SALAH AL-DIN, IRAQ

RAPID

MARKET

ASSESSMENT

OCTOBER 2019

TABLE OF CONTENTS Acknowledgments 2

List of Acronyms 3

Human Relief Foundation, who we are? 4

Secours Islamique France, who we are? 4

Executive Summary 5

Methodology 8

Key findings 10

Assessment Indicators 11

Governorate Analysis 13

Consumer Demand Observation 14

Services Demand Observation 14

Resuming Business 15

Savings 16

Consumer Behaviors 17

Core Good Prices 17

Storage and Supply Chain 17

Recommendations 20

ACKNOWLEDGMENTS

The Market Assessment was a collaborative effort of various stakeholders including the beneficiary community. The HRF/SIF team

wants to thank the various stakeholders that made this work possible. Special mention goes to UNDP ICRRP Team for the technical

guidance throughout the assessment and relevant local authorities’ field teams for the facilitation support and participation during

data collection. The local government line directorates and departments for Shirqat, Baiji, Tuz Khurmato and Balad districts; private

stakeholders, other NGOs, and UN agencies provided valued information required for this assessment. Profound gratitude to the

community who volunteered their time and valued information, which made this assessment a success.

We are very grateful for the commitment and dedication of the team members who conducted this study: - Omar Hameed; Project Manager – HRF - Noor Ahmed; M&E Officer – HRF - Talib Abdullah; Livelihood Field Officer – HRF - Rasheed Khaleel; Livelihood Field Officer – HRF - Dhifaf Wahab; Community Mobilizer – HRF - Mustafa Ghanim; Enumerator – HRF - Ali Al-Bayati; Enumerator – HRF - Malak Abdulmuhsin; Enumerator – HRF - Mohammed Abdelrazzak; Livelihoods Specialist – SIF - Badea Ali; Livelihoods Assistant – SIF - Safa Naseer; Community Mobilizer – SIF - Nawfal Hashim; Enumerator – SIF - Asmaa Taha; Enumerator – SIF - Abdulkadir Ra’ad; Enumerator – SIF - Zeena Abdullah; Enumerator – SIF

This publication has been produced with the assistance of the United Nations Development Programme (UNDP). The contents of this publication are the sole responsibility of The Human Relief Foundation (HRF) and Secours Islamique France (SIF) and can in no way be taken to reflect the views of the UNDP or its donors

LIST OF ACRONYMS

CaLP CaLP Cash and Learning Programme

CTP CTP Cash Transfer Programming

EU EU European Union

FGD FGD Focus Group Discussion

GIS GIS Geographical Information Systems

HEA HEA Household Economy Analysis

IDP IDP Internally Displaced People

IGA IGA Income Generating Activities

KII KII Key Informant Interview

MRE MRE Mine Risk Education

MGO NGO Non-Governmental Organization

SME SME Small and Medium Enterprise

ToR ToR Terms of Reference

UN UN United Nations

UNDP UNDP United Nations Development Programme

VST VST Vocational Skills Training

WASH WASH Water Sanitation and Hygiene

Human Relief Foundation, who we are? Human Relief Foundation (HRF) is an international, UK-based charity established in 1991 (UK Charity Commission registration no.

1126281). In the years since beginning operations, HRF has become internationally recognised. In April 2003, it was granted Special

Consultative Status with the Economic and Social Council of the United Nations. HRF is a signatory of the Code of Conduct for the

International Red Cross and Red Crescent Societies and has a partnership agreement with the European Commission Humanitarian Aid

(ECHO). HRF has over 27 years of experience in delivering humanitarian assistance in some of the most complex and protracted

humanitarian crisis. Since 1991, when the first emergency intervention was launched in response to the First Gulf War in Iraq, HRF has

actively contributed in alleviating suffering among conflict-affected populations. Due to its prompt and effective response, focusing on

the most vulnerable, HRF engages itself in various sectors from WASH and shelter, to livelihood, protection and education. Thanks to

its well-establish and strategic presence around the world, HRF has had missions and operations in Somalia, Jordan, Yemen,

Bangladesh, Pakistan and Ghana. Capitalizing upon its worldwide experience, while establishing strong relationships with the local

population, HRF demonstrated its ability to grow and expand its intervention capability building upon emergency relief assistance into

more protracted and sustainable processes, considerably contributing to local capacity building and resilience of disaster affected

communities. Pursuing its mission in supporting sustainable wellbeing and improving people’s quality of life, HRF has directed its initial

stabilization activities towards enhancing livelihoods of the Iraqi people through Food and NFIs distribution during the immediate post-

conflict assistance, as well as by engaging in more lasting solutions to help conflict affected populations in their recover to a better

quality of life.

HRF Iraq employs over 40 staff across five offices in Baghdad (head office), Mosul, Erbil, Kirkuk and Tikrit. Supervision of operation and

definition of HRF strategy in the region are guided by long term dedicated staff, such as its Country Director - based in Baghdad - and

its Deputy Country Director - based in Mosul. Iraq operations require approval from HRF HQ in Bradford - UK - which also provides

comprehensive administrative and programmatic support to in-country teams. HRF has a large pool of experienced and qualified staff

in key locations across the country. HRF core staff is constituted primarily by national senior engineers and technical support staff,

gathering both sector specific knowledge and local expectations. HRF has dedicated finance staff in Baghdad, Erbil and Mosul who

manage in-country project finances, with support from the UK-based finance department where necessary. It is HRF’s capacity building

philosophy to engage the local communities in which it serves as much as possible in the development of their own society. As such,

HRF operations in Iraq are run almost exclusively by Iraqi nationals. By its high staff retention rate and the capacity to directly interact

and communicate with the people it helps, HRF has become a focal point in the field for people in need. HRF has maintained an office

and a presence in Salah al-Din for many years, including during the recent years of conflict in Tikrit. As such, HRF was one of the first

NGOs to begin operating in Salah al-Din after its liberation from ISIL, through livelihood support activities focusing on agriculture

restoration, rehabilitation of infrastructures, restocking of livestock and small business grants. Currently, HRF is maintaining a focal

point in Tikrit in charge of its orphan’s sponsorship program, thus well-placed to expand its operations here.

