Education Infrastructure
Education Infrastructure
Business Model Description
Build, reconstruct or rehabilitate elementary, middle and high school infrastructure through Public-Private Partnership (PPP) projects in allocated plots by the government, including those announced by the National Investment Commission (NIC) and agricultural land donated by the people, which according to the 2023-2025 three-year budget provision have become eligible for establishing schools. Adhere to inclusive school design principles such as optimizing connectivity and using large interior spaces for wide circulation areas, taking into account children with disabilities, special needs, and living in informal settlements.
Expected Impact
Foster access to education to lift more people out of poverty, improve livelihoods and stability.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Iraq: Countrywide
- Iraq: Central Provinces
- Iraq: Middle Euphrates
- Iraq: Northwestern Iraq and Anbar
- Iraq: Southern Iraq and Mesopotamian Marshes
Sector Classification
Education
Development need
Achieving quality education in Iraq is undermined by limited government education spending, which represents less than 10% of the public budget that is below the MENA average of 14% and the international benchmark of 15-20% for achieving SDG 4, quality of education staff, outdated curriculum, weak school infrastructure, skills mismatch, and limited time spent at school (3,4).
Policy priority
Building human capacity is the first of the five sustainable development priorities set out by Iraq’s Vision 2030. The government envisions the domestication of the SDGs through the Ministerial Curriculum (2022-2025) which stipulates the adoption of a plan based on 23 axes, including the improvement of human capital endowment and efficiency in education as the 14th axis (1, 2).
Gender inequalities and marginalization issues
Female labor force participation in Iraq is the second lowest in the world, at 10.6% as of 2021 (cf. 68% for males) as an outcome of numerous factors that hinder entry, including educational inclusion, prevalence of child marriages, and societal norms. In Iraq, mostly girls make up the 3.2 million children that are out of school (6, 8). Marginalized communities, including the estimated 200,000 displaced households and people living in more than 470 informal settlements in Iraq, have significant challenges in accessing physical education facilities or bear the brunt of overcrowding, inadequate school facilities, and long distances to school, which disproportionately impact the girls’ transportation to the educational facilities. Lack of civil documentation and the need to work to provide extra income for their families impede displaced children’s inclusion in the education system (7).
Investment opportunities introduction
Iraq is a conflict-affected upper-middle income country, endowed with one of the most youthful populations globally as 40% of the Iraqi population is under 15, with opportunities to invest in school buildings, technology-based distance learning, early childhood development, private schools, and higher education facilities such as laboratories (2, 5).
Key bottlenecks introduction
Sourcing skills albeit high employee turnover and access to finance need to be addressed given the banks’ limited loan portfolio and public mistrust in the banking system, owing to bank failures during domestic insurgency and external shocks, and currency auction practices among others (9).
Education Infrastructure
Development need
School infrastructure is an urgently needed investment in Iraq given that almost half of the 14,032 existing school buildings need rehabilitation or significant design improvements to ensure basic safety and hygiene standards. The deficit in school buildings results in double- and multiple-shift schools which represent 45% of the total schools in 2018/2019 academic year (3, 4).
Policy priority
The National Development Plan (2018-2022) sets the rehabilitation, expansion, and development of new school buildings as a means of achieving its Human and Social Development pillar. In 2023, Iraqi government established a fund of funds (FOF) with a capital of about USD 765 million, including the education sector, and aims at constructing 1,000 new schools immediately (10, 11).
Gender inequalities and marginalization issues
In Iraq, girls are more likely to be out-of-school than boys at all education levels. The urban-rural divide in school completion rates is prevalent at all education levels and as high as 12%. In Southern Iraq, notably in Al-Muthanna and Missan, gaps in completion rates for primary and lower secondary education levels are the widest. Lacking adequate mobile devices and internet, displaced children have been the most vulnerable to pandemic conditions and some lost around two years of schooling, without access to remote learning. In rural areas, female teachers may not work due to cultural barriers that refrain them from instructing in mixed and overcrowded classrooms (6, 7).
