We know you’re really busy, not to mention dealing with a global pandemic crisis. So, here’s a quick overview of what this paper is all about. If you only have time to read this initial introduction, you’ll have gained something. We promise. But we hope you’ll be encouraged to read more. If you’d prefer a PDF is also available for download.

Us – thinkbank – a market research agency specialising in running research in Iraq and the Middle East. Read more about us in this paper here and here.

What’s this paper about?

Introducing you to Iraq and Iraqis in 2020. In early March 2020, just before the Covid-19 lockdown, we ran a ground-breaking, first-of-its-kind online survey of nearly 2,000 Iraqi consumers aged 18-45. We did this to demonstrate that quality market research in Iraq is possible, and more importantly tell you some really interesting things about Iraq and Iraqi consumers. For a country with so little current and reliable data, this is really new and exciting. Read more about how we set up and ran the survey here.

Who should read this paper?

Anyone interested in commissioning market research in Iraq or the wider Middle East. Anyone looking to enter the Iraq market (with 40 million people it shouldn’t be left off business development roadmaps). Or simply anyone interested to know more about Iraq and real Iraqis from never-released-before reliable and current data.

Financial inclusion & the Iraqi consumer

Hardly any Iraqis have bank accounts or use financial services, and they don’t trust financial institutions – preferring the informal unregulated Hawala system. This traditional system for sending and receiving cash, based on trust and honour, resonates with Iraqis as a proven system that works and has worked for a long time. Iraqis prefer to spend their money on ‘sensible’ things to help secure their financial position in life. As well as cars – which are also considered as important symbols of reputation. Read more about financial inclusion and the Iraqi consumer here in this paper.

E-commerce & the Iraqi consumer

The majority of Iraqi internet users are shopping online, preferring to direct message the seller and pay by cash on delivery. And they’re mostly shopping online for clothing and footwear, food delivery, and health and beauty (led by women). And electronics for men. The quality of the online shopping experience could be improved, and returns have a long way to go. Kurdistan in the north is showing signs of advanced development compared to central and southern Iraq, with more people from there shopping online for convenience and having their own internet at home. So, Kurdistan represents a natural starting place for brands wishing to enter the Iraq market. Read more about e-commerce and the Iraqi consumer here in this paper.

We hope you enjoy reading this paper and finding out more about Iraq and the Iraqi consumer. We have a lot more information to share from the survey, so keep an eye on thinkbank’s blog for upcoming insights on the Iraqi consumer’s attitudes to FMCG, travel and food service.

And now, the introductions.

Before we delve into the detail of the thinkbank Iraq Consumer Survey 2020 and introduce you to the Iraqi consumer, we’d like to first introduce ourselves – thinkbank – as the authors of this paper.

thinkbank designs and conducts customised research in Iraq through a wide range of methodologies, providing advanced analytics and helping international and local clients understand the Iraqi consumer. We provide our clients with accurate data and high-quality insights that support and fuel strategic business decisions.

Our clients choose us because we understand them, we understand Iraq, and we understand the Iraqi consumer.

Head here or here for more information on thinkbank

And more specifically, we are Caroline and Rebaz – the Founders and Directors of thinkbank.

We also can’t introduce Iraqis without first introducing their fascinating country.

With a population now 40 million strong, Iraq has the 4th largest population in the Middle East, after Egypt (90 million), Turkey (84 million) and Iran (75 million).

Iraq also has one of the fastest growing young populations in the Middle East, with an estimated 57% of people under 25.

It’s undoubtedly a complex country – with multiple identities and significant ethnic, linguistic and religious considerations.

Part of Iraq’s complexity is linguistic. Arabic and Kurdish are the official languages, although there are also other dialects and languages including Turkmen (a Turkish dialect), Syriac (Neo-Aramaic) and Armenian. Not forgetting the strong dialects that clearly identify whether someone is from Baghdad, Mosul or Basra. In a society where personal security and trust are a constant consideration, knowing how to communicate with someone is key.

Part of Iraq’s complexity is ethnic. Its primary ethnicities are Arab (75-80%) and Kurdish (15-20%), with the remaining 5% including Turkmen, Yezidi, Shabak, Kaka’i, Bedouin, Romani, Assyrian, Circassian, Sabaean-Mandaean and Persian^[1].

Part of Iraq’s complexity is geographical. In northern Iraq there is the semi-autonomous Kurdistan Region. Generally speaking, this region is a more mature consumer market than the cities of central and southern Iraq, which are majority Arab and governed from Baghdad. For brands thinking about setting up in Iraq, Kurdistan could be a natural entry place.

And part of Iraq’s complexity is historic, with the legacy of Saddam’s regime, the 2003 invasion, the rise and fall of ISIS and subsequent political unrest. Iraq in 2020 is still somewhat fragile. But it’s also a country that’s rapidly developing and finding its feet. It has a young, connected population, aware of what the world can offer and wanting more for themselves as a result. And through our Iraq Consumer 2020 Survey we’ve demonstrated that despite this complexity and fragility, it is possible to conduct robust market research in Iraq.