Secours Islamique France, who we are? Secours Islamique France (SIF) is a non-governmental organization for international emergency solidarity and development. The

association’s meaning is rooted in the values of brotherhood, mutual aid, justice and solidarity towards the poorest populations. As

such, SIF efforts are exclusively social and humanitarian. SIF’s aid goes toward all needy persons, regardless of their social, religious or

cultural affiliations. The organization is dedicated to alleviate suffering among the poorest people in France and around the world. It

acts wherever humanitarian and social needs require mobilization of emergency relief and implementation of development programs.

SIF is inspired by the human values of Islam, solidarity and respect for human dignity, which are at the heart of its action. Through its

commitment, values and missions, it calls for the creation of human solidarity that transcends differences and borders. Neutrality,

independence, impartiality, respect, responsibility and risk-taking are the principles underlying its humanitarian action and that SIF has

committed to preserve since its creation. Each of these principles guarantees relief for populations that is fair and respects their

diversity–whether cultural, religious or social. SIF has been implementing livelihoods and women empowerment project to crisis and

conflict-affected populations in over 30 countries in the world including Lebanon, Jordan, Syria, Gaza and the west bank, Iraq, Chad,

Nigeria, Somalia, Kenya, Madagascar and Pakistan. The aim of these projects is to ensure provision of emergency support to the most

affected communities while advocating to enhance and improve their resilience in early recover stages enabling them to generate

their income in a way that respects their dignity and specific needs.

SIF operated in Iraq since 2016 in partnership with UNICEF, IHF, WFP, UNFPA, Centre de Crise et de Soutien (CDC) in the fields of food

security and livelihoods, S/NFI, WASH, education and child protection to IDPs, returnees and host communities in Ninewa, Salah al-

Din, Erbil, Kirkuk, Maysan and Anbar governorates. SIF can rely on a strong base of core funds that allows it to promptly intervene in

case of need and adapt its assistance according to priorities coming from the local community. Secours Islamique France has developed

its advocacy campaigns to have more impact and give more meaning to its actions and exert influence on global policy matters that

are related to its field of work: protection of civilians and respect of international humanitarian law, access to water and sanitation for

vulnerable populations, food security, child protection and social emergency in France.

EXECUTIVE SUMMARY Markets systems are critical to the lives and livelihoods of people, both in stable and in crisis affected contexts. They play a vital role in meeting basic needs by supplying goods and services. They are also a key to protecting and promoting livelihoods, offering mechanisms for selling produce and providing access to paid work and income generation. A market system is composed of the market chain (market actors and linkages between them – e.g., producers, collectors, processors, traders, consumers), supported by key infrastructure, inputs and services (e.g., storage facilities, transport networks and financial services), and influenced by enabling or disabling factors of the market environment (e.g., institutions, norms, and trends). Crisis-affected populations interact in a wide variety of ways with market systems. Understanding these interactions as well as the market system functionality, dynamics and bottlenecks is an integral part of situation analysis and is key to efficiently supporting livelihoods. It can help reduce aid dependency by promoting long-term recovery, increasing the stability of local market systems and therefore support resilience capacities of the communities. Market system analysis can help agencies play a facilitation role rather than replacing market actors to ensure that support has a sustainable impact. Iraq has been suffering a complex crisis for the past years, accumulating the consequences of multiple displacement (from Syria and within Iraq), conflict and economic crisis. Since 2014, when the Islamic State first captured territory in Iraq, large-scale population movements affected 6 million people in the country. While the situation stabilizes and following the official defeat of ISIL in December 2017, conflict affected areas are experiencing an increased number of returns. While the process appears to slowing down, it has not happened with the speed initially predicted by the humanitarian community, leaving populations behind either in, or at risk of, protracted internal displacement (1.9 million1). Over half of them (54%) have been displaced for three or more years, while 45% up to three years. 13% among them are currently living in Salah al Din governorate2. Due to the high severity of the conditions in areas affected by the conflict, nearly 64% of IDPs expressed no intention to return to their areas of origin within the following twelve months citing a lack of livelihoods, services, social cohesion and security. However, especially the governorate of Salah-al Din, is experiencing continuous episodes of forced returns, thus aggravating living conditions. In fact, returnee and non-displaced households face simultaneously almost four sectors with consistently high levels of needs (livelihood needs rated at 52% in Baiji, 46% in Balad and 46% in Shirqat3) classifying target population as having unmet humanitarian needs. Similarly, lack of economic or job opportunities is one of the most important factors that pushed returnees’ families again into displacement. Three fourths of returnees live in locations where the supply of jobs is insufficient4. Livelihood deterioration in ISIL-controlled areas is testified by

