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JUNE 18, 2015
Milan, Italy
GLOBAL FORUM on REMITTANCES & DEVELOPMENT
1
Somalia:
Leveraging Remittances for Post-Conflict
Development
“Where Remittances Matter Most:
Rebuilding Post-Conflict Societies”
Changes in the Economic Environment:
• Increased security, decline of piracy & Al-
Shabaab insurgency
• Diaspora returnees bringing human &
financial capital
• Resilient entrepreneurial culture
SOMALIA OVERVIEW
2
Challenges to Economic Growth:
• Credit Gap (for businesses and individuals)
• Highest cost of electricity 9
• Weak institutions and governance
• Unskilled workforce – technical and education
$1.30
$0.80
$0.0
$0.5
$1.0
$1.5
$2.0
Remittances Humanitarian
Assistance
FundsinBillions
Annual Funding Received (2012)
1 Hanging by a Thread, 2015
2 Global Humanitarian Assistance, Development Initiatives
3 Keeping the Lifeline Open: Remittances and Markets in Somalia, 2013
4 UN Financial Tracking Service, 2012
3 4
• Remittances account for 45% of Somalia’s GDP1
• In 2012, Somalia was the fourth largest
recipient of humanitarian assistance globally2
9 Powering Progress: The Potential of Renewable Energy in Somalia, 2015
Country Stats:
Population: 12 million (2014)6
Youth Population: 75% under 30 6
Adult literacy: 24% (2013)8
GDP (PPP): $5.9 billion (2010)5
GDP per Capita: $491 (est.)
General Unemployment: 54%7
Youth Unemployment: 67% 7
5 CIA Somalia Factbook
6 Population Estimation Survey, UNFPA, 2014
7 Somalia Human Development Report, UNDP, 2012
8 AfDB Country Brief, 2013
EST. - POPULATION & LOCATION of SOMALI DIASPORA
284k
227k
12k
275k
205k
• North
America
• Europe
• Gulf Region
• Australia
• New Zealand
• Africa
Est. 1 million diaspora remit $1.3 billion annually
(2012, UNDP report)
SOMALI DIASPORA & REMITTANCE HABITS
4
• Average households receives $1,7001
Annually
• >40% of Somalis survive on remittances2
• Remits = 60% of household annual income1
• 51% of recipients are women1
• Primary source of start up capital for Micro
and Small business6
Household
• 66% of remits go to
essential household
expense (i.e. healthcare,
education, and food4)
Business Investment
• ~80% of startup seed capital sent by
diaspora investors6
• Micro Business profit margin in
Mogadishu: Bakara, Suuq bacaad, &
Hamarweyne market= $101–$300/mo7
• 80% of diaspora remit funds
• Average annual remit: $1,200-$4,000
• 73% of remits flow through one of the 20
formal money transfer operators
• Average cost of sending money to Somalia is
5%, below the global average (9%)
• ~68% of remits go to family members3
Development Projects
• In 2008, Chalmers and
Hassan estimated ~10% of all
remitted funds5 go to
organizations and
development projects
Remitters1: Recipients:
How Remittances are Spent in Somalia:
1 Keeping the Lifeline Open: Remittances and Markets in Somalia, 2013
2 Remittance Transfers to Somalia, Rift Valley Institute, 2013
3 UK Somali Remittances Survey, DFID, 2008
4. Cash and Compassion, UNDP, 2011 5. Chalmers and Hassan, 2008
6. Hanging by a Thread, 2015
7. IBS Microfinance Survey, Mogadishu, 04/2015
SHURAAKO SUPPORTS SMEs GROWTH & DEVELOPMENT
Shuraako Portfolio Management
In the last two years, Shuraako has facilitated over $2 million in investments across Somalia
with a Portfolio at Risk (over 30 days) of only 6.9%
• Historically Shuraako has brokered the
following investments…
 Asset-based lending
 Debt/murabahah vehicles
 30% owner’s contribution
 2.5x collateral coverage
 Investments range from $5k-$125k
Investment Structure
Investments Placed: 40
Jobs Created: 768
Sectors Invested in: 8
Total Funds Invested in Somalia: $2.05m
• Promotes diaspora investment in
agricultural and rural businesses
• Total project funds are $2.27m, of which
Shuraako is the Fund Manager
• Seed Capital Matching Investment Fund
 40% Seed capital match
 40% Diaspora investment
 20% Owners contribution
Somali AgriFood Fund
* Data as current as of June 2015
• Conducting a diaspora investor survey,
which will identify investment preferences
of Somali diaspora
• Hosted the Somali Investment Forum,
which brought 340 private sector players for
a 2.5 day Forum; and connected diaspora
investors to local businesses
Encouraging Diaspora Investment
Portfolio at Risk > 30 days: 6.9%

