Swedfund invests $5m in Somali fund
Swedfund has committed to invest $5 million in the Nordic Horn of Africa Opportunities Fund (NHAO), split into two tranches, with the second tranche contingent on certain conditions being met.
Despite decades of conflict, Somalia’s growing private sector accounts for over 90% of the country’s GDP. In many instances, private enterprises have assumed roles typically held by public institutions, providing financial services, security, and education. Somali SMEs exhibit a high demand for capital but face limited access to affordable financing. Local financial institutions demand high collateral because of risks associated with the informal market and a fragile financial system. The country lacks a national ID register, and land ownership regulation is poor.
The fund aims to finance small and medium-sized enterprises with revenues around or below $1 million.
Managed by Shuraako, an experienced fund manager with multiple funds and credit-related projects in Somalia since 2013, the fund has $25 million in capital under management. NHAO has three offices in Mogadishu, Garowe, and Hargeisa, and its investment structures are Sharia-compliant, with USD-denominated secured debt instruments (Murabaha).