a high poverty rate (41.2%) that doubled compared to the national level (22.5%) in 2014, and degradation of the labor market. Unemployment rates reaches 27%5 among the IDP and returnees’ population nationally and 69% among young women6. Researches7, confirm the high unemployment rate in Salah al-Din governorate to reach 80%, registering levels of 57% in Suleiman Bek sub-district in Tooz district (according to the sub-district mayor registry) and a 22% rate in Baiji center. While considering that according to IOM data8, in 97% of Baiji district no resident can find employment and in 75% of Shirqat district less than half of residents can find a job, with a slow recovery of small businesses in 60% of locations considered. Generally, the majority of the population stating having a permanent job is involved in the public sector (92%)9, while the private sector has seen low levels of investments and development due both to the high level of destruction and the lack of capital available to be invested. Results from pre-award livelihood competency assessment shows how returnees often struggle due to unfamiliarity with different markets and a lack of specific tailored skills, resources or networks that would allow them to find meaningful and safe employment, as well as a lack of knowledge and capital needed to establish self-employment. Lack of family connections, lack of formal training, lack of assets and increased competition for jobs were indicated as the top five obstacles in accessing livelihoods. Market functionality is a fundamental element in the development of livelihood activities. Overall, despite important damages to infrastructures, Baiji market place emerged to be a vibrant and well supplied trading center (Annex F). However, the market place was severely affected by the conflict and only a fourth of retailers in the market were open and trading at the time of the assessment. Similarly, in Suleiman Bek, only 65 retailers are currently working. At governmental level, 87%10 of the population in Salah al-Din declare not perceiving any difficulty in accessing the market. Salah al-Din governorate has the third largest returnee population with 598,134 individuals11, since the beginning of 2018. However, only 67% of the pre-conflict population of the district returned to their homes. The governorate hosts the top five locations identified by IOM having the most severe condition of return, all situated in Tooz District (Markaz Tooz, Sulaiman Bek and Al Amerli sub-districts). Overall, among Salah al-Din population, 31% of returnees (187,812 individuals) are ranked living in high severity conditions and 56% (333,324 individuals) in medium severity conditions. Moreover, Salah al-Din represents the second governorate of origin for number of IDPs (13%) and research suggests the probability that further returns will take place in the following months12. Within Salah al-Din, the targeted districts stand out as particularly vulnerable. Baiji district represents a key hotspot for returns with 58,254 individuals (71% in 31 locations) in harsh living conditions (high level of destruction, high security concerns and low social cohesion).

1 HNO Iraq, 2019 2 IOM, Reasons to remain: categorizing protracted displacement in Iraq, November 2018. 3 REACH, MCNA VI, 2018 4 IOM, Integrated Location Assessment III, 2018 5 WB, MPO, April 2018 6 WB, Iraq Economic Monitor, 2018 7 IOM, Integrated Location Assessment III, 2018 8 IOM, Return Index – Findings round three – Iraq, April 2019 9 IOM, Integrated Location Assessment III, 2018 10 Ibid 11 IOM, Return Index – Findings round three – Iraq, April 2019 12 IOM, Categorizing protracted displacement in Iraq, November 2018

In response to the humanitarian crisis caused by the diffusion of ISIL in Salah al-din which was followed by heavy military operations to defeat them, the Human Relief Foundation and Secours Islamique France are implementing a livelihoods program targeting IDPs, IDPRs and host communities in four districts in Salah al-din (Shirqat, Balad, Tuz Khurmato and Balad). HRF/SIF commissioned a livelihood and market assessment to recommend appropriate and viable businesses, income generating activities, and vocational skills. Furthermore, HRF/SIF wanted to understand feasibility and choice of the appropriate delivery mechanism(s) for Small Business Grants (SBG). The specific objectives of the assessment were;

To investigate the microenterprise markets in Salah al-din governorate, identify and provide guidance on economic sectors/sub-sectors with the highest potential for development of family breadwinner enterprises by HRF/SIF

To gather information on market demand and translate it into programming that responds to a dynamic business environment and youth needs through Vocational Training programs (business training, marketing, financial literacy, ... etc)

To conduct a market assessment of the feasibility of SBG and the choice of cash transfer delivery mechanisms in HRF/SIF operational areas

To conduct a market assessment of the feasibility of ROSCA and the choice of cash transfer delivery mechanisms in HRF/SIF operational areas

To collect comprehensive community and household level data on sources of vulnerability, asset base, businesses, coping mechanisms and adaptive strategies

Basis for evidence based policy and programme development

Baseline for programme development, monitoring and evaluation

Businesses that would create additional employment opportunities if supported and increase the community resilience and social cohesion’s bonds

Potentials for market distortion due to the introduction of cash

METHODOLOGY The Market Assessment framework was developed by international consultant deployed by HRF/SIF during September 2019, to facilitate a coordinated, area-based and comprehensive market assessment. The assessment design focused on three programming areas, (1) Small Business Grants (SBGs) and Income Generating Activities, (2) Business Skills Training (BST), and (3) Value Chain (VC). Data collection used a cross-sectional design incorporating both quantitative and qualitative methods to answer the assessment objectives. Quantitative methods – were deployed to capture data on income and financial indicators measuring enterprise viability, Qualitative methods were used to gather an in-depth understanding of a livelihoods and market structure. An in-depth desk review was conducted to understand the context, and to complement information gaps in the assessment. The desk review included project documents and reports from other NGOs working in Salah al-din (such as DRC, Oxfam, Intersos, IRC,.. etc). Primary methods included:

A survey was conducted by administering individual questionnaires to gather quantitative data among breadwinners from IDPs, IDPRs and host communities. Data collected included; specific livelihood activities that households are engaged in, monthly incomes, and preferences in business and vocational skills. The survey was administered using an electronic mobile data collection system called Kobo

Focus Group Discussions (FGDs) provided in-depth qualitative information to enhance understanding of local livelihood systems and markets. Participatory approaches were used to encourage the participants to freely discuss, analyze and share their views and opinions on issues related to livelihoods, economic activities, and markets

Key Informant Interviews (KIIs) provided broader picture information on issues related to small business, petty trade, vocational skills, and cash transfers

