Business is back on Iraq’s streets

/ Source: CNBC

Even in the face of continuing violence, there’s a palpable sense of optimism in Iraq these days. The country’s post-war election, held in January this year, appears to have boosted commerce and sales in the country — one of several signs that Iraqis are hopeful about their future.

Baghdad's heavily commercial Karrada Street, for example, has its hustle back.

Fala Hassan, a shop keeper on Karrada Street, thinks his customers have turned a corner. Before the election, many of them were fearful and sales were slow, he said. But these days his customers are back, he notes, and their cash is flowing again.

“People were so worried before the election … Now they are less worried about the future,” Hassan said.

Growing consumer confidence is a small, but critical economic step for Iraq — a country that needs to take many to get back on its feet.

There is a ripple effect: Iraqis are enjoying higher salaries and buying big-ticket consumer products, like washing machines. And the growth in sales is leading to more jobs in commercial districts like Karrada Street.

The job growth is small, but in a country with 30 percent unemployment, every job counts. And the employment revival is not only seen on Karrada Street. From Baghdad’s airport to Sadr City’s sewers, more and more reconstruction jobs are now going to Iraqis rather than foreign contractors.

There’s a sense of optimism in another of Iraq’s more vibrant spots: the Iraqi Stock Exchange. When it opened last summer, only 15 companies were traded on the exchange says Chairman Dr. Talib Al-Tabatabaie. Now there are more than 40 listed companies and investors expect their stock prices to go higher, he added.

Foreign firms face hurdles
But for overseas companies doing business in Iraq, the outlook is not so sanguine.

Companies like publicly-traded Harris Corp., a Florida-based communications business that won a $96 million contract to bring Iraq’s public television network up to date, still face hurdles.

From relocating nearly 300 families, who began living in the company’s brand new studios in Iraq during the U.S. bombing campaign, to transporting hundreds of thousands of dollars in cash over dangerous roads in order to pay employees — a result of Iraq’s antiquated banking system — this company has seen its fair share of difficulties.

But Harris’ costliest issue by far has been security says David Sedgley, program director for the Iraqi Media Network. “We’ve had employees killed, we’ve had employees injured, we’ve had some employees missing,” he said.

In fact, more than a dozen workers have been murdered. All of them were Iraqis, and most of them were journalists. They were assassinated by insurgents bent on destabilizing the country. Now it’s getting hard to find people willing to be on television, says Sedgley.

Just over one year ago, when Harris first bid on the Iraqi media contract, the outlook wasn’t quite so bleak. But these days, employees have to travel with heavily armed protection. And the company’s security costs, budgeted at only $1.6 million, have soared to more than $10 million, forcing Harris to reduce the amount of new programming they provide in order to preserve profits.

Western companies doing business in Iraq face the same problems as Harris. But with unemployment in Iraq still as high as 30 percent, many Iraqis are still willing to take the risk of working with westerners, as jobs are still very scarce.