The Norwegian investment fund for developing countries (Norfund) has set up a $10 million kitty to support small businesses in Somalia.
Norfund, together with the Danish investment fund for developing countries (IFU) and Shuraako, an arm of One Earth Future (OEF), have set up the Nordic Horn of Africa Opportunities Fund to help small and medium-sized enterprises.
Dubbed Murabaha, the Sharia-compliant investment instrument can offer financing of up to $25,000.
The capital is expected to fund energy, fisheries, agriculture, light manufacturing and hospitality sectors across Somalia to help entrepreneurs to build sustainable businesses and contribute to the economy and create employment.
“The fund focuses on post-conflict and fragile states by building sustainable societies,” said Norfund chief executive officer Kjell Roland.Norfund, being the main investor, has committed $3 million, IFU $2 million and Arsenault Family Foundation $2 million.
The Norwegian Ministry of Foreign Affairs gave $3 million for first loss component.
Other partners are the Development Fund (Utviklingsfondet) a non-governmental organisation active in Somalia and a network of Nordic Somali diaspora.
IFU chief executive Tommy Thomsen said they will provide loans “to enable small businesses to grow.”
Somalia is recovering from civil war and rebuilding frameworks to attract investment. However, there are few international investments and establishments in the country.
The Nordic Horn of Africa Opportunities Fund is, seeking to fill the gap by financing SMEs that have no other sources of capital.
“The fund will grow over time as new investors join,” said OEF and Arsenault Family Foundation chairman Marcel Arsenault.
“There are investors who have shown interest to join over the next three to six months.”
OEF provides strategic, financial and administrative support on complex problems to create constructive alternatives to conflict.
Shuraako, which means “partnership” in the Somali language, helps to connect small and medium-size enterprises to investors to help citizens create jobs.