The assessment targeted four districts in Salah al-din governorate; Shirqat in the north, Baiji in the west, Tuz Khurmato in the east and Balad in the southeast. The survey used probability sampling methods. The minimum sample size desired was 30 across the four districts. However, during data collection, it was increased to 50 to allow for sub-group comparisons, and to minimize the influence of non-responses on overall results. As for the FGDs and KIIs, purposive sampling was employed. The assessment reached out to a total sample of 226 respondents across the four district. Of these, 68.3% were males, and 31.7% were females. The average age of the sample respondents was 38.4 years. A further disaggregation of age showed that 31.6% were youth aged between 18 and 25 years, 46.3% of respondents were aged between 26 and 35 years, and 22.1% were aged above 35 years. A disaggregation by residential status showed that 87.5% of respondents were returnees and 14.5% were either IDPs or host community members. Data collection took place over a three-week period; 10 to 31 October 2019, 10th to 21st October 2019 in Baiji (Baiji center and Seniyah) and Shirqat (East Shirqat, Shirqat center, Tlool Al- Baaj and Al-Mujama’at), and 22nd to 31st October 2019 in Tuz

Khurmato (Sleiman Bek) and Balad (Balad center, Aziz Balad and Balad train station). The data collection team consisted of SIF Livelihoods Specialist, HRF Livelihoods Project Manager, two HRF field officers, one HRF community mobilizer, one SIF livelihoods assistant, one SIF community mobilizer in addition to locally deployed screeners and enumerators. For quantitative data, Microsoft Excel was used to clean and analyze data. In addition, google map was used for mapping some of the assessment results. For the individual businesses assessed, financial indicators such as payback period, return per dollar, profitability per month were used to evaluate viability, in conjunction with qualitative indicators such as demand and seasonality. For qualitative data, Thematic Content Analysis Technique was used to group and analyze data by thematic area, and the convergence of opinion approach was used to the qualitative groups. The following were some limitations to the assessment:

The scope of study: In response to the project needs and planned objectives, the assessment integrated three components which are typically assessed as individual studies. The components are Small Business Grants (SBGs); Business Skills Training (BST), and Value Chain (VC). This made the scope of the assessment large, needing more time and resources. However, due to limited time and resources, it was agreed that the assessment design should prioritize main aspects of each of these three components

Time loss due to training logistics: Due to geographic spread, it was not possible for research screeners and enumerators from HRF/SIF to be trained at once as it was originally planned. Therefore, training and pre-test of tools was done twice (one for each NGO), which made the research team lose a considerable amount of time

Security Assessment: Though it was desirable to have provided an overall security layer on all the components of the assessment, it was difficult to do so because the scope of the study was too large to conduct a detailed security impact assessment. SIF Liaison and security assistant led the security briefing and engaged with both agencies’ staff for their daily movements to the field

Value chain analysis: Much as the assessment identified the most viable business, it was beyond the scope of the assessment to conduct a detailed value chain analysis for each of the defined value chains

Gender equity: the under-representation of women in community leadership positions, which is a key informant criterion, coupled with general security and access constraints resulted in a low percentage (16%) of female key informants

Whilst findings grant an insight into the needs and vulnerabilities of assessed populations in Salah al-din governorate at the time of data collection, the situation remains highly complex and is constantly changing. Thus the findings are indicative of the situation in the assessed locations at the time of data collection. Findings are in no way statistically significant and although all efforts have been made to remove KI bias, there remains the chance that it exists within certain answers.

Trends in availability, consumption, supply, and demand for each of these three core components will be discussed at the national as well as the governorate level for the four assessed districts in Salah al-din. Additionally, this assessment seeks to reduce information gaps on subjects such as access to markets, access to financial service providers (FSPs), preferences for humanitarian assistance, and potential societal implications of cash-based assistance in assessed communities across Salah al-din. To this end, Human Relief Foundation and Secours Islamique France collected data in October 2019 through Key Informant (KI) interviews, direct interview with business owners and target communities and FGDs in 52 communities in Salah al-din (19 in Shirqat, 17 in Balad, 10 in Baiji and 6 in Tuz Khurmato). HRF and SIF conducted 187 interviews with 153 markets and business actors along the supply chains for the three assessed core goods in order to analyze market system functionality within assessed locations, as well as the wider market system relevant to markets and consumers in assessed communities. More specifically, 14 representatives of assessed population groups (original residents, internally displaced persons (IDPs), and returnees) and 18 local authority representatives were interviewed to analyze the availability and consumption patterns of the three core goods in the assessed locations, as well as experiences with, preferences for, and perceptions of humanitarian aid and cash-based programming within assessed communities. Additionally, 7 Focus Group Discussions (FGDs) were also held in six locations in Salah al-din. These discussions sought to examine capacities, needs, and preferences for humanitarian aid and small business programming among community members.

ACHIEVED INICATORS

DIST TARGTED LOCATION BUSINESS ACTORS COMMUNITIES LOCAL AUTH. FGDs ASS. SAMPLE

SHIR

QA

T City center - Shirqat 7 2 9

City center - Tlool Al-Baaj 11 2 2 1 16

4 villages – Tlool Al-Baaj 8 1 9

Northern part - Ashour 19 1 2 1 23

Al-Mojama’at 11 1 2 14

BA

IJI

City center - Baiji 24 1 1 26

Al-Ziweya 3 3

City center – Al-Seniyah 21 2 2 1 26

Villages – Al-Seniyah 9 9

TUZ

City center – Slieman Bek 29 2 3 1 35

Villages – Slieman Bek 3 3

City center – Tuz Khurmato 2 2 4

BA

LAD

City Center - Balad 7 2 9

Aziz Balad 11 2 2 15

Al-Rafe’at 9 1 10

Al-Rawashid 8 1 1 10

8 villages – River bank 5 5

KEY FINDINGS Cash assistance for business grants and asset replacement was the most reported way as the preferred form of humanitarian assistance by interviewed community members and business actors, since it would enable more members to gain increased purchasing power of the analyzed core goods. However, small business programming must account for a diverse range of economic, ethical, and social dynamics that exist within the assessed communities of each of the four districts of Salah al-din. In particular, small business programming must consider the possibility of changes in economic and social cohesion bonds specifically for Balad and Tuz Khurmato as they host mixed populations and the potential consequences for market systems in the these areas. A. Access to Markets and Money Service Providers (MTAs)