Investment opportunities introduction
Post-crisis reconstruction and demographic dividend vouch for lucrative investments in education infrastructure and inter-sector linkages between education and agriculture. Federal Budget 2023-2025 grants contractual privileges to private sector for construction of pre-university schools and higher education facilities such as teaching hospitals (12).
Key bottlenecks introduction
Sourcing well-educated teachers is hard as only about one third of teachers in Iraq have bachelor’s or higher degree. Low salary and conflict hinder the practice of teaching. Lack of synergies between administrative units and limited flow of educational data undermine the long-term strategic and corporate planning amidst the conflict-induced uncertainty (4, 9).
Pipeline Opportunity
Education Infrastructure
Build, reconstruct or rehabilitate elementary, middle and high school infrastructure through Public-Private Partnership (PPP) projects in allocated plots by the government, including those announced by the National Investment Commission (NIC) and agricultural land donated by the people, which according to the 2023-2025 three-year budget provision have become eligible for establishing schools. Adhere to inclusive school design principles such as optimizing connectivity and using large interior spaces for wide circulation areas, taking into account children with disabilities, special needs, and living in informal settlements.
Business Case
Market Size and Environment
> USD 1 billion
12,000 school buildings
The immediate need for construction of school buildings in Iraq is 8,000, while the figure is 12,000 for the longer-term. In the short term, school constructions are expected to create a market of more than USD 1.2 billion, including Iraqi and foreign contractors (13).
In Iraq, there are around 3.2 million school-aged children who are out of school as per estimates in 2023 (27).
Indicative Return
Return on Equity: 20-25%
Given the specific market considerations, PPP procurement for social infrastructure such as schools in Iraq would be expected to generate a return on equity between 20 to 25% (29).
Investment Timeframe
Short Term (0–5 years)
Immediate need to build schools in Iraq could translate to advantageous contractual arrangement and return in less than five years. Previously school constructions in Iraq were backed by advance payments, involvement of banks and state as guarantor, assuming two-year contracts (15).
Ticket Size
USD 500,000 - USD 1 million
Market Risks & Scale Obstacles
Business - Supply Chain Constraints
Market - Highly Regulated
Corruption and International Arbitration
Impact Case
Sustainable Development Need
The projected cost of delivering SDG 4 - Quality Education in Iraq for the period of 2022-2030 would be about USD 120 billion from a developing country base scenario, albeit the limited public spending on education, representing less than 10% of the government budget -below the MENA average (3, 17).
Children with disabilities, mainly depression and anxiety, make up 22% of the total population, but more than 24% of those out of school at every educational level (6).
Quality of education, physical education facilities, and skill levels in Iraq remain low amid high dropout rates (highest at the end of upper secondary education with 12%, in 2020) and repetition rates (over-aged children make up about one-third of the secondary school children) (3, 4, 6).
Gender & Marginalisation
Enrolment is a key issue for an inclusive education sector in Iraq where the rate of females who are out of school (11.4%) is double that of males (5.4%), leaving out-of-school children vulnerable to child labor and child marriage (4).
Multi-shift schools in Iraq make up about 45% of the schools in Iraq, while putting those in the evening shift in a disadvantaged position, as pass rates between morning shift students and evening shift students may differ as much as 20% (4).
Expected Development Outcome
The private investments in building school infrastructure and public-private partnerships could help achieve SDG 4 - Quality Education by deploying more capital.
Inclusive building designs may help children with disabilities in participating to educational activities, therefore attaining better educational outcomes and lifetime rewards.
Gender & Marginalisation
School construction, especially in rural areas, could narrow down the gap in school buildings and decrease the number of out of school girls.
Increasing the number of new schools in Iraq would eventually finish the multiple-shift practice in education.
Primary SDGs addressed
1.1.1 Proportion of the population living below the international poverty line by sex, age, employment status and geographic location (urban/rural)
In 2020, 1.1% of the population (below the USD 1.9 per day poverty line), 14.5% of the population (below the USD 3.2 per day poverty line) (17).
Eradicating extreme poverty in Iraq (18).
4.1.2 Completion rate (primary education, lower secondary education, upper secondary education)
4.3.1 Participation rate of youth and adults in formal and non-formal education and training in the previous 12 months, by sex
4.a.1 Proportion of schools offering basic services, by type of service
In 2020, 76%, 46%, 32% (primary education, lower secondary education, upper secondary education) (6).
