2. Problem
MSMEs in Productive Sectors are underfunded.
Financial Inclusion and access to finance is very low in Somalia.
3. Solution
GARGAARA is established to
contribute to increased
access to finance for MSMEs
supporting entreprenuership
and employment.
GARGAARA is set up to
leverage private capital,
when it is ready and
forthcoming, to
encourage
entrepreneurship and
support generation of
jobs through high-growth
MSMEs and improved
access to finance.
GARGAARA MSME
Financing Facility is
intended to operate for
as long as possible, thus
rendering a sustainable
service for the financing
of MSMEs.
4. Established in April 2019 by FGS, with support of WB/IFC, as an apex
institution. To date, with the support from WB, FGS has approved the
charter of GARGAARA; appointed its governing board consisting of
members drawn from the private and public sector, as well as a
representative from the donor community; and recruited key
management team.
It is structured to operate through private sector management and
governance principles and with the provision to allow transition
toward private sector majority shareholding and board of directors’
representation over time through follow-on fundraising including from
international DFIs.
The ability of GARGAARA to forge new partnerships or attract added
private capital contributions is assured under its charter of
incorporation approved by FGS coupled with the ongoing partnership
with the World Bank/IFC and other development partners when
GARGAARA OVERVIEW
5. Somalia’s economy is growing and is built on a strong trading
relationship with the world as well as favorable liberal investment
policies which welcome all investors contributing to our dynamic private
sector.
Somalia has a tremendous potential in Agriculture, livestock fisheries,
telecommunication, energy, manufacturing, ICT, tourism, and
hydrocarbons. This wealth in all the diverse sectors could attract many
investors. Moreover, Somalia has a young population, a diaspora willing
to invest in the country and, with the longest coastline in Africa, is
strategically located to become a potential regional economic hub.
Why Somalia?
6. Why Now?
The funding or
financing gap for
businesses and
individuals in
Somalia is US $2.4
billion.
Investment climate:
• MSME access to finance is very
low in Somalia, and lending levels
by Somali banks meet only 7% of
the demand.
• Somali financial institutions tend
to concentrate on financing trade
related transactions.
• There is little to no investment in
productive sectors such as
agriculture or energy.
7. Market Size
Share of Market
$100 million share capital authorized in
the productive sectors.
Total Addressable Market
$2.4 Billion or 40% of the GDP.
8. IFC:
Provide technical assistance,
advisory services and investment.
Commercial Banks:
GARGAARA is channeling funding to commercial banks
and non-banks financial institutions.
DFIs:
GARGAARA & DFIs
can create strategic
synergies by utilizing
our local presence and
knowledge.
Government:
Collaborate improving
entrepreneurship and
employment, particularly
vulnerable groups (women
& youth).
POTENTIAL
PARNTERS
9. AGRICULTURE: Agriculture in Somalia is a major employment
activity and is the largest economic sector in the country.
LIVESTOCK: The livestock sector is the largest contributor to
Somali livelihoods with over 65% of the population engaged in
some way in the industry.
FISHERY: Fishing is a highly profitable venture throughout the
world; the tuna industry alone is worth $6 billion globally.
RENEWABLE ENERGY: Somalia relies on fuel wood and
charcoal and imported petroleum to meet its energy needs and it
accounts for 82% of the country's total energy consumption.
Productive sectors
11. GARGAARA FINANCING WINDOWS
Large loan Window
This window will provide enterprise loans in
the range US$50,001 up to US$150,000 to
eligible PFIs for sub-loans to SMEs. The Large
Loans Window will aim to facilitate access to
finance for businesses, improve affordability,
and maximize geographic coverage.
Micro and Small Loans Window
This will be set up on similar lines to the
large loan window. It will support PFIs, which
will extend micro-loans mainly to micro
enterprises, individuals, and household
enterprises in the range US$500 to $10,000,
and small loans to more formal businesses in
the range US $10,001 to $50,000.
12. Business Model
Revenue Model & Pricing Financial Sector Development Capacity Development and
Fund-raising
We provide benefits in terms of
capacity building in financial service
delivery and mobilizing private
investment capital.
We deliver funds on-lending at an
equivalent profit rate of 6% per annum.
We support progress toward
increased access to financial
services for MSMEs.
13. Financials and Cap
Table
• $15million
investment by the
Ministry of Finance;
• $100 million share
capital are
authorized.
14. Fundraising (The Deal)
Terms
GARGAARA could take a junior position(1st loss
capital) in the overall capital structure.
GARGAARA could cover operational cost related to
the investment.
Investment could be structured with additional
tranches if other investors are willing to different
levels of risk.
With US$15 Million,
we want to rise 30M
US from
investors(DFIs,
impact investors,
bilateral, and
multilateral). This
would be a leverage
of 1:2.