• Though the majority of interviewed business actors and community representatives (KIs representing residents, IDPs, and returnees) across all four districts of Salah al-din were able to access markets—either in their community of residence and/or in nearby communities—barriers to accessing these markets remain. The main barriers represented by lack of shops or markets that offer the basic daily necessities for residents (food, vegetables and fruits, construction materials, construction services, workshops, … etc), this matter force the residents (particularly the returnees) to travel for long distances in order to get access to the functional markets in nearby cities. 56% of respondents reported constraints in passing through the checkpoints and long time to be spend before taking the greenlight for passing. Variety of markets was also reported as a big concern by 74% of respondents

• Almost 98% of interviewed business actors in assessed communities reported the existence of hawala (MTA) offices in their community of residence or in a nearby community. By contrast, only 2% of the interviewed business actors reported the availability of formal banks or access to store credit

• Rotating savings was reported by 67% of business actors as a common attitude to save money for better business upgrading. It was also confirmed that this attitude was no longer active post-ISIL period as the business actors lost the financial capacity to maintain it

B. Experiences and Preferences for Business Programming

• The majority of interviewed business actors in assessed communities of all four districts in Salah al-din reported that members of their population group (IDPs, returnees and original residents,) in their community preferred cash assistance to other modalities of humanitarian assistance, in order to improve access to better livelihood opportunities and build resilience

• Most interviewed community representatives and relevant local authorities across all four districts preferred direct small business programmes as modalities of livelihoods support. Commonly cited reasons for a cash preference included to purchase what is needed, upgrade their existing business or extend it to fulfill their communities’ requirement, pay debts, and to increase employment opportunities by hiring more labors

• A few exceptions to the cash preference trend were found in Tlool Al-Baaj and Aziz Balad cities, where returnees expressed preference for asset replacement targeting in-kind distributions of agricultural inputs, livestock respectively

C. Market Functionality

• Across all districts, residents’ lack of cash was the most commonly reported obstacle to the purchase of the basic goods from markets in assessed communities among interviewed supply chain actors and local community representatives

• Communities pay for market goods with cash. 81% of all the interviewed KIs across assessed communities in the four districts reported that their population pay for most of their basic goods with cash, it was reported that the rest either use debt or food-NFI exchange coping strategy

• Return patterns affected market functionality across assessed communities in all four districts of Salah al-din. However, a higher proportion of supply chain actors in assessed communities of Tlool Al-Baaj and Seniya cities reported that recent returnee movements have either increased demand for core goods sold by vendors in local markets, reflecting the contextual situation at the time of data collection. Additionally, former conflict zones previously controlled by the Islamic State of Iraq and the Levant (ISIL) underwent significant market transformations once the IDPs returned to their areas of origin, which must be taken into consideration in the design and implementation of business programming

• Market system in the four assessed districts were not fully functional due to a number of logistical, infrastructural, environmental, financial, and sociopolitical factors. These factors may inhibit the abilities of beneficiaries to actually increase consumption of the basic items if given access to cash

• Changes in the current political situation within federal Iraq may have significant repercussions across Salah al-din. Salah al-din serves as one of the two major corridors (beside Diyala) that funnels imported goods from Turkey through Kurdistan to Baghdad and southern provinces, as well as agriculture items produced in almost every district inside the governorate to Baghdad. Any negative security development will have further consequences on the recent recovered markets in the governorate and add more loses to the business actors

• Major findings for each district include: - Balad district: More restrictive price and supply controls imposed by local authorities (mainly the directorate of combating

the economic crime) on core good market systems were reported within assessed communities compared to other districts, impacting private sellers as it was reported by business actors. This issue was negative by the directorate itself as their representatives confirmed that all of their actions is to ensure the stability of markets, support the national products and control the fluctuations in prices of particularly the basic food items

- Tuz Khurmato district: Variations in levels of supply and demand within assessed market systems were attributed to displacement and return patterns (departures and arrivals of IDPs and voluntary returnees to Sulieman Bek and other

villages). It was reported that markets are very functional in the city of Tuz Khurmato and Amerli while the ones in Sulieman Bek still in need for further recovery support (financial assistant and asset replacement)

- Baiji district: Damaged infrastructure and security incident followed by 4 years of displacement from the district contributed to worse levels of access to core goods within some sub-districts and villages of Baiji district compared to others in the same governorate, causing disruptions in the supply chains. More than 6,000 wholesale and retailing shops have been completed destroyed during the battle against ISIL

- Shirqat district: Significant differences in supply and demand dynamics of the core good market systems of the assessed communities of Tlool Al-Baaj and Ashour sub-districts were often dependent supplies usually approach the district from Kurdistan region through Qayyara corridor, as well as on the quality of infrastructure and the checkpoints that sometimes delay the dispatch of commodities into the district

In general, it was considered that livestock and agriculture businesses are among the most affected sectors due to high constraints and controls imposed by local authorities among the governorate regarding the transportation and dispatching such goods to the governorate.

