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