Is it possible to invest profitably in Somalia and South Sudan?..and do these pictures give a precise illustration of the region?

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Brianne Caldwell
5 years ago
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1 Is it possible to invest profitably in Somalia and South Sudan?..and do these pictures give a precise illustration of the region? 1

2 A different part of the story.. is one of hope, one of growing businesses, one of hidden entrepreneurial potential of women and one of the Diaspora going back and helping people. 2

3 KINYETI A FINANCIAL INSTITUTION IN SOUTH SUDAN 3

SHURAAKO OVERVIEW Shuraako has developed and expanded its local infrastructure over the past four years which now includes offices throughout the country and a highly skilled permanent staff Local

4 SHURAAKO OVERVIEW Shuraako has developed and expanded its local infrastructure over the past four years which now includes offices throughout the country and a highly skilled permanent staff Local Approach Somalia Approach to investments tailored to local conditions. Character checks and relationships are key to succeed in the Somali market. Shuraako actively manages and monitors each investment through collection of reports, site visits and home office risk monitoring. 4

5 INVESTMENT PROCESS Shuraako follows a thorough investment selection process including client identification and screening, comprehensive due diligence, deal structuring and funding - Origination - Initial document collection & DD - Additional document collection & iterative DD - Credit checks - Credit Committee - Agreement Pre-Funding - Disbursement Post- Funding - Collection of quarterly financial and operational reports from investees - Frequent field staff site visits and investee engagements - Field office(s) payment collection and monitoring -Shuraako main office individual loan and portfolio management systems (payment tracking, monitoring, aging, risk analytics, etc.) Following funding, Shuraako actively manages and monitors each investment through collection of reports, site visits and home office risk monitoring. 5

SHURAAKO OVERVIEW Shuraako implements a tried and tested ESG framework as a part of its overall due diligence process ESG Framework (i) Draws on IFC

Investment staff query on industry-specific ESG issues and general queries on use of natural resources where applicable.

6 SHURAAKO OVERVIEW Shuraako implements a tried and tested ESG framework as a part of its overall due diligence process ESG Framework (i) Draws on IFC Performance Standards. Heavily relies on: Character. Site visits. Employee interviews. Investment staff query on industry-specific ESG issues and general queries on use of natural resources where applicable. Shuraako s in-house ESG expert has over ten years experience in private sector ESG and CSR. Prior to joining Shuraako, she was a Sr. Project Manager in Performance Assurance and Impact Assessment & Planning with Environmental Resources Management (ERM). 6

SHURAAKO OVERVIEW Shuraako s ESG framework was also developed to take into account the unique factors of the Somali context ESG Framework (ii) Most industry in Somalia is light industry thus avoiding

License / registration with relevant authorities is required. Background checks conducted through Lexis Nexis Bridger Watchlist. National and local ESG laws are underdeveloped and/or unenforced.

7 SHURAAKO OVERVIEW Shuraako s ESG framework was also developed to take into account the unique factors of the Somali context ESG Framework (ii) Most industry in Somalia is light industry thus avoiding ESG issues usually associated with heavy industry. Somalia is an oral culture, reliance on written documentation is not practiced. Exclusions based on Sharia law and EDFI Exclusion List. License / registration with relevant authorities is required. Background checks conducted through Lexis Nexis Bridger Watchlist. National and local ESG laws are underdeveloped and/or unenforced. However, Somali cultural norms and Islamic principles have filled the regulatory gap: Sharia-based exclusions include weapons, alcohol, tobacco, gambling, unsustainable use of natural resources. Business arrangements are stakeholder-centric rather than shareholder-centric with particular concern paid to the impact on employees, customers, the local community and environment. Strong social accountability. Local best practice to ESG. 7

8 Summary critical success factors Local management and network is neccessary - fly-in, fly-out doesn t work Ensure that social compact between lender and client is built Risk willing investors: Blending and first loss provision 8

Stewardship at AAM. November Katy Grant, Senior Analyst - Responsible Investing Stewardship. Aberdeen Standard Investment

Stewardship at AAM. November Katy Grant, Senior Analyst - Responsible Investing Stewardship. Aberdeen Standard Investment Stewardship at AAM November 2017 Katy Grant, Senior Analyst - Responsible Investing Stewardship Aberdeen Standard Investment For professional investors only Not for public distribution 2 What is Stewardship