D. Implications and Perceptions of Increased Business Programming

• Consumers’ lack of cash was a major challenge reported by supply chain and business actors and interviewed community representatives across assessed communities of Salah al-din governorate. Potential Cash assistance may enable beneficiaries in the assessed communities to purchase more goods and consequently increase demand for the analyzed core goods in all four districts of Salah al-din, and therefore; increase the economic resilience of the returnee communities

• Very few local authority KIs reported that members of their communities received cash assistance in the three months prior to data collection. Conclusions on the potential implications of cash-based programming on community dynamics can therefore not be drawn from the findings of this assessment. However, according to many of these interviewed community members, benefits seen from the few communities assessed for this report who have had access to cash-based programming included a sense of dignity and recovery, the ability to afford basic necessities, and debt repayment. Yet, the distribution of cash assistance in communities reportedly also caused jealousy and tensions between beneficiaries and non-beneficiaries, and negatively impacted inter-community relations (from a tribal perspectives). While not unique to cash programming, it is recommended that humanitarian organizations implementing cash-based programming develop comprehensive communication plans to correspond with community members (beneficiaries and non-beneficiaries). Furthermore, it is recommended to develop clear Accountability to Affected Populations (AAP) practices in order to avoid the creation of social tensions or unmet expectations with regards to the extent and scope of cash-based programming in communities

ASSESSMENT INDICATORS Demographics - % of IDPs, returnees and host communities (pre and post ISIL period)

- % of people with access to functional markets that meet their basic needs - % of 90% satisfaction over the offered goods in the markets within their communities - % of people who lost their business (whether it was shop, workshop, agriculture, livestock, fishery, …etc) - Household characteristics and level of education - # of wholesalers vs. retailers

Natural - Landholding/Properties - Food security and agriculture - Access to common resources - Rainfall and vegetation - Land use and environmental degradation

Financial - Salaries - Livestock - Remittances - Access to credit - Support from Social Safety Net (MoLSA) - Support from local government (reimbursement fund) - Support from Directorate of Agriculture

Sociopolitical - Social fabrics and networks, including support and loans from NGOs, charities, friends and relatives - Ability to influence and participate in decision making - Gender roles - Rights and entitlements

Physical - Housing and shelter - Water supply system, irrigation system - Household assets

Human - Available skills - Participation in the labor force, age dependency ration - Health particularly disability and chronic diseases

Environmental - Transport infrastructure, and telecommunications

GOVERNORATE ANALYSIS

The 19 assessed locations in Shirqat are composed of Arab Muslim

communities; almost 99.5% have been displaced during ISIL control over

the area. The district linked Salah al-din with Kirkuk and Ninewa

provinces, therefore; the markets are more recovered in comparison

with other districts. Agriculture, livestock and small businesses such as

selling food items of general housing materials are the common

businesses in the district

CONSUMER DEMAND OBSERVATION: The Consumer Demand Observation (CDO) aimed to determine the extent to which goods and services in markets in target districts were available and satisfactory, and which were most in demand. The survey identified areas in the market with unfulfilled demand and those likely to improve with financial support or skills training. A sample selected using a pre-defined community groups in 22 locations with specific indicators (as explained previously) combined with random sampling considering gender parameters. The actual sample surveyed exceeded the plan 3 times. Observations were randomly selected from marketplaces in target districts (28% female and 72% male.

SERVICES DEMAND OBSERVATION According to the Consumer Demand Observation and interviews, most services in target districts had low levels of satisfaction. Construction and plumbing had the highest level of satisfaction among the top 10 of services with 34 percent and 31 percent respectively, while water tank handcraft came next with 23 percent satisfaction. Market dissatisfaction (services with low level of satisfaction) was substantial for technical and maintenance services such as phone technicians, plumbers, refrigeration and AC installation/repairs and appliance technicians. In addition, food or drinks in a restaurant/coffee shop, photographer/videographers and beauticians had high levels of dissatisfaction.

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80

Shirqat Baiji Tuz Khurmato Balad

Observation sample (%; male vs. female)

male female

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Shirqat Baiji Tuz Khurmato Balad

Service Observation sample (%; various services)

Food or Drinks in a Restaurant/Coffee shop Clothes Washer Blacksmith or welder Computer Technician

Barbering Appliance technicians Refrigeration Installation/Repair Phone Technician

Photographer or Videographer Plumber Sewing

The observation study also found the following goods and services almost absent from the market: financial services, solar power maintenance, wide-internet services, locally processed food, computer and business services, centers for local handicrafts, entertainment services and machineries’ repairing workshops.

RESUMING BUSINESS During the community observational discussion, 64 percent of actors who lost their business confirmed their need for seed fund between $1,500 to $2,000, while 21 percent need more than $2,000 and 5 percent need less than $1,000. In FGDs, some actors confirmed they could get some assistance or use their limited saving money, which would help them to start up their business when they get further financial assistance.

Most businesses listed in Chart above required between $1,500 to $2,000 to be re-established and generate income. However, some

businesses would need more, such as forming a small water purification workshop to produce bottled water for drinking, squeezing

and producing sesame oil and small agriculture-related businesses. In FGDs and interviews some actors confirmed they were willing

to create a partnership to establish their business.

Value Chain Development: Assessment results found that some agriculture and non-agriculture sectors were underdeveloped. If they

were developed and supported, they would generate good income for local people and create many job opportunities. These included:

sesame oil, clay and ceramic pottery and other locally produced materials. For instance, sesame and olive trees grow well in Salah al-

din governorate, and most of it go to Mosul city for squeezing and producing, as formers in Shirqat, Baiji and Balad do not have

resources or skills to do it in their area. Currently, even olive or sesame oil producers in Mosul are not benefitting because they are

being squeezed and produced using old and inefficient technology, despite having a good market. If the value chain of these sectors

were developed in Salah al-din in a proper and sustainable way, they would have a positive impact for the all involved in target districts

including farmers, producers and unemployed youth (new job opportunities), and consumers.

Although many actors (including female headed households) confirmed their willingness to start a business; they had not done it so

far for the following reasons:

- Inability to obtain appropriate funding (47%: 44% female, 56% male)

- Financial risk (18%: 51% female, 49% male)

- Economic barriers (16%: 38% female, 62% male)

- Sociopolitical and security unrest (13%: 65% female, 35% male)

- Do not know how to start a business (3%: 69% female, 31% male)

- gender considerations (3%)

Other reasons included lack of support from family, friends and local community, lack of access to information and market, and lack

of confidence.

