Middle East

IRAQ : SP

TLIGHT

When businesses talk of Iraq, the word you will hear is always potential. And in part its true. Now the combat is over and Iraq is heading slowly towards peace and prosperity, the country is ripe for companies looking to gain a foothold as various industries start to pick up. To test market opinion on Iraq, we interviewed 29 IT and business professionals, asking if they thought the country was on the verge of a boom, and whether IT Iraq presents an opportunity for foreign companies. Many were from the US but many had on the ground experience of Iraq, for example serving with the Army.

Yes 45%

No 55%

No 34%

Yes 66%

Do you think the IT sector in Iraq is about to boom?, source: IDG Connect

Do you think IT in Iraq presents an opportunity for foreign companies?, source: IDG Connect

Findings
Currently Iraq is still a recovering market, and so gathering a wide-selection of opinions proved difficult. Although the sample group is relatively small, the first-hand knowledge of the interviewees provides valuable insight into the country. The personal opinions of the responses vary, but help paint a larger picture. The general consensus was that Iraq would inevitably recover, with much of its growth powered by the countrys natural oil reserves. But before that could happen there were various issues that needed addressing. Infrastructure was cited as the major barrier for investment, with the ex-Army respondents in particular commenting on its low quality and lack of maintenance. Skills shortages were cited as a barrier for recovery. One interviewee explained how Many of the educated [and] tech oriented Iraqis have left the country, and that as long as there is continuing unrest, both the educated Iraqis and foreign investment would stay away. Security was identified as a major worry. Responses showed the repeated public attacks are putting companies off from establishing themselves in the region. One interviewee called being in Iraq a very scary thing at the moment. However some respondents did indicate that there were some green shoots of recovery, saying, Businesses are starting to pull their acts together, and will need IT solutions that outside consultants can bring in more quickly than local staff can develop.

Businesses are starting to pull their acts together, and will need IT solutions that outside consultants can bring in more quickly than local staff can develop.

Other factors mentioned included Iraqs unstable political landscape, economic fragility-one respondent warned that the currency was about to explode- as well as corruption and the current social climate.

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Background
The war has left a metaphorical clean slate for investment, and many companies, especially US ones, are looking to find a niche for them to invest into. But much of this information is outdated or lacking depth, meaning its very difficult to know what the state of play really is within the country. A 2006 report from the US over possible investment was pretty vague about the telecoms and IT industry, simply explaining, The lack of modern office equipment or computers, and antiquated bookkeeping and accounting systems, retard the development of small and medium sized enterprises and then went on to describe the lack of infrastructure and fixed land networks. More recently a 2012 business guide didnt paint a much better picture, saying, Infrastructure for IT services remains underdeveloped in most parts of the country. Universities have limited Internet capacity, most university faculty does not have regular access to computers at work; computer labs for student use are inadequate and often non-functional. Many university faculty and staff lack basic computer skills and Internet experience. Outside of major urban centres, many academics and students do not have email addresses. Although it did point to the countrys embracing of wireless communications and a more tech-savvy youth as a plus point.

Outdated information
Iraq

One of the major barriers when researching Iraq is the sheer lack of up to date information. Most data available is out-dated and on many IT reports and studies Iraq is simply not included, making it very hard to know where Iraqs standing in the IT world actually is. Between old business reports and sketchy government data, its incredibly difficult to do anything other than paint a bleak picture of the country. Although with time and effort useful information can be found, much of it is far older than it should be for such a fast-moving industry.

Signapore Russia US

15% 44% 55% 85% Average percentage of Iraqi firms with their own website, source: [Iraq, Russia]

EnterpriseSurveys.org, [Singapore] iDA Singapore, [US] National Small Business Association

Iraq today
From the stats that are available, it seems the country has a long way to go before it catches up with many of its Middle Eastern neighbours. A 2011 Word Bank survey shows that on average only 15% of Iraqi firms had their own website, and 21% used email to communicate with clients or suppliers, though this seems to be a problem for SMBs rather than larger enterprises. These figures are incredibly low, even when compared to other countries with limited infrastructure and low Internet use.
Iraq Zimbabwe Russia

21% 79% 86% 95%

US

Average percentage of iraqi firms who use email, source: [Iraq, Russia, Zimbabwe] EnterpriseSurveys.org, [US] National Small Business Association

For the rest of the public, there is relatively low computer and Internet use. In 2008 around 14% of the population owned a computer, with just under 6% of the population using the Internet, equating to around a million people, but this rate is growing fast. Mobile ownership is much higher than computer, with around 20 million owning mobile phones, compared to just over one million for landlines. Calls and text are by far the most common uses, with using games, photos or music used by around a third of people.

