There have been widespread security problems in Diyala, particularly after 2006. While security improved significantly in the second half of 2008, bombings and assassination attempts continue to occur.

The public sector currently provides 36% of all jobs in the governorate. Private sector expansion in the governorate is inhibited by lack of regular electricity and water supplies, poor infrastructure, competition from cheap imports, lack of capital and skilled staff. Diyala has traditionally been dependent upon agriculture as a major source of income and employment, and is famous for its citrus fruits and dates. Agriculture provides a fifth (19%) of all jobs in Diyala and accounts for an estimated one fifth of the governorate’s GDP.

Diyala experiences significant humanitarian and development problems, particularly with water. The governorate’s main water supply from the Himreen dam is insufficiently supplemented by the Tigris and sources flowing in from the KRG and Iran. Only 190 of the 300-350 litres per person per day required are being provided. Almost half of the population (46%) suffers from irregular availability of drinking water, a figure which rises to 74% in Al-Muqdadiya district. Around half of all households in Al-Muqdadiya (47%), Kifri (53%) and Baladrooz (40%) drink water directly from a stream, river or lake.

Diyala has one of the highest proportions (8%) of post-February 2006 IDPs relative to the local population. 83% of the governorate’s Internally Displaced Persons (IDPs) are originally from Diyala, having fled to other parts of the governorate. 17% of IDP households are female-headed, compared to a national average of 10%. Female-headed IDP households often face problems securing a consistent source of income and in dealing with government bodies. Almost all IDP and returnee households (96% and 92% respectively) have identified food as a priority need.