The Central Bank of Iraq (CBI) has launched the National Financial Inclusion Strategy (NFIS) for the 2025-2029 period, an ambitious plan aimed at increasing access to and use of quality financial services for all segments of the population, with particular attention to marginalized groups such as women, youth, and micro, small, and medium-sized enterprises (MSMEs).

Current Context and Challenges

Iraq faces significant challenges in financial inclusion. Only 11% of Iraqis hold a bank or mobile money account, revealing low penetration of traditional financial services. Moreover, the financial sector is predominantly dominated by state-owned banks with limited capacity to facilitate financial intermediation. Most MSMEs operate informally, with only 14% having a commercial account, and there is deep distrust in financial institutions, marked by perceptions of inefficiency and bureaucratic service.

Obstacles also include difficulties in accessing financing, low financial literacy, and a strong preference for cash, which remains the primary payment method in Iraqi society.

Vision and Goals of NFIS

The new strategy aims to transform this reality by increasing access to and use of financial services, particularly through digital channels and fintech innovations. NFIS’s vision is to promote an inclusive, reliable, and empowering financial system that offers opportunities to all, especially vulnerable populations.

Key objectives include raising the percentage of the population with bank or electronic money accounts to 50% by 2030, halving the gender gap in account ownership, and increasing to 85% the proportion of Iraqis making digital payments.

Strategic Pillars and Facilitators

The strategy is structured around fundamental pillars: expanding the variety of financial service providers and products, fostering trust and financial literacy, and encouraging digital services and innovations. Additionally, it recognizes the importance of strengthening financial infrastructure, establishing a supportive legal and regulatory framework, and promoting collaboration between the public and private sectors.

Coordination mechanisms will be established, such as the National Financial Inclusion Committee, chaired by the CBI Governor, and specialized working groups that will oversee the implementation of the pillars and facilitators.

Progress and Potential of the Digital Sector and MSMEs

Despite challenges, Iraq has shown progress in implementing digital financial services. Over the past five years, more than 4.9 million electronic accounts have been opened, although adoption remains limited, particularly among youth. Cash continues to be the primary payment method, highlighting the need to promote digital solutions.

MSMEs, the engine of Iraq’s economy, face significant hurdles. Most operate informally, with only 14% having accounts for commercial purposes, mainly small businesses led by men. Improving their access to financing and formalization will be key to fostering their growth and contributing to economic stability.

Focus on Consumer Protection and Financial Education

The strategy also emphasizes strengthening consumer protection and enhancing financial literacy, which are essential for building trust in the formal financial system. Distrust in institutions and fears related to data privacy hinder the adoption of financial services.

Future Outlook

In conclusion, Iraq’s National Financial Inclusion Strategy marks a decisive step towards a more inclusive, digital, and trustworthy financial system. By promoting innovations and enhancing coordination mechanisms, the country aims to reduce economic inequalities and support sustainable development, creating greater opportunities for its entire population.