Iraq Business Perspectives (Part 2): Iraq’s Untapped Financial Market & Iraqisation


In the second part of our series on Iraq’s business environment and investment climate, we hear more diverse views from two professionals working in different sectors, providing a detailed overview of the challenges and opportunities in Iraq in 2019 and beyond, from the macroeconomic level to local challenges issues.

Our first guest contributor is Bartle Bull, co-founder of Northern Gulf Partners, a frontier market investment bank and Portfolio Manager of their Iraq Stock Exchange (ISX) fund Iraq Investment Partners I (IIPI). He extols the potential gains from investing in Iraq, as a vast influx of oil revenue leads to colossal expansion from a low base in sectors such as telecoms and consumer goods.

In the energy sector, Andy Lenihan, Senior Consultant at Turner & Townsend discusses the challenges of delivering services to major international oil companies, in the complex operating environment of southern Iraq. He describes the importance of a solid, long term localisation strategy.

For Patient Investors, Iraq Represents Vast, Untapped Potential

Bartle Bull, Founder, Northern Gulf Partners

Iraq is potentially one of the richest countries on earth, and one of the fastest growing important economies in the world. Iraq is the world’s fourth largest oil producer and number two in OPEC. Of these, it’s the only producer with a realistic likelihood of doubling its production over the coming decade. The inbound investment for this alone will be north of $150b.

Iraq’s greatest resource is its population of 38 million, 65% below the age of 25. Iraqis, famously well-educated, are tough, resourceful, and enterprising. The entrepreneurialism is amazing—we see this sophisticated, globally connected, youthful population designing apps, starting thriving retail businesses, launching IT incubators. Baghdad feels like the most exciting city in the Arab world right now.

The rise of the Iraqi middle class is a remarkable phenomenon. Consumer products, financial services, private healthcare and education, food and beverages, mobile phone usage—all these are growing fast.

The Iraqi Stock Exchange

The ISX has 104 listed companies. Total market capitalization is $11.6b and daily volumes are still very low- less than $1m. The great majority of investors are local retail as foreign investors and local institutions have yet to enter the market. The exchange is fully electronic using a state of the art NASDAQ-OMX platform but new investors will find the market can be bureaucratic, illiquid and expensive.

Growth in the consumer sector is well represented on the ISX. The share price of Asiacell, a mobile phone carrier majority owned by Qatar’s Ooredoo, was up over 40% last year and paid a 12% cash dividend. The local Pepsi bottler was up over 30% with a 2.5% dividend. For companies like these, coming from a very low base, the excitement has barely begun.

Untapped Potential

In a massive and growing export economy like Iraq’s, we see the currency as a positive for investors. Dollars are pouring in from oil exports, to the tune of over $7b per month right now, and likely to rise over time. The dinar appreciated slightly against the dollar in the last year. The Central Bank is independent and technocratic and works closely with the IMF; they have been very successful in keeping the dinar stable.

The market’s at a very early stage, and still down over 50% from its peak in 2014, just before the IS crisis hit and the oil price collapsed but is starting to recover. According to the database BarclayHedge, our fund IIPI was the best performing emerging markets hedge fund in the world in May 2019 with an increase of 13.57%.

One good way to measure the potential of Iraq’s stock market is to look at market capitalization-to-GDP ratio, in other words the size of the local market compared to the size of the economy. In Iraq it is 5.5%. In the closest “comp”–neighboring Saudi Arabia, with a smaller population and similar oil reserves, the ratio is 72%. (It’s 77% in Kuwait, 23% in Iran, and 55% in Jordan.) This would imply 13x growth in the market just to keep up, but we can’t forget that in Iraq the denominator, the GDP itself, is also growing rapidly.

Partnering with Local Talent is Key for Sustaining Growth

Andy Lenihan, Senior Consultant, Turner & Townsend


The term ‘localisation’ can have negative connotations for an expat due to fears they will be replaced with a local national. A much more realistic view of this issue would see localisation as a fundamental part of achieving an organisation’s vision. The main objective of a good localisation strategy should be to acquire, retain and develop local talent, and deliver world class quality projects using local resources. Through a combination of meaningful transformation, localisation and delivery of world class service, we believe it is possible to make a difference to business in the regions and sectors where an organisation operates.

There is much that expats bring to the table with their experience, and ensuring that this knowledge is passed on to the pool of talented Iraqis available in our industry is key to enabling growth, the well-being of citizens and the health of the local economy. We have recently employed our first Iraqi National into our team as a Quantity Surveyor (QS) and we are currently in discussions with the RICS Recruit on how we can develop and support a structured training programme for the local talent pool.


Arriving in Iraq as an expat is definitely daunting at first. Following strict safety procedures, wearing body armour and travelling in armoured vehicles is unnerving, but you get used to it pretty quickly. The established network of international security providers advise us daily on any potential threats and the Iraqi Oilfield Police do a great job manning checkpoints in the work sites. Our client also provides us with an evening update of the incidents which have occurred that day and although security and safety is always paramount, it’s amazing how quickly you adapt and normalise phrases such as ‘celebratory small arms fire’.

Administrative issues

The processes we encounter for the issuance of Visas and Oil Field Passes are not the easiest to navigate. Often there are long periods where expat staff are required to leave the country due to issues with Visas. This has an impact on the long term costs associated with employing expats and negatively impacts the day-to-day running of projects. When issues arise, we aim to keep our team working e.g. from one of our local offices such as Dubai, but the consequences of not getting to site on time are increased, especially when you factor in your rotation. If the sequence is disrupted, you could spend as long as 3 months away from site. The slow issuance of oilfield passes can also result in expats having to travel to different camps away from the oilfield which again has a knock-on effect on project progress.

Iraq has the potential to be one of the world’s top oil and gas producing nations but before the abundant reserves can be turned into an opportunity for current and future generations, several challenges need to be overcome. Plants left dormant due to the Iraq wars need to be upgraded in terms of quality, standards and HSE performance, and new projects that can capture, transport, treat and process the excess natural gas – that currently has to be flared – could inject $3.5 billion per year into Iraq’s economy. Cost control remains firmly on the agenda as companies balance cost discipline with the need for significant capital expenditure. Working on behalf of client project management teams, it’s extremely important to provide independent advice to assure the cost, schedule and risk associated with these essential programmes of work


Guest Contributor

Bartle Bull is the co-founder of Northern Gulf Partners, a frontier market investment bank and Portfolio Manager of their Iraq Stock Exchange (ISX) fund, Iraq Investment Partners I (IIPI).

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Guest Contributor

Andy Lenihan is a Senior Consultant at Turner & Townsend, a multi-sector international project management and programme management consultancy.

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