In terms of registration, most businesses are operating unofficially, without permits or registering. According to the market HRF/SIF assessment, only 29% of the respondents said that they had official registered their businesses, and most of them are bakers, agriculture farmers and Money Transfer Agents. With regard to Competition, 79%, or more, of the sellers/businesses said that they are unable to compete the rest of the businesses that sell similar goods or provide the same services. This is due to a number of reasons, including: lack of available goods, lack of diversity in goods and services, bad quality of provided goods and services, the goods or services not fulfilling the needs of the customers, bad customer service, and other reasons, like rising operational costs. Therefore, these are considered opportunities for new small enterprises because the market is not saturated yet. In addition to that, the presence of training programs in some professional and entrepreneurial skills will be a real competitive edge for women and young business actors that want to start their own small enterprises. Training will increase their knowledge and skills and enable them to overcome the challenges listed above.

During FGDs and in-depth interviews, the following barriers to business skills training were identified:

- Affordability of training fees and transportation costs

- Poor financial capability among young people

- Lack of encouragement by family and the local community (due to local traditions and norms)

- Lack of entrepreneurship awareness; and

- Geographic barriers, especially for women living in Seniya and Aziz Balad villages, where most of them are unable to go to

the main city of Baiji and Balad respectively to participate in education or training

Among the most vulnerable groups, such as marginalized groups (particularly in Balad and Tuz Khurmato), the key access barriers to

business skills training were the same as were mentioned above plus: extreme poverty; unequal access to training opportunities;

discrimination; and lack of motivation.

More than 94% percent of business actor respondents expressed a desire to have training to start up or resume their business if given

the opportunity (38% female, 62% male). This was reiterated in FGDs; all participants confirmed they wish to have a training

opportunity to enhance their knowledge and skills to establish a business. Respondents were asked what type of training they would

need to start up their businesses (they could select more than one training need). Among those who wished to have training, 51

percent wanted entrepreneurship skills training, 22 percent requested marketing skills training, 19 percent wanted financial literacy

training and 8 wanted life skills training. During FGDs and in-depth interviews, training needs identified were almost the same in all

target districts:

- Entrepreneurship skills: introduction to entrepreneurship, time management, social inclusion and self-planning

- Marketing skills: using social media, finance skills, planning

- Financial literacy: financial and asset management

- Life skills: self-confidence, self-awareness, communication, self-marketing, leadership, influencing, creativity and innovation

The assessment found that, among those that had not get training, 31% of them did not get training because there are no opportunities for training, while 29% of them reported that they did not have information about the opportunities available to them. 24% reported that financial obstacles stood in the way of them getting any kind of training, while 16% say that they did not get any training because of the political and security instability. A SWOT analysis was carried out, and this includes analyzing the strengths and weaknesses of the enterprises, which represent the

internal environment of these enterprises, as well as the opportunities and threats, which represent the external environment of the

enterprise (local environment and any external influential parameters). This analysis was carried out for more than 37 businesses and

traditional goods and services. The results of different productive and service projects showed the following:

GREATEST STRENGTHS: - Good knowledge of the market as well as the overall context - Good location of the project (especially when it comes to areas of

return as there is a dire need for business re-establishment) - Availability of human resources - Availability of manpower - Availability of natural resources (raw construction materials,

agricultural assets and lands, … etc)

GREATEST WEAKNESSES: - Not having enough capital - Weak marketing - Weak skills, especially highly technical skills, and business management

skills - Rising operational costs as a result of rising prices, and rising cost of

services and fuel - Bad quality of a number of goods and services - Weak abilities and skills, as well as lack of innovation and creativity in

developing the goods and services - Lack of diversity in the goods and services - Low levels of customer satisfaction/demand

GREATEST OPPORTUNITIES: - All the assessed districts are under recovery stage - The relative improvement in the economic situation in all the

assessed districts - Expansion of reconstruction activities - Getting facilitation from wholesalers for some commercial

activities (post payments) - Lack of competition, especially in projects that depend on

technology skills - Changing tastes of the people, who want modern and innovative

goods and services (especially after displacement) - Working through a network of shops as distributors - Ability to work with other projects

GREATEST THREATS: - Ad-hoc Security incidents - Weak basic services, like electricity and water - Exchange rates - Inflation - Lack of purchasing power among the served people - Access to main markets/infrastructures - Weak purchasing power among the people - Increased competition (and reliance on importing goods, especially from

Turkey and China) - Imitation (when a project starts providing unique goods, everyone else

will copy) - Customers are looking for unique products, but they cannot find

something that meet their needs and desires

SAVINGS The assessment shows that 28% of the business actors (male and female) that participated in the assessment have saving skills (67%

female, 33% male). During the discussions and interviews, the participants said that the most important reasons behind the decreasing

amount of savings is that there is decreased purchasing power, no income, increased inflation, unemployment has gone up, and the

deterioration of the national market itself. In addition to that, they have had an increasing number of needs, especially over the last 4

years, as a result of the deterioration of the security situation and the difficult conditions that they went through during displacement.

The study also shows that around 96% of the respondents prefer to save their money at home (21% female and 79% male), while 4%

prefer to save their money with their friends or with a relative. Through the discussions and interviews, it was seen that male avoid

saving money in banks or in microfinance institutions because they suffer from the lack of financial knowledge and lack of trust in

banks, especially recently, because people are having a hard time making withdrawals from their accounts in banks.

CONSUMER BEHAVIOURS A breakdown of payment methods by vendor type reveals that retailers primarily deal in cash and monthly settlements, whereas

wholesalers have a more even split between the use of different payment terms. Businesses that sell to both retail and wholesale

markets are more likely to allow the use of payment by credit.

BUSINESS TYPE % PURCHASES ON CREDIT % PURCHASES IN CASH % PURCHASES IN MONTHLY SETTLEMENT

Retailer 20 60 40

Wholesaler 38 32 37

Both 47 32 22

Nearly all respondents reported a drop in consumer demand from pre-ISIS trading. The most commonly cited reason for this decline

in demand was that there is a lack of cash in the markets of Salah al Din, and those who left during the crisis still have not returned to

the area.

CORE GOOD PRICES The table below provides details of all prices gathered during the market assessment were commodities are being reported by multiple

respondents an average price has been given.

COMMODITY UNIT PRICE IQD

FOOD ITEMS

Tomato kg 1,001

Onion kg 750

Potato kg 1,000

Aubergine kg 400

Rice kg 1,550

Oil bottle 1,488

Tomato sauce tin 2,000

Eggs tray of 30 3,350

Sugar kg 975

Flour kg 500

NON-FOOD ITEMS

Glass m² 5,000

Glue bottle 1,500

Power tool piece 14,000

Pipe meter 4,000

Jacket piece 15,000

Dress piece 10,000

Women’s loungewear piece 8,000

Most suppliers noted that their prices have increased when compared with pre-ISIS prices. This is primarily due to increased difficulties

associated with importing and transporting goods. Additionally, some suppliers discussed a rise in the cost of storage.

STORAGE AND SUPPLY CHAIN These products have been sourced from a variety of cities within Iraq. Many items are coming from Tikrit, although Baghdad, Mosul,

Erbil, Kirkuk are also mentioned by respondents as sources of supplies.

All respondents said that they keep their stock within the shop, and that their storage options have been affected by the crisis.

The frequency of restocking is highly dependent on the type of items being sold. All vendors selling fruit and vegetables reported

restocking every day. Vendors stocking long-life food items such as rice, oil and tomato sauce tend to restock once per week. Vendors

selling non-food items were more likely to restock once per month.

HRF found that the markets in Baiji and Suleiman Bek may be slow to respond to increased demand. When asked about their ability to

upscale stock intake, every respondent suggested it would take a matter of weeks (rather than days) to increase their supply. Although

dependent upon the type of items being sold, the minimum reported time to increase supply was 2 weeks, and for some vendors it

could take upwards of 5 weeks to respond to an increased demand. The primary reason cited for this delay was a lack of cash, or an

inability to store any further stock within their current premises

RECOMMENDATIONS While it has already been noted that this assessment can only be considered to be indicative, a number of tentative conclusions can

be drawn from its findings. Firstly, it is clear that despite the conflict with ISIS ending nearly 2 years ago, the markets in Salah al Din

remain negatively affected. Physical damage to shops caused during the conflict remains a barrier to recovery, and prices remain higher

than prior to the conflict.

Low numbers of returnees remains a primary barrier to economic recovery in the area. The lack of demand caused by the lower

population has led to higher prices and many businesses remaining closed. The economic slowdown is also affecting business’ ability

to respond to change.

Based on the findings of this market assessment, the following recommendations are made:

• Create and implement an integrated project including: Support services linking target business actors to microfinance, mentoring and advisory service providers

• Entrepreneurship enabling environment: enhancing the link between youth entrepreneurs and stakeholders and creating a youth entrepreneurship network in target districts

• Develop rigorous selection procedures, including an independent selection committee, ensuring that the most vulnerable people such as women, unemployed and youth and marginalized benefit from the intervention

• Entrepreneurship training focusing on micro-business opportunities. Emphasis should be given to customer service and improving the quality of goods and services provided by business actors

• Build on what already exists. Findings show curricula/training manuals have been designed and developed by international organizations and NGOs for entrepreneurship, including by ILO, MoLSA and others. Review these and identify what, if any, additional curricula needs to be developed

• Partner with government, local councils, community leaders and the private sector, to build on what these actors can offer to assist and coordinate the work of the project team and implementing partners

• When designing and implementing training courses and support services, take into consideration the sensitivity of women’s situations, particularly the type of business grant, venue of training and duration of the training program

• To ensure sustainability of interventions, enhance linkages between business actors and stakeholders, and create networks in target districts. This encourages informal learning and provides the collective power that may be required to reach out to new markets

• Provide gender-sensitive capacity building for project staff, trainers, mentors and implementing partners to better understand gender-based differences in approaching entrepreneurship and self-employment. Women are an integral part of project activities and are beneficiaries. For example, women’s entrepreneurial activities are often home-based and grow at a slower pace than men’s. Women may require additional market and entrepreneurship skills training compared to men, as they may not have undertaken any business activities previously

• Support businesses that encourage local production of goods that are currently being imported, particularly fruits and vegetables. This would also reduce the price and the expense of transportation, which would, in turn, make local products more competitive and improve food security within the target districts

• Allocate adequate time to promote project activities in order to enhance the quality of selection and identify most in-need target groups

• Conflict sensitivity and prevention capacity building for stakeholders, including participants, project team and implementing partners to ensure the success of the project

• A training of trainers (TOT) workshop on conflict sensitivity and prevention for targeted individuals to ensure sustainability and transfer of knowledge;

• Encourage business actors to use social media, such as creating Facebook or WhatsApp groups to networking or promote their goods and services

• Including government entities, local councils, social leaders, CBOs and the private sector, and building on whatever possible for those entities in order to help the project team and implementation partners while coordinating with them

FOR FURTHER INFORMATION:

COUNTRY CONTACT

Omar HAMEED

Livelihoods Project Manager

Human Relief Foundation

Omar.hameed@hrf.co.uk

Mohammed ABDELRAZZAK

Field Coordinator – IRAQ / Livelihoods Specialist

Secours Islamique France

fieldcoordinatoriraq@secours-islamique.org

HEADQUARTER OFFICE CONTACT

Mohammed RAHMAN

Head of International Programmes

mohammed@hrf.co.uk

Marion Chranuski

Program Officer - Middle East & Asia Secours Islamique France HRANUSKI@secours-islamique.org