Wednesday August 1, 2018
By Tom Jackson
The Nordic Horn of Africa Opportunities Fund, a US$10 million fund
for supporting small and medium sized companies, has launched in
Somalia.
The fund has been launched by investment firm Norfund, One Earth Future’s Shuraako initiative and Danish development finance institution IFU,
and aims to help Somali entrepreneurs build sustainable businesses,
contribute to their country’s economy and tax base, and create a
significant number of jobs.
It has an initial capital target of
US$10 million, with the primary investment instrument to be the
Sharia-compliant “Murabaha” and the average deal size US$250,000. The
capital will flow to all regions of Somalia, with investments made into
companies in various sectors.
Norfund, the initiator and anchor
investor, has committed up to US$3 million, while IFU and the Arsenault
Family Foundation have each committed US$2 million. The Norwegian
Ministry of Foreign Affairs has supported a first loss component of US$3
million. The fund will fill a gap by funding SMEs that have no other
sources of capital.
“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 financial
return,” said Norfund chief executive officer (CEO) Kjell Roland.