No recent sex-aggregated data available, 28% in 2019 (18).
Proxy: around half of the schools need rehabilitation and 45% run with multiple shifts (4).
Universal primary and lower secondary completion rates by 2031 (16).
N/A
Ending multiple shift practices in education and completing 8,000 new school buildings (10).
10.b.1 Total resource flows for development, by recipient and donor countries and type of flow (e.g. official development assistance, foreign direct investment and other flows)
In 2021, Net Official Development Assistance (ODA) received by Iraq was about USD 2 billion (19).
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Outcome Risks
The construction operations could lead to ground water contamination, formation of construction site debris, including paints and asbestos, traffic and air and noise pollution in the proximity (28).
Involvement of international contractors may aggravate Iraq's reliance on foreign finance and workforce, therefore corruption and transparency concerns (26).
Impact Risks
Without the strategic oversight by the public authorities, firms may fail to comply with contractual obligations, deviate from agreed design standards, or breach contractual privileges (15).
The small-scale and local contractors could be overshadowed by larger deals and the associated risk of corruption and politicization of tender processes.
If the hygiene and inclusive building design standards are not accounted for or monitored, the positive impact could be lower than expected.
The positive impact would be undermined if the site selection for the new school buildings do not consider rural and conflict-affected students.
Impact Classification
What
Enhancing access to schools and education infrastructure translates into improved lifetime gains for students and reduction in out of school population, repetition and dropout rates.
Risk
Construction of new school buildings may not be finished or fail to comply with agreed design standards due to corruption and transparency concerns.
Contribution
Building schools in Iraq complement businesses that provide early childhood development (ECD), remote learning and vocational training which have similar impact on inclusive education.
Impact Thesis
Foster access to education to lift more people out of poverty, improve livelihoods and stability.
Enabling Environment
Policy Environment
The Iraqi National Education Strategy, 2021-2031: lays the foundation for increasing financial commitments to achieve universal primary and secondary education, pledging to increase the share of public spending on education from below 10% to 16% before 2030 (16).
Ministerial Curriculum of the Government of Mohammed Shia Al-Sudani, 2022-2025: presents the vision of the government with respect to SDG priorities, including for the achievement of SDG 4 - Quality Education and improving efficiency in the educational system (2).
The National Development Plan, 2024-2028: is set to include a priority program that is designed to complete the public sector projects with a social dimension related to human capital development (30).
Republic of Iraq National Development Plan, 2018-2022: Sets out the government’s five-year objectives for the Human and Social Development pillar, including the construction of 3,000 new school buildings to reduce overcrowding in the classrooms and to end multiple shift schooling practice (10).
Financial Environment
Financial incentives: Government establishes partnership for education infrastructure investments in ''oil-for-reconstruction'' framework (26).
Fiscal incentives: Investment projects are exempt from non-custom taxes for 10 years and are subject to exemption of import duties for raw materials, equipment and devices, though implications and provision of incentives by the two different investment laws in the country may differ (22, 23).
Other incentives: Iraq Development Fund is established as a fund of funds (FOF) to manage USD 2.4 billion to be spent on sustainable development in six priority sectors, including education (24, 25). Education infrastructure investments could be financed in exchange for oil (26).
Regulatory Environment
The Revised Investment Law No. 13 of 2006 in Iraq: sets out fiscal incentives for the Iraqi and foreign investors, including tax exemption for imported assets for educational projects, and establishes the National Investment Commission (NIC) for promoting and facilitating investments (22).
Investment Law of the Kurdistan Region of Iraq (KRI), Law No.4 of 2006: grants equal rights to foreign and local investors and offers tax incentives for investments, including special clauses concerning education projects under the article 6 (23).
The Public-Private Partnership (PPP), 2017: provides a legal framework for collaboration between the public and private sectors in the development of infrastructure and public services.
Marketplace Participants
Private Sector
Private contractors experienced in school infrastructure, Iraqi Contractors Association, Orascom Construction, Power Construction Corporation of China (PowerChina), ENKA, SABIS.
