On 30 May 2016, the Iraq Middle Market Development Foundation (IMMDF) disbursed a US$1.7 million loan to a private sector poultry company in Erbil, Kurdistan, to expand its corn-drying operations. The loan will be repaid in monthly installments until December 2019.

The company will use the funds to purchase 20,000 tonnes of wet corn from 363 small farmers in the area of Erbil, with an average farm size of 10 hectares. By paying the farmers immediately upon delivery of their corn, the company will provide them with the necessary working capital to prepare the next corn or wheat crop. The IMMDF’s loan will therefore contribute to create a sustainable economic environment for those 363 farmers and their families.

The company will dry the wet corn in its own facility, built with a US$1.0 million loan from IMMDF in 2012, using 30 per cent of the dried corn to produce poultry food in its own mill, built with a US$2.5 million loan from IMMDF in 2010, and selling the remaining 70 per cent to other private sector feed mills in Kurdistan.

IMMDF was advised by Eversheds LLP in Amman, Jordan.

In spite of the challenging circumstances in Iraq, IMMDF continues to finance projects of private sector small and medium size companies that generate employment and economic growth in Iraq.

THE BORROWER
Established in Erbil in 2004, the family-owned company imports veterinarian vaccines and products, which it keeps in its own cold storage facility; provides technical advice to farmers and poultry farms; produces and sells high-quality poultry food; and dries wet corn purchased from small local farmers. With a total of 90 employees, the company produced US$34.7 million in gross revenues in 2015.

The company has two affiliates: a chicken hatchery which sells one-day chicks to broiler farms, and a slaughterhouse, which buys those broilers and sells fresh chicken for consumption under a well-known brand. This group of affiliated companies represent a successful example of a poultry integrated production network that relies on and supports small corn farmers and poultry farms in Kurdistan.

PREVIOUS IMMDF LOANS TO THE COMPANY
In 2008, the company received a US$1.0 million loan from IMMDF to expand its activities to cold storage of imported agricultural and veterinary products, which the company sold to local poultry farmers.

In 2010, the company received a US$ 2.5 million loan from IMMDF to build a feed mill and storage silos to produce high-quality poultry food.

In 2013, the company received a US$ 1.0 million loan from IMMDF to build a corn-drying facility, including a harvester, a separator, two 1400-tonne and sixteen 25-tonne silos for dried corn storage and a covered open air drying and cooling area for corn and wheat storage. The company has increased its dried corn production capacity from 3 tonnes per hour in 2013 to 75 tonnes per hour today.

IMMDF LENDING IN IRAQ SINCE 2005
IMMDF is a company created by Global Communities in the United States in 2004 to finance projects of small- and medium-size companies that generate employment and economic growth in Iraq. With loans received from OPIC, IMMDF has financed 53 agricultural, industrial and manufacturing projects since 2005. It has disbursed US$80 million in three- to five-year loans to these 53 projects, at an average of US$1.5 million per loan, creating 1,680 direct jobs and thousands of indirect jobs at suppliers of our borrowers. With annual gross revenues from US$1.5 to US$35 million, and from five to 200 employees, these borrowers represent a broad spectrum of commercial activities and financial sophistication.

The following charts illustrate IMMDF loans, as a percentage of the total loan amount disbursed from 2005 to 2016, by the economic sector of activities (left) and the borrowers’ location (right):

IMMDF requires extensive reporting from borrowers on their commercial and financial performance, and accounting policies and procedures, thereby improving their corporate governance. It also requires mandatory insurance on equipment purchased with loan proceeds and external audits of the borrowers’ financial statements by top international accounting firms.

IMMDF has been generally successful identifying and lending to creditworthy SMEs’ projects, even under the difficult circumstances in Iraq. When borrowers defaulted and loans had to be enforced, IMMDF was able to obtain favorable court decisions, including from the Supreme Court of Iraq, and realise loan collateral through public auctions of defaulted borrowers’ properties.

During the summers of 2012, 2013 and 2014, IMMDF offered an internship program at its Erbil office to students of business management at Iraqi, European and U.S. universities. This successful program received interns from American University, Kurdistan; Universidad de Navarra, Spain; London School of Economics, United Kingdom; and King’s College, Canada.

IMMDF supports a kindergarten in Erbil, which receives daily 200 children four to six years of age, a kitchen for refugees in Erbil and a refugee camp of the Chaldean church, also in Erbil.