Investing profitably in Somalia

February 5, 2020

The Nordic Horn of Africa Opportunities Fund is one of the first commercial investment fund in Somalia. It focuses on investing in small and medium sized companies and aims to demonstrate Somalia’s investment potential.

Challenging business environment

The business environment in Somalia is one of the most challenging in the world. Access to capital is constrained, electricity supplies are limited, and the protection of minority investors is problematic. Some areas face severe security challenges, and international investments are few. However, Somalia is now recovering from civil war and is rebuilding the legal framework to attract more investments.

Somalia has a lot of opportunities, and investments are important for building peace and prosperity in our country”

Prime Minister, Mr. Khaire

The Nordic Horn of Africa Opportunities Fund

In this context, Norfund has initiated a USD 10 million Fund to support small and medium sized companies. The Nordic Horn of Africa Opportunities Fund is one of the first commercial investment fund in Somalia, and will fill an investment gap by funding SMEs that have no other sources of capital.

The Fund was created together with the Danish development finance institution, IFU, and Shuraako, a US-based NGO and fund manager with a local presence across Somalia. Another important Fund enabler was the Norwegian Development Fund (Utviklingsfondet), an NGO which operates in Somalia.

“Any country needs a profitable private sector and in order to achieve this, you need investors. This fund is therefore a very important start for Somalia

Nikolai Astrup, prev. Minister of International Development

The Nordic Horn of Africa Opportunities Fund seeks to create positive development effects while also generating a positive return on capital. By adding risk capital to the Somali region, the Fund will enable Somali entrepreneurs to build sustainable businesses, create jobs, and contribute to the country’s economy and tax base.

Invested in 14 companies across Somalia

By the end of 2018, the Fund had invested in 14 companies across Somalia. The investments were made in different sectors, including fisheries, agriculture, light manufacturing, hospitalities, and energy.

One of the investees is Maandeeq Poultry Company, a chicken producer with a stock of 35,000 chickens. Maandeeq Poultry Company has 50 employees, about half of whom are women. The company has received a Sharia compatible loan from the Fund, for the purpose of expanding the company significantly.