Small businesses in fragile and conflict-affected settings: Breaking the vicious cycle of fragility

But conflicts, shifting weather patterns, and other pressures have made doing business a challenging enterprise, compounding the daily pressures of finding the right buyers, sourcing key inputs, and developing the necessary skills to compete.

ITC has a long history in Iraq, and with the EU’s support has put in place a project to help Iraqi farmers grow their businesses and sell their products. Known as Strengthening the Agriculture and Agri-Food Value Chain and Improving Trade Policy, or SAAVI, one of the defining features of this market-led programme involves bringing together agribusinesses under alliances, upgrading every aspect of their production processes, and connecting them to buyers such as supermarkets and processing factories, reaping prices with a 90% premium. This approach allows smallholder farmers to learn from one another and, importantly, meet market expectations.

‘As generational farmers of Ninewa, there are still many things that we did not know before joining SAAVI.’ Thekra Abdul Hafiz, farmer, member of Greenland Business Alliance.

One such farmer is Thekra Abdul Hafiz, who has joined the Greenland Business Alliance. ‘As generational farmers of Ninewa, there are still many things that we did not know before joining SAAVI,’ Thekra said, crediting the project’s focus on alliance building and buyer connections for making it possible to learn new skills and gain key business insights.

Today, tomatoes grown in Mosul can be found under the ‘By Iraqi Hands’ label on the shelves of major retailers like Carrefour in Erbil, and the creativity and hard work of many more small businesses can be seen at trade fairs like the Iraq National Trade Forum, which held its inaugural edition in 2022 and its second iteration in 2024. But crises can put this hard-won progress at risk. This dynamic is not limited to Iraq: fragility is becoming increasingly common for small businesses around the world. Often, multiple crises are happening at once, putting the business and policy ecosystem under heavy strain.

Understanding the nature of fragility and what it means to ‘do no harm’ when supporting small businesses is a complex task. That’s why the 2023 SME Competitiveness Outlook (SMECO), ITC’s flagship publication, made fragility its guiding theme. Released ahead of the UN Climate Change Conference in Dubai, and officially launched in Baghdad, SMECO outlines how a comprehensive approach that draws from the expertise of small businesses, local governments, development partners, and UN agencies can make a lasting impact on the ground.

The report takes a global look, seeing how fragility and conflict-affected settings make it harder for small, informal, and women- and youth-led MSMEs to survive, much less grow. The research also reinforces that every situation has its own nuances and complexities, and that in an increasingly fragile world, everyone involved must be ready to play the long game. 

Without working to address the drivers of fragility now, progress towards achieving global goals will also falter: SMECO found that countries experiencing fragility are having a tougher time achieving most of the 17 Sustainable Development Goals, and collectively are behind on 15 of them.

Small business competitiveness is a critical piece of the puzzle, but MSMEs cannot break the vicious cycle of fragility alone. Changing the business and policy environment is key, and Iraq is one example where those efforts are working. The country is putting in place domestic reforms that will not only pave the way towards Iraq joining the World Trade Organization, but will also remove many of the hurdles that limit the potential of local MSMEs, including farmers like Thekra.