Stockholm (NordSIP) – Norfund, the Development Finance Institution of Norway, has established a $10 million fund to support small business in Somalia together with IFU, the Danish investment fund for developing countries, and the One Earth Future foundation.
The Nordic Horn of Africa Opportunities Fund has been set up to help small and medium sized enterprises in Somalia. The fund, which is “Sharia-compliant”, offers financing of up to $25,000 to fund energy, fisheries, agriculture, light manufacturing and the hospitality sector. Entrepreneurs will be encouraged to build sustainable businesses, contributing to the local economy and creating employment.
Norfund’s mandate is to support the building of sustainable businesses in poor countries, thereby contributing to economic and social development. Owned wholly and funded by the Norwegian government, it has a committed portfolio of $1.95 billion that includes over 770 companies. Nordfund predominantly invests in countries where the private sector is weak and access to capital is scarce, such as in sub-Saharan Africa.
Norfund “focuses on post-conflict and fragile states by building sustainable societies,” offered Norfund CEO Kjell Roland. Norfund committed $3 million to the fund, alongside $3 million from the Norwegian Ministry of Foreign Affairs and $2 million from IFU and the Arsenault Family Foundation apiece.
“This is an important investment for Norfund and an example of how it is possible to do sustainable investment in some of the world’s most fragile states. We believe the fund will have significant development impact in Somalia and also achieve a small yet positive and financially sustainable return,” Roland added.
IFU provides risk capital and advice, making investments on commercial terms in the form of equity and loans to contribute to economic development in the countries being invested in. IFU and IFU-managed funds have co-invested over $3.2 billion in Africa, Asia, Latin America and parts of Europe.
“Small companies are strong drivers for job creation and economic development, but often don’t have access to finance. IFU is very pleased to invest in this new fund, as it will provide loans and enable small businesses to grow in Somalia, which is one of the least developed countries in the world,” IFU CEO Tommy Thomsen said.
The fund is known as “Shuraako” locally, which means “partnership” in the Somali language.
Image: (c) shutterstock-Galyna-Andrushko