Sweden Partners with Somali Financial Institutions to Provide Low Collateral Loans

Hargeisa Market

April 16, 2018 - HARGEISA, Somaliland – The Swedish International Development Cooperation Agency (Sida), represented by the Embassy of Sweden, is announcing a comprehensive partnership with major Somali financial institutions, including Dahabshiil Bank International, Premier Bank, and International Bank of Somalia (IBS) to launch a program that will expand the provision of low collateral loans to small and medium size enterprises (SMEs) throughout the Somali region. The program will be managed and coordinated by Shuraako, a program of One Earth Future, a non-governmental organization that has been active in increasing access to finance in the Somali region for the past five years.

“This program provides tools for Somali financial institutions to expand their lending procedures and opens up new, viable markets,” said the Swedish Ambassador to Somalia, Andreas von Uexküll.  

The program will increase access to finance for merit-worthy SMEs that lack sufficient collateral or possess other non-financial credit challenges. The program will in particular, target female and youth entrepreneurs and business owners.

The Somali diaspora in Sweden continues to play an important role in Somali recovery by providing lifelines for survival, education and health, as well as capital for investment. The strong ties between the two countries, not least through emerging private business initiatives, calls for an engagement by Sweden in the development of financial services with a view to reduce poverty and rebuild the country.   

The challenges facing the Somali region have made it difficult for the financial system to reach its full potential. Market surveys of financial service supply show that very few Somalis have formal access to credit. This is particularly true for marginalized groups such as female and youth entrepreneurs.

 “SMEs are widely recognized as key drivers of job creation and overall economic growth,” said Ambassador von Uexküll. “This program will provide these businesses with increased access to finance.”

Somaliland’s Minister of National Planning and Development, H.E, Awale Ibrahim Shirwa Lodoon, welcomed the Swedish government’s initiative.

“The partnership with the Somali private sector will play an important role in development, job creation, and reducing poverty across the whole region,” he said. “This is a good example of a development partner working with national institutions, and we encourage other partners to follow this model.”

"This kind of partnership between Somali banks and international partners like Sweden will increase job creation and development across the Somali-speaking regions,” said Abdirashid Duale, CEO of Dahabshiil Bank. “Thanks to Sweden working with Somali financial institutions, there will be a positive impact on stability and security."

“This financial instrument will expand lending opportunities which will lead to greater stability and positively impact the development of youth, women, and internally displaced persons (IDPs) further ensuring participation in terms of their financial inclusion,” said Nuradin Abdi Elmi, General Manager of Premier Bank.

The program will host an official launch event in Hargeisa on April 17, 2018.

 

About the Swedish International Development Cooperation Agency (Sida):

Sida is a governmental agency working on behalf of the Swedish parliament and government, with the mission to reduce poverty in the world. Through their work, and in cooperation with others, Sida contributes to implementing Sweden’s Policy for Global Development, which includes activities that will enable poor people to improve their lives. Sida conducts enhanced development cooperation with a total of 33 countries in Africa, Asia, Europe and Latin America.  Sida has more than 700 employees, located in our three offices in Sweden as well as abroad in our cooperation countries. The Swedish strategy for Somalia focuses the contributions on crisis management, democracy, human rights and job creation.

 

About Shuraako, a program of One Earth Future:

OEF is a self-funded, private operating foundation seeking to create a more peaceful world through collaborative, data-driven initiatives. OEF focuses on enhancing maritime cooperation, creating sustainable jobs in fragile economies and research which actively contributes to thought leadership on global issues. As an operating foundation, One Earth Future provides strategic, financial and administrative support allowing its programs to focus deeply on complex problems and to create constructive alternatives to violent conflict.

Shuraako is a nonprofit implementation program of One Earth Future operating throughout the Somali region. Shuraako, which means “partnership” in Somali, brokers economically beneficial relationships that connect small and medium size enterprises to impact investors to catalyze job creation. This in turn contributes to a more resilient and peaceful Somali region. Shuraako achieves this by identifying and recommending eligible Somali businesses to impact investors and charitable funds and by servicing approved financing. Shuraako seeks to foster a thriving business sector by addressing the financial gap in the Somali region and brokering productive partnerships that encourage economic development.

 

About Dahabshil Bank International (DBI):

Dahabshil Bank is the largest financial institution in the Somali region. DBI and its affiliates offer its clients services including loans, microfinance, global remittance services, mobile payments, debit card services including Mastercard, and serves clients from every walk of life. It serves the business community and international and local partners, among others, contributing to development and job creation throughout the Somali regions.

 

About Premier Bank:

Premier Bank is a privately-owned, Sharia compliant commercial bank licensed by the Central Bank of Somaliland in 2016. Premier’s philosophy is to encourage economic and community development. Its diverse knowledge of local financing requirements enables Premier to meet and service the needs of the local economy by introducing modern banking practices.

 

About International Bank of Somalia (IBS):

Primarily focused on serving the underserved agricultural sector, IBS’s key objective is to provide a full range of financial services such as retail, corporate, online banking and investment banking. IBS specializes in providing trade finance, microfinance, project finance and loan services. IBS also provides financing to the construction and real estate sectors in addition to the agriculture sector. IBS serves as a MasterCard principal within Somalia. 

 

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