Tuesday January 23, 2024
Mogadishu (HOL) - Somalia's leading non-banking financial institution, KIMS Microfinance, signed a strategic partnership agreement with Gargaara Finance Limited, a specialized apex financing facility to enhance job opportunities for young men and women in the Horn of Africa country.
Under the agreement, Gargaara will provide KIMS with an expandable, Shariah-compliant line of financing. KIMS will utilize this funding to enhance its provision of financing to Micro and Small Enterprises (MSEs) across the country.
Speaking at the announcement ceremony in Mogadishu earlier this month, Mustafa Abdi Ali, Chairman of KIMS Microfinance, expressed that the partnership agreement would enable KIMS to expedite its goal of providing increased opportunities to growing companies and entrepreneurs, particularly women and youth.
Since 2014, KIMS Microfinance has granted over 38,000 Shariah-compliant loans to MSEs, with a total value of USD 37.6 million. This financing has created over 25,000 jobs for women and youth groups from various segments of society, including refugees or internally displaced persons. KIMS operates through eight branches throughout Somalia, maintaining a solid portfolio with a Portfolio at Risk greater than 30 days remaining under 3%.
KIMS offers a range of client-centric small and microenterprise loan products, covering Trade and Commerce, Fisheries and Agricultural Value Chains, Livestock financing, Solar Home System financing, and Education financing. In addition to individual loans, KIMS provides a group loan product for vulnerable clients with income-generating activities, allowing them to access loans through a mutual, group guarantee model.
According to a statement from KIMS, it operates a pro-poor business model intentionally focused on supporting economically active but vulnerable women and youth as priority clients. The current portfolio of KIMS comprises 40% women and 61% youth (aged 18-35).
The statement further noted that with the support of Gargaara and other key investors, KIMS' current five-year business plan aims to finance 77,000 cumulative clients by 2027, solidifying its position as the leading provider of Sharia-compliant microfinance services in Somalia.
However, Gargaara Finance Limited, incorporated by the Ministry of Finance in Somalia in 2019 and backed by over $30 million in funding from the World Bank and the German Development Finance Institution, KfW, has entered a strategic financing partnership with KIMS. This marks the first instance of Gargaara extending its financing to a non-banking financial institution (NBFI).
According to the Somalia Country Economic Memorandum, more than two-thirds of the active labour force are self-employed in Somalia due to limited formal wage employment opportunities. Women and youth face barriers to economic participation.