Family Income and Poverty:
The percentage of the population living below the poverty line rose (105.5 Iraqi dinars per month / person) in Erbil in the year 2012 to 3.6% of population, compared to (3.4%) in 2007. This percentage varies between rural (9.3%) and urban areas (2.4%)29, and from one district to another; 1% in Erbil and Koya, compared to 5% in Khabt and 6% in Merga Sur. The percentage of children under the age of 5 years who are suffering from malnutrition rose from 6.5% in 2000 to 9.7% in 2011.
Agriculture and Agro-Products:
Agriculture is one of the important productive sectors in Erbil and that generates job opportunities for local employment, especially in areas of high poverty rates compared to the average of the governorate.
Despite of the nature’s richness of water and fertile soil, the agricultural sector in Erbil is still far from using the mechanization and modern techniques currently used in the agricultural and livestock production sector. In addition it suffers the a lack of comparative studies that enable decision makers to compare the productivity per unit in this sector with other areas advanced in agricultural techniques, as well as the absence of feasibility studies for the various crops and agricultural production in general, leading to creating a random sector.
Workers in the agricultural sector suffer weak knowledge and modern means of production, in addition to poor skills, especially skills related to the use of modern technology and machines. On the other hand, the government provides various types of support for workers in this sector, e.g. pesticides, fertilizers, seeds, etc., yet the amount of support provided is insufficient and the timing of its distribution does not fit with the production cycle in several occasions, rendering that support ineffective and unable to achieve its desired impact.
As a result, cost of local product is very high and no competitive in terms of quality, in addition to being unprotected within laws on local product protection, especially the local products similar to those imported from neighboring countries such as Turkey and Iran. Protecting the local product by preventing the importation of similar products is not the ideal solution as long as the local product is uncompetitive in terms of price, because if its high cost of production, and quality. Future efforts must focus first on the implementation of feasibility studies and then benchmarking studies, leading to identifying the products that have the potential to compete, at least locally, with similar imports. Afterwards, production methods and the skills of producers should be developed, as well should be supported with the necessary machines, technological equipment and assets; seeds for example, providing them with specialized laboratories and facilitating local, regional and global marketing mechanisms.
It is estimated that the next three years shall be exhausted in studying the sector and identifying areas for improvement and development of the product and those who produce it. Also, the next strategy for the post-2018 years should focus on issues such as the protection of the developed local product, product certificates of quality and support of exports.
The number of local companies registered stood at 10756 in various disciplines, and the total of registered foreign companies was 2004, where most companies are Turkish (44%), followed by Iranian, Arab and European companies in the various disciplines30. In terms of the size of investment capital used in Erbil, it exceeded USD 24 billion as of May 2015, most of which (80%) is domestic capital31. Foreign investment in Erbil focuses on the sectors of services and contracting.
Industry and Trade:
Total number of factories in Erbil by the end of 2014 stood at 2753, of which 37 are large industries factories (30+ workers); 2716 factories for small to medium industries, of which 1233 are working factories and 1483 are under construction. Industries that employ 1-9 workers are small industries and industries that employ 10-29 workers are medium industries.
Industries areas focus on sand and stone quarries (252) and presses (292), while other industries are distributed among food, textile and manufacturing industries and machinery. The estimated number of job opportunities offered by the industrial sector is 36932 jobs.
In trade, the current trade movement can be described as being a one-way movement where the Region imports, in general, different Products mainly from Turkey and Iran, in addition to products from China and other countries, while the local product, in return, is not up to competition to reflect the movement of trading in some products.
There are no specialized economic studies addressing the comparative advantage of the productivity of some products, the potential to develop them, and the economic feasibility of producing them. In addition, there is a lack of integrated and targeted support programs for products with competitive potential in the future and the unavailability of the infrastructure needed to support commercial trade; e.g. roads and railways.
In terms of domestic economic activity and exchanges between districts, there is also a room for development and improvement through providing the support and infrastructure necessary to convert them from internal exchange operations to a product marketable externally. For example, Shaqlawa district is distinct for tourist services while Koya features quality poultry products and eggs.
30 Information, statistics and indicators for Erbil Governorate 2014, the Ministry of Planning, Kurdistan Statistical Authority, Erbil Directorate of Statistics
31 From the lecture of Mr. Nawzad Hadi, Governor of Erbil, at the Swiss Taft University, https://youtu.be/j7yOVZ8vA2U, on June 28th, 2015
32 Erbil's Provincial Diagnostic Report, with the support of ILO, 2012
Globally, the importance of tourism as an economic sector began increasing; tourist numbers increased during the period 1990 - 2011 steadily and developing countries experienced a growth in tourism sector as well. World Travel and Tourism Council (WTTC) statistics indicate that the share of developing countries rose from 30% in 1980 to 47% in 2011 and is expected to further rise to 47% in 2030.
In general, Kurdistan Region, including Erbil, enjoys important natural, historical and cultural data stimulating tourism development; e.g. attractive nature including mountain ranges which are an extension of Zagros Mountains series, where the highest peak of this series at a height of 3607 m is in Erbil; the waterfalls where the most famous are Bekhal Falls in Erbil, in addition to a number of natural springs. The Great Zab river is also the natural and administrative border between Erbil and Nineveh governorates. Climate in Erbil is hot in summer and cold to mild in winter, where temperatures in July and August reach to 50°C and 2°C in January, varying from one area; temperature reaches to -5°C in mountainous areas than in plains.
There are five crossings to Kurdistan Region with neighboring countries; one of them, Haj Omran crossing, is located in Erbil, connecting Erbil with Iran. In addition to the international terminal, there are several cross points between Erbil and the other governorates.