Before we delve straight into the detail and data of the survey, we’d first like to introduce you to Rezhna and Walid – and their attitudes towards being online, finance and shopping. Their profiles bring to life some of the information illuminated by the survey data in this paper.

Walid

Walid is Baghdadi, older than Rezhna by a decade and with additional financial and family responsibilities. Accordingly, he’s curious to know more about banks and their facilities, in case they could be useful. But he’s also fairly wary of them. It’s a bit harder for him to get online, but he still manages it fine and likes to seek out good deals through the internet – especially for electronics.

So now let’s get stuck into some of the insights from the thinkbank Iraq Consumer Survey 2020, an online survey of nearly 2,000 Iraqi consumers aged 18-45. You can find out more about exactly how we set up and ran the survey here.

The survey told us that half of Iraqi internet users spend more than 5 hours a day online, and perhaps unsurprisingly this figure is higher for younger Iraqis, like Rezhna^[2]. Nearly two thirds of them go online just before bed, and just over a third ‘first thing in the morning’^[3].

Regardless of age, their device of choice is resoundingly smartphones, with 82% using their smartphone to connect online.

Interestingly, a quarter of Iraqi internet users own 2 or more smartphones.

Differing to attitudes in the West or in Arab Gulf countries, the internet isn’t regarded by Iraqis as a way to save money^[4]. This probably relates to the fact that the internet is expensive in Iraq compared to other parts of the world together with the challenges of online shopping for a country where very few people have bank accounts.

This high internet cost, combined with the fact that the Kurdistan Region is relatively more stable and has a more developed infrastructure than southern regions, could also help explain the significant regional differences in how Iraqis connect. Kurds usually access the internet via home landline, like Rezhna, or mobile Wi-Fi known as ‘Mi-Fi’. Whereas people in central and southern Iraq are much more likely to use public Wi-Fi^[5], like Walid.

Nevertheless, the internet is highly regarded in other respects:

• • Three quarters of respondents think the internet helps them stay connected to friends and family^[6]. Vitally important when family is often the primary social safety net. And two thirds of Iraqis agree the quality of human contact has improved thanks to technology.

• • Nearly all Iraqi internet users say the internet is the first place they search for information.

• • Just over half say the internet helps them make decisions^[7].

And where are Iraqis going to find this information to help them make purchasing decisions? Overwhelmingly, Facebook.

In fact, in Iraq when people refer to Facebook, what they often actually mean is the internet itself.

In recent years younger Iraqis are also going elsewhere to gather information though, and Instagram is now almost as popular amongst 18-24-year-old females (like Rezhna) as Facebook^[8].

Iraq is a cash economy where trust in financial services is low

Of those surveyed, just 17% have bank accounts, and a staggering 80% are unbanked.

Consequently, very few Iraqis use any form of financial services such as credit cards or digital banking. Although Iraqis with bank accounts are more likely to use other financial services. Walid currently has a Qi Card – a pre-paid card through which he receives his government salary, so he may be encouraged to try some out other services eventually (and abandon his habit of withdrawing his whole salary in one go at the ATM every month).

Trust in financial institutions, foreign and local, is low in Iraq. The most trusted financial institution isn’t actually an institution or bank – it’s a long established, unregulated system based on trust called ‘Hawala’. Through it, money can be deposited anywhere with a Hawala dealer who is trusted to ensure it finds its way to the desired recipient wherever they may be – Baghdad, Erbil or even London.

For any foreign or local bank to establish itself successfully in Iraq, it would have to build – or be built on – existing trust structures. Iraqi consumers are yet to be convinced that formal banking and alternative financial services are proving solutions to problems they actually face. Digital payment solutions also appear to have struggled to reach the necessary critical mass to start influencing transaction habits. One company that has succeeded in digitizing transactions for Iraqis is a Baghdad Hawala provider called Al-Taif, benefitting from a long understanding of what its customers actually want.

Furthermore, any brand entering Iraq should be cognisant of the potential challenges when promoting products with tempting financial offers. When faced with the task of calculating the best offer on a TV with a discount stated in terms of percentage (10%) versus a discount offered in absolute monetary value (equivalent to 15%), not quite two thirds of our survey respondents succeeded. This suggests brands, and particularly financial service providers, looking to enter the Iraq market should carefully consider how to communicate offers and financial products.

Securing their financial position is extremely important to Iraqis.

When asked what they would buy on coming into a large sum of money (an additional $10,000), almost a third opted to invest in their own business or repay existing debts. Following that though, around a fifth would buy a new car.

Perhaps surprisingly for those less familiar with Iraq, given the growing young population, of less importance was ‘fast’ spending on immediate improvements to living standards such as ‘entertainment, travel or vacation’ or ‘household goods’. Apart from (literal) fast spending on the new car of course!

It’s important to remember that Iraq’s youth bear a great deal of responsibility, like we saw with Walid; it’s culturally important to provide for and secure one’s family. Which means less of the fun stuff. The car isn’t regarded as ‘fun’ though, it’s an important indicator of security and reputation.

So how frequently are Iraqis shopping online? And how can they actually buy things online if the vast majority don’t have a bank account?

The answer is – the most popular way Iraqis shop online is direct messaging to the seller and paying cash on delivery.

57% of Iraqi internet users shop online,
using direct messaging and cash on delivery

In Iraq, we have to broaden the definition of ‘online shopping’ (with bank cards and associated facilities), to include – finding and ordering a product online using online messaging, an App, or website, and then paying cash on delivery. Rezhna does this regularly. It is also worth noting that many Iraqis will refer to ‘getting something online’ when they have in fact offered via a telephone number on a retailer website or social media page. 20% of internet users have done this in the previous three months, but we haven’t included such purchases in our overall online shopping figure.

And on the basis of this, 57% of Iraqis shopped online in the previous 3 months.

The top 3 things Iraqis buy online are clothing and footwear (42%), food delivery (36%) and health and beauty products (27%).

Women are more likely than men to shop online for clothing and footwear, and also health and beauty products. Men are more likely to shop online for consumer electronics and computers. Interestingly, women are also slightly more likely than men to shop online in general. And they are also more likely to order online using online messaging, while men prefer to order a product they found online via telephone.

And it is young women who are particularly driving demand for online products, like Rezhna.

Perhaps related to Iraqis not regarding the internet as a way to save money, the primary reason for shopping online is access to new products (just over half of online shoppers). And a third say it’s to access a better product selection. Only just over a quarter feel online shopping is cheaper than in-store^[9]. Interestingly, just over a third say the most common reason they don’t shop online is fear of overspending.

If you consider reasons for shopping online by gender or region though, it’s a different story. More men than women think it’s cheaper shopping online than in-store, which could be related to the products they are more likely to buy (electronics, like Walid’s Korean smartphone)^[10].

And in Kurdistan, people shop online for greater convenience overwhelmingly more than in Central and Southern Iraq^[11]. This reflects the fact that there’s a more developed range of apps in Kurdistan supporting online shopping, such as Lezzoo and Brisima for food and grocery delivery, as well as a better delivery and transport infrastructure.

The thinkbank Iraq Consumer Survey 2020 is a first-of-its-kind. It proves that despite the country’s complexity on numerous levels, it is possible to conduct quality research in and on Iraq. It also reveals fascinating insights on the Iraqi consumer. A huge feat for a country where there is so little publicly available data, and robust data at that.

For a reminder of the headlines, here’s our summary from the beginning of this paper.

We hope you’ve enjoyed reading and finding out more about Iraq and the Iraqi consumer. We have a lot more information to share from the survey, so keep an eye on thinkbank’s blog for upcoming insights on the Iraqi consumer’s attitudes to FMCG, travel and food service.

The Iraq market is opening up – market research is possible there, and many global brands are moving there. Don’t be left behind.

Founded in 2018, thinkbank is a British-Iraqi full-service research company. Our British and Iraqi team draws on nearly 20 years of research experience and combines the best of local experience with international expertise, operating to ESOMAR standards. We’re based in Erbil and have teams of researchers on the ground across Iraq, as well as a network of consultants across the Middle East and UK. We’re fluent in Arabic, Kurdish and English.

Accuracy is important to us, it’s the keystone of the research industry. We provide our clients with accurate data and high-quality insights that support and fuel strategic business decisions. We can access the hard-to-reach in Iraq, respecting and working with Iraqi cultural norms so we can effectively recruit representative respondent samples. And our local expertise and network of connections means we can operate across the whole country, including hard-to-reach locations such as Mosul, Kirkuk and disputed territories.

thinkbank clients

Our clients range from major global brands to leading local brands, including Careem, Viber, Lafarge and Qaiwan Group. We are also the official Research Partner for Iraq Finance Expo 2020.

We work across a diverse range of sectors, including media, telecoms, FMCG, retail, construction and stakeholder research. We provide both qualitative and quantitative research solutions, and our services include brand health, consumer tracking, concept testing, advertisement and campaign evaluation, market entry consultancy, market sizing, and feasibility studies.

We understand brands, and we understand Iraq and the Middle East.

The objective was to measure core attitudes and behaviours in relation to:

• Digital behaviour
• Financial inclusion
• E-commerce & online shopping
• FMCG
• Travel
• Food service

In this paper we focused on digital behaviour, financial inclusion, and e-commerce. We will share our findings on FMCG, travel and food service in Iraq on the thinkbank blog soon.