Smartphone apps find success in Iraq despite economic crisis

Sunday 14/05/2017
Thriving. Entrepreneur Ali al-Khateeb, the company manager of Ujra, directs his taxis in Baghdad. (AP)

Baghdad - It did not take long for Ahmed Subhi and his friends to figure out the best project to launch amid Iraq’s acute economic crisis. They just looked at their phones.

Subhi became the co-founder of Baghdad’s popular food ordering and delivery app called Wajbety — “My Meal.”

“When we were mulling business ideas to be introduced in Iraq, mo­bile apps came first to our minds, given the wide access to internet and smartphones by Iraqis and the absence of such business,” Subhi, 40, said in an interview in his of­fice in Baghdad’s affluent Man­sour neighbourhood. As he spoke, employees wearing headsets typed away on laptops, processing orders for restaurants.

Iraq’s young, tech-savvy entre­preneurs are finding business op­portunities in mobile apps at a time the government is strapped for cash and looking to the private sec­tor to create jobs.

They have seen the success abroad of businesses such as food ordering, ride hailing and online shopping and are adapting them for Iraq, where years of conflict and economic hardship have taken their toll.

Oil revenues make up nearly 95% of Iraq’s budget but the country has been reeling under an economic crisis since 2014, when prices be­gan falling from a high of more than $100 a barrel.

The seizure of Iraqi territory by the Islamic State (ISIS) in 2014 wors­ened the situation. Badly needed resources were diverted from pro­ductive investment to fight a long and costly insurgency. Growth has been stunted, with poverty and un­employment on the rise.

Iraq has one of the most youth­ful populations in the world, with about 60% of its estimated 37 mil­lion people under the age of 25, the United Nations said.

Decades of war, government mis­management and the failure to en­courage private-sector initiatives, however, have made many in Iraq look only to the public sector as a place for jobs that provide incen­tives and pensions.

The unemployment rate in 2016 was 16%, up from nearly 15.5% in 2015 and 14.9% in 2014, the World Bank said.

“Iraqis have long linked their life to the government and its budget, and therefore we don’t have the business mentality mainly among youths,” said Mahmoud Daghir, general director of the Financial Operations Department at the Cen­tral Bank of Iraq.

“The youths have developed an idea that a university degree au­tomatically leads to a comfortable public-sector job,” he said.

That sector, however, is hugely bloated, with about 5 million em­ployees, in addition to the security forces. The Iraqi government has stopped hiring, except in health care, where there is an acute lack of professionals and those with high-level degrees.

In a bid to create up to 250,000 private-sector jobs, the govern­ment last year started a $5 billion initiative for small, medium and large projects called Tamwil — “Fi­nance” — which is run by the Cen­tral Bank, Daghir said. The loans run for five years with an interest rate of no more than 4.5%.

Subhi decided not to seek a pub­lic sector job. In 2009, he and three friends established his Baghdad-based IT Training House Company, which offered IT services, educa­tion and products mainly to the government.

When government resources dried up in 2014, Subhi’s business slowed down.

“As contracts with government agencies were not available any more, we had to find an exit,” he said. “Then, we decided to intro­duce app business to Iraq.”

The Wajbety app was born in April 2014. At first, it attracted only a lukewarm response from the pub­lic and faced unexpected problems: Motorcycles carrying food orders were sometimes confiscated by authorities in Baghdad neighbour­hoods where they were not allowed for security reasons. Many Iraqis do not have access to e-mail. Some restaurant owners refused to pay the 5% fee per bill that Subhi re­quested. There were fake orders.

The company found solutions, such as using cars as well as motor­cycles, taking orders via phone or social media and using a verifica­tion process for big orders.

Now, his business is worth more than $100,000, has eight employ­ees and averages 50 orders per day.

A fellow Baghdad entrepreneur, Ali al-Khateeb, also turned to a successful foreign business model, the ride-hailing company Uber. In February, Khateeb launched an app called Ujra — “Fare.”

The company has nine employ­ees and deals with 250 drivers who pay it a percentage of the fare from each trip. He plans to hire another 50 or so employees by the end of the year and expand beyond Bagh­dad.

Khateeb, a 32-year-old father of two, promises to make Iraqis’ taxi experience simple, safe and enjoy­able.

“They don’t have to stand in the street in the very hot summer or rainy winter anymore waiting for a taxi and they don’t need to worry about their security and safety, as all our drivers are verified and have modern cars,” he said.

(The Associated Press)