID-19 in late February 2020. The primary purpose of the EDF was originally job creation in the wake of the Islamic State in Iraq and the Levant (ISIL)-related damages to urban areas of Iraq. Other secondary effects of the EDF fund are resilience to engaging in coping mechanisms such as shedding workers. This suggests that direct support to firms may be a viable intervention in Iraq to combat the negative economic outcomes of COVID-19.