In terms of the transport network in Erbil, public transport is a key sector that needs to be developed in the next phase. Roads are available and in a good status, especially in the center of Erbil, yet they need to keep pace with the rapid expansion of the city’s area and residential areas. There are two bus stations in Erbil that provide transport services for a number of cities, but they are not up to international standards and non-organized within a comprehensive framework of the sector. There are public transport between Erbil and the other governorates. There is no railway.
Reaching Erbil by air is through Erbil International Airport, which connects the governorate directly with 17 international destinations in addition to Baghdad and Basra. It records 11 flights per day, and the number of travelers amounted to 621,870 passengers in 2011, representing an increase of 37% compared to 2010, at the rate of annual increase of 25 % since 2006.
33 The report on e current status of tourism - the guiding plan for tourism in the province of Kurdistan, the General Authority for Tourism - Kurdistan Regional Government, August 2012
Political stability is one the most important factors affecting the development of tourism. The Region has been in general witnessing excellent political and security stability since 2004 to 2013.
Tourist traffic, either for the purposes of leisure or work, has been affected by the tense economic situation due to the failure to approve the annual budget for Iraq. Other reasons include the armed attacks in Erbil, most notably of which is the coward bombing near the governorate building in November 2014 and the attempt to enter Erbil by the terrorist ISIS organization in August 2014.
Kurdistan, and Erbil the capital in particular, is an important destination for those looking for opportunities to invest in services sectors, including tourism industry which has seen remarkable growth in the number and quality of hotels, restaurants and cafes since 2004 until the moment, where Lebanese investments dominated this sector.
Tourist numbers have dramatically increased in the Region since 2007, where numbers of tourists exceeded 1.7 million tourists in 2011, most of whom (69%) went to Erbil. Tourism revenues for the same year amounted to USD 600 million.
The number of tourists to the Region doubled in a notable and remarkable boom in 2012, with the number of tourists exceeding 2.5 million tourists during the first half of 2012; where 223,000 crossed to Erbil by air through Erbil International Airport and 755,000 crossed to Erbil through border crossings with Iraq. The majority of tourism in the Region is internal, where approx. 70% of the tourists are Iraqis, compared to less than 15% of foreigners.
Tourism sector needs full regulation and development in the Region, since there is still a need to adopt and circulate the international rankings for tourist facilities. Tourist areas and utilities, means and lines of transportation should also be developed, as well as the local human resources that could be an important element in the labor required for the sector, not to mention the culture of the tourist community. Further, the high cost of tourism, especially travel tickets’ and hotel accommodation, as well as the limited airlines, in addition to the lack of organized promotion and weak associated services of local handicrafts and folklore exhibitions, among others, are some of the most important aspects that need to be developed in the next phase.
Financial and Banking Services:
Banking and financial services can be available and investor’s confidence can be attained with the existence of a legislative structure that govern them, guarantee the right of the investor, facilitate the provision of basic investment service and develop economy in general.
Central Bank of the Kurdistan is subordinate to Iraqi Central Bank in Baghdad. As well, the banking sector in the Region is subject to a complete subordination to the laws of the Central Bank of Iraq in Baghdad, which limits the possibility of diversification of services and affects the liquidity available, in addition to increasing the time needed to complete banking transactions’ procedures. Only a limited number of financial services is being offered in the Region; e.g. banks that provide limited and modest services in terms of investment. The Region in general lacks other important financial services for investment; such as stock market, bonds and currency exchange.
There are 95 banks in Erbil, most of which are located in central Erbil. They vary between public, private and specialized banks that provide certain sector services; such as the agricultural loans. ATMs are available at only ten banks only and they are mostly out of order. The number of bank users in Erbil in 2013 was approx.100,000, yet there are no precise figures or analytical statistics on the number of users of banks, their nationalities, or the quality of services they receive. Salaries constitute the majority of the trading volume in banking services, while the other services are of very limited number; including opening of current and savings accounts in local currency and dollar, bank transfers and a limited number of facilities including promissory notes and letters of guarantee. Among the services offered by the banks are also lending service, which includes housing, agricultural and industrial loans.
Unemployment and Employment:
The percentage of population at working age in Erbil is (57.3%), which is the percentage of the population in the age group of 15 to 64 years of age according to the ILO definition. Unemployment rates vary by gender, where unemployment rates among males is 4.3% versus 12.8% among females34.
In terms of economic sectors generating income, the private sector has absorbed almost half of employment in Erbil (44.5%). Service sector achieved the highest proportion of employment, absorbing 71.4% of labors, followed by the industrial sector at 20.2% and finally the agricultural sector at 8.4% thereof.
34 Labor Force Report 2013
35 Socio-Economic Indicators in KRG – Socio-Economic Monitoring System, Ministry of Planning. Kurdistan Regional Statistics Office, Kurdistan Region, Iraq, Dec 2012
Competences of local Manpower for Recruitment in Foreign Investments:
Local competencies can be currently described as weak and disproportionate to the requirements of foreign investors. On the one hand, there is the language barrier as a main obstacle facing the possibility of hiring local staff, since Kurdish, Arabic and English languages are main languages, as well as Turkish in several occasions. Most young people lack the English language fluency. On the other hand, there is a weakness in the required expertise in a degree that varies from the requirements of one sector to another. Thirdly, there is also poor professional and productivity culture, on top of which is adherence to working hours and deadlines.
There is no study on economic sectors’ needs of competencies that can guide the design and implementation of requalification and training programs for the local workforce, neither a comprehensive study on the potentials and aspirations of the local workforce and their view of the various careers and jobs. Such studies are essential in determining the most important causes of the gap between the local workforce requirements and needs of the economy.