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Lee sorensen shuraako

  • 1. JUNE 18, 2015 Milan, Italy GLOBAL FORUM on REMITTANCES & DEVELOPMENT 1 Somalia: Leveraging Remittances for Post-Conflict Development “Where Remittances Matter Most: Rebuilding Post-Conflict Societies”
  • 2. Changes in the Economic Environment: • Increased security, decline of piracy & Al- Shabaab insurgency • Diaspora returnees bringing human & financial capital • Resilient entrepreneurial culture SOMALIA OVERVIEW 2 Challenges to Economic Growth: • Credit Gap (for businesses and individuals) • Highest cost of electricity 9 • Weak institutions and governance • Unskilled workforce – technical and education $1.30 $0.80 $0.0 $0.5 $1.0 $1.5 $2.0 Remittances Humanitarian Assistance FundsinBillions Annual Funding Received (2012) 1 Hanging by a Thread, 2015 2 Global Humanitarian Assistance, Development Initiatives 3 Keeping the Lifeline Open: Remittances and Markets in Somalia, 2013 4 UN Financial Tracking Service, 2012 3 4 • Remittances account for 45% of Somalia’s GDP1 • In 2012, Somalia was the fourth largest recipient of humanitarian assistance globally2 9 Powering Progress: The Potential of Renewable Energy in Somalia, 2015 Country Stats: Population: 12 million (2014)6 Youth Population: 75% under 30 6 Adult literacy: 24% (2013)8 GDP (PPP): $5.9 billion (2010)5 GDP per Capita: $491 (est.) General Unemployment: 54%7 Youth Unemployment: 67% 7 5 CIA Somalia Factbook 6 Population Estimation Survey, UNFPA, 2014 7 Somalia Human Development Report, UNDP, 2012 8 AfDB Country Brief, 2013
  • 3. EST. - POPULATION & LOCATION of SOMALI DIASPORA 284k 227k 12k 275k 205k • North America • Europe • Gulf Region • Australia • New Zealand • Africa Est. 1 million diaspora remit $1.3 billion annually
  • 4. (2012, UNDP report) SOMALI DIASPORA & REMITTANCE HABITS 4 • Average households receives $1,7001 Annually • >40% of Somalis survive on remittances2 • Remits = 60% of household annual income1 • 51% of recipients are women1 • Primary source of start up capital for Micro and Small business6 Household • 66% of remits go to essential household expense (i.e. healthcare, education, and food4) Business Investment • ~80% of startup seed capital sent by diaspora investors6 • Micro Business profit margin in Mogadishu: Bakara, Suuq bacaad, & Hamarweyne market= $101–$300/mo7 • 80% of diaspora remit funds • Average annual remit: $1,200-$4,000 • 73% of remits flow through one of the 20 formal money transfer operators • Average cost of sending money to Somalia is 5%, below the global average (9%) • ~68% of remits go to family members3 Development Projects • In 2008, Chalmers and Hassan estimated ~10% of all remitted funds5 go to organizations and development projects Remitters1: Recipients: How Remittances are Spent in Somalia: 1 Keeping the Lifeline Open: Remittances and Markets in Somalia, 2013 2 Remittance Transfers to Somalia, Rift Valley Institute, 2013 3 UK Somali Remittances Survey, DFID, 2008 4. Cash and Compassion, UNDP, 2011 5. Chalmers and Hassan, 2008 6. Hanging by a Thread, 2015 7. IBS Microfinance Survey, Mogadishu, 04/2015
  • 5. SHURAAKO SUPPORTS SMEs GROWTH & DEVELOPMENT Shuraako Portfolio Management In the last two years, Shuraako has facilitated over $2 million in investments across Somalia with a Portfolio at Risk (over 30 days) of only 6.9% • Historically Shuraako has brokered the following investments…  Asset-based lending  Debt/murabahah vehicles  30% owner’s contribution  2.5x collateral coverage  Investments range from $5k-$125k Investment Structure Investments Placed: 40 Jobs Created: 768 Sectors Invested in: 8 Total Funds Invested in Somalia: $2.05m • Promotes diaspora investment in agricultural and rural businesses • Total project funds are $2.27m, of which Shuraako is the Fund Manager • Seed Capital Matching Investment Fund  40% Seed capital match  40% Diaspora investment  20% Owners contribution Somali AgriFood Fund * Data as current as of June 2015 • Conducting a diaspora investor survey, which will identify investment preferences of Somali diaspora • Hosted the Somali Investment Forum, which brought 340 private sector players for a 2.5 day Forum; and connected diaspora investors to local businesses Encouraging Diaspora Investment Portfolio at Risk > 30 days: 6.9%

Editor's Notes

  1. GDP per Capita (2012, UNDP report, and CIA Factbook)
  2. External investment = $1.45m (includes 2 pending murabahah agreements and SYEF contribution of $150k Owner’s equity = $600k
  3. Use of funds for development projects: Chalmers and Hassan, 2008 – about 10% of remittances from North America and UK
  4. External investment = $1.45m (includes 2 pending murabahah agreements and SYEF contribution of $150k Owner’s equity = $600k