Government
Ministry of Education (MoE), Ministry of Higher Education and Scientific Research, Ministry of Labor and Social Affairs (MoLSA), Kurdistan Regional Government (KRG), the National Investment Commission (NIC), Ministry of Construction and Housing, Ministry of Environment.
Multilaterals
United Nations Development Programme (UNDP), World Bank, United Nations Children's Fund (UNICEF), United Nations Educational, Scientific and Cultural Organization (UNESCO).
Non-Profit
Non-Profit: Adyan Foundation, Oxfam, the Rashad Center for Cultural Governance, REACH Iraq, Rwanga Foundation, Save the Children, Re:Coded, the Station.
Target Locations
Iraq: Countrywide
Iraq: Central Provinces
Iraq: Middle Euphrates
Iraq: Northwestern Iraq and Anbar
Iraq: Southern Iraq and Mesopotamian Marshes
References
- (1) Ministry of Planning, Republic of Iraq. 2019. The Future We Want: Iraq Vision for Sustainable Development 2030. https://planipolis.iiep.unesco.org/sites/default/files/ressources/iraq_vision_2030_en.pdf
- (2) Prime Minister's Office, Republic of Iraq. 2022. Ministerial Curriculum of the Government of Mohammed Shia Al-Sudani (2022-2025).
- (3) Lahire, Nathalie; Sedmik, Elisabeth; El Ghali, Hana Addam. 2021. Building Forward Better to Ensure Learning for All Children in Iraq : An Education Reform Path (English). Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/430241627636852041/Building-Forward-Better-to-Ensure-Learning-for-All-Children-in-Iraq-An-Education-Reform-Path
- (4) Munir, Essam; Selim, Safwa; Ramadani, Hanguin and Mohammed Jamal. 2021. Iraqi Education Sector Overview. Kapita Business Hub. https://kapita.iq/storage/app/media/Research/Iraq%20Education%20Sector%20Overview%20EN.pdf
- (5) Denselow, James. 2023. Iraq’s Young Population – A Challenge or an Opportunity? Arab News, Research and Studies. https://www.arabnews.com/sites/default/files/rsu_iraq_young_population_2.pdf
- (6) UNICEF. Iraq Education Fact Sheets, 2020: Analyses for learning and equity using Multiple Indicator Cluster Surveys (MICS) data. https://data.unicef.org/wp-content/uploads/2019/07/2020-IRAQ-Education-Factsheets_UNICEF_final.pdf
- (7) Norwegian Refugee Council (NRC). 2022. Twice displaced: The unmet needs of Iraq’s children in informal settlements. https://www.nrc.no/globalassets/pdf/reports/iraq-informal-settlements-children/twice-displaced---english.pdf
- (8) Central Statistical Organization (CSO), Kurdistan Region Statistics Office (KRSO) and International Labour Organization (ILO). 2022. Iraqi Labour Force Survey 2021. https://www.ilo.org/wcmsp5/groups/public/---arabstates/---ro-beirut/documents/publication/wcms_850359.pdf
- (9) UNDP SDG Financing in Iraq project team consultations with Iraqi firms and other private sector stakeholders in September 2023.
- (10) Ministry of Planning, Republic of Iraq. 2018. National Development Plan 2018-2022. https://andp.unescwa.org/index.php/sites/default/files/2021-05/National%20Development%20Plan%202018-2022.pdf
- (11) Zawya Projects. 2023. Iraq to set up joint funds with Saudi, Japan and Italy. https://www.zawya.com/en/projects/construction/iraq-to-set-up-joint-funds-with-saudi-japan-and-italy-vb9ly419
- (12) Republic of Iraq, Ministry of Justice. 2023. Federal Budget 2023-2025 (Arabic original). https://iq.parliament.iq/blog/2023/06/26/%D9%82%D8%A7%D9%86%D9%88%D9%86-%D8%A7%D9%84%D9%85%D9%88%D8%A7%D8%B2%D9%86%D8%A9-%D8%A7%D9%84%D8%B9%D8%A7%D9%85%D8%A9-%D8%A7%D9%84%D8%A7%D8%AA%D8%AD%D8%A7%D8%AF%D9%8A%D8%A9-%D9%84%D8%AC%D9%85%D9%87/
- (13) UNDP SDG Financing in Iraq project team consultations with Iraqi public sector stakeholders in July 2023.
