Iraq market set for growth, but challenges remain
Lack of government control over agencies makes scrutiny difficult
Although the Iraq construction sector looks set to benefit from major investment as efforts to rebuild the country to continue, the "worrying" business environment in the country is likely to prevent the sector from achieving its full potential, according to new research.
A report from Business Monitor International suggested that the market is set to grow at around 7.4% between 2013 and 2017, which is considerably slower than the 24% year-on-year growth achieved between 2008 and 2012.
It added that project completion rates were low, which it blamed on a lack of accountability in government agencies as well as regular delays in gaining approval for projects and funding issues.
In March, the Iraqi government approved an 18% increase in its annual budget, which included a 49% uplift in infrastructure spending - or 40% of the total budget.
Although the Ministry of Finance is looking to exercise greater control over stalled projects by making agencies liable for schemes that are less than 25% complete appear before parliament for questioning, the report states that the government's "lack of control over local agencies and bureaucratic bottlenecks will impede the progress of development projects".
Iraq has targeted investment from the GCC into its construction sector in a bid to help alleviate a chronic housing shortage in the country. The government's ministry for housing and construction has signed deals with a number of UAE developers over the past 12 months, including Emaar, Damac and Bloom Properties.