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According to stats from the Iraq governments site, in 2009 20% of people aged 19-24 and 18% of 25-30 year olds rated themselves as having a good knowledge of using computers. But this figure drops dramatically to 12% of 15-18s and just under 5% in 10-14s. Those on the Internet have a high engagement with social media72% of Facebook users in Iraq are between 18 and 34 (13-17 make up 11% while 35- 60 make up 17%). Clearly if this is accurate there is a need for the next generation to be trained and educated in how to use the technology, especially if Iraq wants to become a major player in the IT sector. Much of the Middle East suffers from high rates of software piracy (generally hovering around the 50% rate) but the last records for Iraq in 2007 put the number at a massive 85%, with an estimated value of $124 million. Its unlikely that this has reduced much since then, as the piracy rate among other Middle Eastern countries has stayed relatively stable and its hard to foresee any major changes.

Expert Opinion
Dr Salah Shakir CEO of STHBusiness
After Iraq became a new country in 2003, it was in need of major rebuilding. Between 12 years of embargos and the war, most of the countrys services and infrastructure were either outdated or damaged, including its IT sector. Huge amounts of work is needed to bring the back country into normal operating conditions; Electricity, water, internet, roads, bridges, new housing, new laws, and many more are all in need of fixing to make the country liveable. I wanted to work as an IT consultant in Iraq in 2004, but it became impossible due to internal civil and ethnic war from 2004-2008. A few major construction projects occurred during these years with the help of US military services, but Iraq will need over five million new housing units to accommodate the growth of population and the return of Iraqis who left the country during the old regime and the war. As of 2012, Iraq has only 20-40% of supply of power to the public. These are only a couple of examples of where the country stands today, but Iraq will be rebuilding for the next two decades at least. I started working full time as an IT consultant in Iraq since 2010 and I would like to share my experiences, difficulties, and thoughts about its IT sector and the opportunities open for foreign companies. I believe the IT sector in Iraq is booming, and there is a great need for high tech expertise to accomplish the thousands of IT projects that exist today and for the next few decades. There are issues and problems that need to be solved by the Iraqi government to make the country move forward, such as corruption and bureaucracy. Other challenges stalling progress include the enforcing of digital copyright. I have seen many stores in the past few months start selling copyrighted software at retail prices such as anti-virus and some Microsoft products. However, some good recent good news was the Microsoft Company announcing two months ago their new partner/dealer in Iraq. Government officials corruption and bureaucracy are other challenges facing the country and threatening its progress. If you plan to work in Iraq, spend time on networking with officials and people in general. Most of the government agencies accept well planned IT proposals that will benefit the country, but I have talked to many officials and they have told me many times they do not know what IT projects they really need to move forward.

Conclusion
Iraq is still finding its feet in the digital word, and the general consensus seems to be its still a way behind adopting the Internet and the infrastructure required to have a competitive business climate. But the high numbers of mobile devices mean it could be possible for the country to skip a boom in home computers and catch up to the rest of the world on adopting mobile as the chief means of accessing the Internet and communicating through smart phones or tablets. Our research shows divided opinion on whether Iraq is likely to boom, but the majority of participants we spoke to do believe there is a clear opportunity for foreign businesses.

About IDG Connect

IDG Connect is the demand generation division of International Data Group (IDG), the worlds largest technology media company. Established in 2005, it utilises access to 35 million business decision makers details to unite technology marketers with relevant targets from any country in the world. Committed to engaging a disparate global IT audience with truly localised messaging, IDG Connect also publishes market specific thought leadership papers on behalf of its clients, and produces research for B2B marketers worldwide. For more information visit: http://www.idgconnect.com/