The European Commission works closely with governments in developing countries to help them develop and implement policies in support of private sector development. It provides substantial grant funding across a wide range of activities, including regulatory reforms, capacity-building and the provision of business development services, with a particular focus on strengthening local micro, small and medium-sized enterprises.
This is also the case in Somalia where the European Union has launched in February 2021 three 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 access to finance for local small and medium sized enterprises while supporting the investment climate.
The 3 new projects entail:
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.
A Roadmap for DFI investment in Somalia
The above launches follow the publication in November 2020 of the EU funded “Roadmap for DFI Investment in Somalia. The goal of the study is to develop a roadmap to increase investment in Somalia from larger development finance institutions (DFIs). The report confirms that there’s room for increased engagement by DFIs in Somalia and formulates 5 key recommendations for stakeholders on how to attract such investments.
Link to the report: