The EU boosts the Somali private sector by opening access to finance
Mogadishu, 2 February 2021: Today, the European Union has launched 3 new projects in support of Somalia’s private sector. The projects are significantly stepping up the EU’s engagement in Somalia as the new partnership will enable financial institutions to successfully provide relevant financing to local small and medium sized enterprises while supporting the investment climate.
“The EU sees the great potential in Somalia’s dynamic private sector and its entrepreneurial spirit, said the EU Ambassador to Somalia, Nicolas Berlanga Martinez. Somali businesses stepped in at times when state capabilities to deliver public services were limited. A new and direct collaboration with Somali banks and an improved regulatory framework strengthening the formal economy will give an unprecedented boost to the private sector and the job market.”
“Continued investment in Somalia’s private sector is integral for inclusive growth. We welcome the continued support from the European Union (EU) to achieve a stronger, more prosperous Somalia”, said the Minister of Planning, Gamal Hassan.
“The private sector plays a key role in stimulating and growing our economy. Our Government has heavily invested in the sector with the aim of creating employment and sustainably growing the economy. These initiatives launched today by the European Union (EU) support our continued resolve of providing better livelihoods to our people and our local communities”, added the Deputy Minister of Finance, Abdullahi Sheikh.
“The Government of Somalia has continually emphasized on the impact of a vibrant private sector in transforming livelihoods. Seeing that the European Union (EU) is continually supporting us to accelerate the sector’s growth continues to highlight our mutual interest in empowering our local community economies and that is the backbone of inclusive growth. We thank the EU for their partnership in strengthening this sector”, underlined the Deputy Minister of Commerce, Ali Mohamed Sheikh.
The 3 projects that were launched in Mogadishu are the following:
1.Finance for Inclusive Growth: with an EU funding of 4.5M€, the project seeks to strengthen the capacity of partner financial institutions to fill the financing gap in Somalia ensuring increased access to finance by providing micro loans and technical assistance to women and youth in business and producers, promoting financial inclusion for all. It will be implemented by AECF;
2.EU Contribution to the Nordic Fund: with an EU funding of 5.5M€, the project will contribute to the Nordic Horn of Africa Opportunities Fund (the ‘Nordic Fund’) which is an impact fund targeting Somali small and medium sized enterprises. The Fund’s investors and economic supporters include the European Union, Norfund, Investment Fund for Development Countries (IFU), the Norwegian Ministry of Foreign Affairs, Danida and the Arsenault Family Foundation. The Fund is managed by Shuraako, a programme of the ‘One Earth Future Foundation’, in collaboration with IFU. Shuraako connects investors with promising Somali-based businesses to encourage economic development and stability throughout the region.
3.Support to Policy Dialogue on Investment Climate: with an EU funding of 1,8M€, the project will target the investment climate and business environment by improving access to finance, markets, and essential services for medium, small, and micro enterprises (MSMEs), with a special focus on women’s economic empowerment. The project’s key areas are public-private dialogue; regional market access; responsible business conduct. It will be implemented by DAI.
The new project is part of EU’s “Inclusive Local and Economic Development programme” (ILED). The European Union (EU) and its Member States are supporting stabilisation, inclusive economic growth and protection for the most vulnerable in Somalia through the ILED programme (ILED, EUR 98.2 million). Among ILED’s key objectives is an inclusive and sustainable economic growth based on a sound appreciation of challenges and potentials in Somalia.
The Africa Enterprise Challenge Fund (AECF) is a leading development finance organisation that supports businesses to innovate, create jobs and leverage investments in order to create resilience and sustainable incomes in rural and marginalised communities in Africa. Launched in 2008, AECF has invested in 292 businesses across more than 40 value chains and 26 countries in sub-Saharan Africa. We focus specifically on agribusiness, renewable energy, and climate technologies, while also addressing the cross-cutting themes of gender, youth, and fragile contexts. In just over a decade, we have impacted more than 27.7 million lives, created close to 24,000 jobs, and leveraged over US $740 million in matching funds.
IFU was established in 1967. It is Denmark’s DFI with a mandate to provide risk capital and advice to companies wishing to set up business in Africa, Asia, Latin America and parts of Europe. The purpose is to contribute to economic and social development in the investment countries. With attention on the private sector, this is realized through equitable and sustainable employment creation and boosted commercial competitiveness of clients, commonly SMEs. In addition, there is transfer of knowledge, support to technology and innovation. Compliance with national and international environment, social and governance/human rights standards is integrated into all IFU investment portfolios, including this project. IFU has more than 812 successful investments to date, including engagement with SMEs in 88 countries. IFU was introduced to the Fund by Norfund in 2017 and subsequently became one of the original investors, committing $2.0 million in the first round in 2018. In 2020, IFU committed an additional US$5 million in the second investment round.
DAI delivers development solutions for bilateral and multilateral donors, governments and private sector clients worldwide, often in difficult environments where insecurity and conflict are rife. Founded in 1970, we have been a thought leader for the world’s largest donor organisations for many years, and currently the European Commission’s biggest contractor for international partnerships/development services. Our European Union business unit is currently implementing over 85 projects in 80 countries. We tackle fundamental problems caused by inefficient markets, ineffective governments, and instability, bringing together fresh combinations of expertise and innovation across multiple sectors: governance, social and green sectors, economic growth and digital transformation.
FOR FURTHER INFORMATION:
EU Delegation to Somalia