DRC-Iraq MSME Support-Print PDF
DRC-Iraq MSME Support-Print PDF
CASE STUDY
DRC MENA livelihoods learning programme 2017-2019
IRAQ DECEMBER 2017
Danish Refugee Council The Danish Refugee Council (DRC) is a humanitarian, non-
Iraq Office governmental, non-profit organisation founded in 1956 that works in
more than 40 countries throughout the world. DRC fulfils its mandate
Yazdandokht Street,
by providing direct assistance to conflict – affected populations –
Ankawa, Erbil, Iraq
44003 refugees, Internally Displaced Persons (IDPs) and host communities
www.drc.dk in the conflict areas of the world and by advocating on their behalf
internationally and in Denmark.
An internally displaced woman who received support from DRC and now runs a restaurant in Iraq. January, 2017. Photo by: DRC
DRC MENA LIVELIHOODS LEARNING PROGRAMME 2017-2019
The Theory of Change / Impact Chain for the MSME support component is briefly outlined below:
1 2 3
Business Incubator Businesses are Grants are used for
and Selection selected and business investments
System set up business grants and business is
awarded operational and/or
expanding
4 5 6
Business creates Household Social cohesion
employment and livelihood security between host and
stable income to is enhanced for displaced
business partners business partners population is
strengthened
• Illiteracy: Many candidates could not read or write. It was not found as a barrier as
most of the time they have notions of numeracy. About 60% of the businesses that DRC
supports, even when the entrepreneur is literate, do not keep books.
3. Training: The session on customer services was the most appreciated session of the
business training. Clients also valued the training as a networking opportunity.
4. Partnership model: In most situations, the partnerships consisted of a business manager
(typically a displaced person) and an investor (usually from the host community). The
partnership model was successful when: 1) partners knew and trusted each other; 2)
partners had complementary skills and/or resources; 3) partners had a balanced relationship
and shared profit equally.
5. Barriers to start a business: Entrepreneurs mentioned that the main barrier to starting
a business without external support was lack of investment capital. However, it also
appeared that borrowing money from extended network was possible primarily for middle-
age men (this option was more limited for youth, women and refugees since they have a
small network). In some cases, it was found that entrepreneurs had reached the limit of
borrowing possibilities; in other however, the reasons why entrepreneurs needed DRC’s
support were less evident.
6. Investment capital and grant size: Investment of $14,000, in this case coming equally
from a grant and matching funds, was the minimum necessary to establish a business that
could support 3 families (i.e. two partners and one employee). For a business to generate
any additional employment, at least twice as much capital would be needed (e.g. for a small
manufacturing unit, about $25,000 total).
7. Programme design: Grants were spent according to plans for two main reasons: 1) DRC’s
time investment in business coaching at business proposal stage; 2) matching fund and
grant disbursement in 2 or 3 instalments.
COST-EFFICIENCY No cost-efficiency analysis has yet been done of this work: it was
found that the way DRC budgets are structured do not allow an
easy cost-efficiency analysis and we would need to put in place a
more systematic registration of staff time (and other costs) to be
able to draw conclusions.
Main take-aways
The level of financial and human resources invested by DRC results in limited income increase
compared with pre-project situation. The proposed model for MSME support may not be the most
relevant and/or effective:
• DRC should further investigate which model of support - start-ups versus scale-ups-
yields the most results towards the set programme objectives .
• Alternative ways of supporting MSME through training and capital grant (current project
model), for instance through fostering market linkages, are worth exploring.