- (14) Xinhua. 2023. Building for future: Chinese construction companies help bridge Iraq's education gap. https://english.news.cn/20230419/002afd9c37b24730b88ea3f835014887/c.html
- (15) OCCRP. 2021. Iraq’s Troubled School Building Lesson. https://www.occrp.org/en/investigations/iraqs-troubled-school-building-lesson#:~:text=Fadel%20Al%2DMassoudi%2C%20head%20of,1.2%20million%20dollars%20per%20school.
- (16) Saavedra, Jaime and Sedmik, Elisabeth. 2023. Iraq: New schools and improved learning bring hope to the poorest children, but more is needed. https://blogs.worldbank.org/arabvoices/iraq-new-schools-and-improved-learning-bring-hope-poorest-children-more-needed#:~:text=The%20Iraqi%20education%20strategy%20sets,currently%2045%25%2C%20as%20well%20as
- (17) Ministry of Planning, Republic of Iraq and UNDP. 2022. Financial Gap Analysis of Agenda 2030 and SDGs in Iraq. Baghdad.
- (18) Republic of Iraq, Ministry of Planning, National Committee for Sustainable Development. 2021. The Second National Voluntary Review Report on the Achievement of the Sustainable Development Goals. https://sustainabledevelopment.un.org/content/documents/285062021_VNR_Report_Iraq_English.pdf
- (19) OECD. 2023. Aid at a glance charts: Recipient Country-Iraq. https://public.tableau.com/views/OECDDACAidataglancebyrecipient_new/Recipients?:embed=y&:display_count=yes&:showTabs=y&:toolbar=no?&:showVizHome=no
- (20) International Labour Organization. 2023. Cost of Inaction: Education Deprivation in Iraq and the Potential of Social Protection to Reverse it. https://www.ilo.org/wcmsp5/groups/public/---arabstates/---ro-beirut/documents/publication/wcms_873037.pdf
- (21) Al-Monitor. 2020. Egypt wins strong foothold in Iraq’s reconstruction: Millions of Egyptian workers may benefit from their government's involvement in Iraq’s massive reconstruction process. https://www.al-monitor.com/originals/2020/12/egypt-reconstruction-iraq-economic-workers-construction.html
- (22) Republic of Iraq, Presidency of Ministers’ Council. 2015. The Investment Law No (13) of 2006 as amended with Law No.2 of 2010 and the Law No. 50 of 2015. https://faolex.fao.org/docs/pdf/irq201855E.pdf
- (23) Kurdistan Regional Government (KRG) Board of Investment. 2006. Investment Law. https://govkrd.b-cdn.net/OtherEntities/Board%20of%20Investment/English/Publication/Investment%20Law/Law%20No.%204%20of%202006%20-%20Investment%20Law%20in%20Kurdistan%20Region-Iraq.pdf
- (24) UNDP SDG Financing in Iraq project team consultations with Iraqi public sector stakeholders in July 2023.
- (25) BasNews. 2023. Iraqi Parliament Allocates IQD1 Trillion to Boost Private Sector, Investment. https://www.basnews.com/en/babat/807181
- (26) Zidane, Salam. 2019. Iraq, China launch 'oil for reconstruction' agreement. https://www.al-monitor.com/originals/2019/10/iraq-china-india-oil-construction.html
- (27) UNICEF Iraq. 2023. What We Do: Education. https://www.unicef.org/iraq/what-we-do/education
- (28) USAID. 2006. Environmental Impact Assessment of Basrah Children’s Hospital Project in Cooperation with the Ministry of Health, Republic of Iraq. https://pdf.usaid.gov/pdf_docs/PNADJ579.pdf
- (29) OECD. 2014. Public-Private Partnerships in the Middle East and North Africa: A Handbook for Policy-Makers. https://www.oecd.org/mena/competitiveness/PPP%20Handbook_EN_with_covers.pdf
- (30) UNDP SDG Financing in Iraq project team consultations with Iraqi public sector stakeholders in November 2023.