Good news for startups and SMEs in the East African country of Somalia. Norfund together with Shuraako, the Danish development finance institution, IFU, and Arsenault Family Foundation, has established a $10m fund that would support small and medium sized companies in the country.
“This is an important investment and proofs the entrepreneural spirit of Norfund. With Shuraako as a partner, we have a local team on the ground that works already. I believe that fund will have significant development impact in Somalia and also receive as small, yet positive financial return,” Kjell Roland, Norfund CEO, said
Here Is All You Need To Know
- The Nordic Horn of Africa Opportunities Fund is among the first commercial investment funds for Somalia.
- Norfund is the initiator and anchor investor of the Fund.
- Norfund has committed an investment of up to $5m, whereof the Norwegian Ministry of Foreign Affairs has supported a first loss component of $3m.
- The business environment in Somalia is one of the most challenging in the world. Access to capital is constrained, electricity is not generally available, minority protection of investors is problematic and parts of the country have major security and terrorist challenges.
- In this context, the Fund will fill a gap by funding SMEs that have no other sources of capital.
- The fund is the first of its kind and will demonstrate the potential to catalyze further capital into Somalia.
‘‘Now is the time to invest in Somalia,’’ said the Prime Minister of Somalia, Hassan Ali Khaire. ‘‘In three to five years it will already be late.’’
Khaire explained that the Somali people are business minded and that the government wants to support the private sector as this is the backbone of the society.
“Somalia has a lot of opportunities, and investments like this Fund are important for building peace and prosperity in Somalia.”
Read also: How International Organisations Are Helping Startups In Africa
Who Will Manage This Fund?
- Shuraako, a program of One Earth Future Foundation (OEF) is the Fund Manager of this new Fund.
- Shuraako, which means “partnership” in Somali, works in conflict-affected areas and underserved small and medium enterprise markets to develop a more resilient and responsible private sector.
- All investments will be done on purely commercial bases with the aim to contribute to strengthening the Somali private sector.
Any Beneficiary Of The New Fund Already?
- Al Fathi Fishing Company in Somalia is the first to benefit from the new fund.
- Suleban Adam Osman started his business in Berbera, Somaliland, as a 20-year-old graduate.
- His business idea was to resell fish purchased from local fishermen in Berbera to the Hargeisa fish markets.
- With only 50 USD in his pocket, he invested in fresh fish and a freezer.
- Within six months of operation, Osman was able to open his first fish shop in Hargeisa.
- Today, 15 years later, Osman is CEO and owner of Al Fathi (Fatxi) Fishing Company — a profitable fishing-, sales- and distribution-company in Berbera with 34 permanent employees.
- This is largely thanks to Norfund’s partner in Somalia, the small and medium sized enterprise (SME) Fund Manager Shuraako.
“Shuraako has done a lot for my business. They facilitated the profession that I was missing, and Shuraako helped me with two new boats and a fuel tank. After that, the production has doubled!” Osman noted
- The aim of the investment is to support further expansion of the company, including the purchase of two additional fishing boats and equipment.
- A requirement, however, is that company is willing train all staff on health and safety procedures.
- The planned expansion is estimated to create 17 new permanent jobs and 24 additional temporary jobs.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award winning writer.
He could be contacted at udohrapulu@gmail.com