ILO and Partners Train Iraqi Banks to Boost Green Microfinance and Sustainability

In a strategic move to support Iraq’s shift toward a green economy while fostering inclusive growth and sustainable job creation, the International Labour Organization (ILO), with funding from Italy through the Italian Agency for Development Cooperation (AICS), successfully organized a five-day intensive training workshop titled “Making Green Microfinance Work: Managing Product Diversification”. Held from 11 to 15 May 2025 in Erbil, the workshop was conducted in collaboration with the International Training Centre of the ILO (ITCILO) and the Central Bank of Iraq (CBI).

This training is a key milestone in the ILO’s flagship initiative “Towards More and Better Employment through Enhanced Support to Private Sectors in Southern Iraq – With a Focus on Green Business”, which is also part of the Team Europe Initiative for Iraq, under the “TAUFIQ initiative.” The effort underscores the commitment of international and Iraqi partners to integrate environmental sustainability into financial practices and expand access to green finance for small and medium-sized enterprises (SMEs).

Equipping Financial Institutions to Serve Green Enterprises

The workshop in Erbil brought together professionals from the Central Bank of Iraq, commercial banks, governmental financial institutions, and microfinance institutions (MFIs). These stakeholders explored how to design, manage, and diversify financial products that are tailored to the evolving needs of sustainable SMEs.

Through technical and participatory sessions, attendees examined practical ways to:

• Develop green loan products.

• Introduce eco-focused savings and insurance schemes.

• Offer non-financial services to complement credit offerings.

• Build effective client communication and relationship strategies.

• Track and evaluate the impact of green finance products using robust assessment tools.

Linking Green Finance with ESG Principles and Market Development

One of the key components of the workshop was the focus on product diversification aligned with Environmental, Social, and Governance (ESG) standards. Participants analyzed global and regional green microfinance trends and discussed how financial services can be effectively integrated with ESG guidelines to stimulate the development of green business segments.

Additionally, the workshop encouraged financial institutions to explore new green market segments, equipping them with strategies to reach underserved enterprises that have potential for environmental impact.

Strategic Alignment with Iraq’s Vision for Sustainable Growth

The training is firmly anchored in Iraq’s broader development agenda. Dr. Ammar Khalaf, Deputy Governor of the Central Bank of Iraq, highlighted the initiative’s alignment with Iraq’s vision to modernize its financial sector and contribute to sustainable development. He emphasized that the workshop complements the ESG Guidelines issued by the CBI in September 2024, which obligate financial institutions to uphold environmental sustainability in their operations.

Similarly, Maha Kattaa, ILO Country Coordinator for Iraq, reiterated that the collaboration with Iraqi stakeholders reflects the ILO’s commitment to supporting decent work, social justice, and environmentally sound economic practices. The workshop, she noted, is a stepping stone in building a green finance ecosystem that promotes decent work, especially in the southern regions of Iraq.

A Multilevel Strategy for Sustainable Enterprise Development

The training in Erbil is part of a comprehensive, multilevel approach under the broader ILO project. This framework targets key levels of intervention:

• Macro Level: By using the ILO’s Enabling Environment for Sustainable Enterprises (EESE) diagnostic tool, the project informs the development of data-driven policies that create a conducive environment for green SMEs.

• Meso Level: The training boosts the capacity of financial and intermediary institutions to offer innovative green products, while also supporting skills development initiatives that promote long-term sustainability.

• Micro Level: Complementary programs like Start and Improve Your Business (SIYB) and Financial Education are empowering youth and green entrepreneurs. These are further supported by the CBI’s 4 trillion-dinar financing initiative, which enhances access to affordable credit for MSMEs engaged in sustainable sectors.

Next Steps: Scaling Impact and Implementation

Looking ahead, the ILO and the Central Bank of Iraq will continue to work closely with workshop participants to provide targeted technical support, aiming to roll out concrete green lending products that can be implemented within their respective institutions. The goal is to ensure that environmentally impactful SMEs are equipped with the financial tools they need to scale their operations and contribute meaningfully to Iraq’s environmental and economic resilience.

By fostering a greener, more inclusive financial sector, the initiative paves the way for long-term economic sustainability, environmental stewardship, and decent employment opportunities in post-conflict Iraq.