Strategic Area:                           Achieving the MDGs and reducing human poverty

Alignment with strategic plan:       Poverty reduction and achievement of MDGs

Project Name:                            Private Sector Development

Duration:                                   2007 - 2009


Project Summary:
The Private Sector Development (PSD) Framework aims at providing support to the emergence of a viable private sector in Somalia, by promoting inclusive market development (authorities, communities and entrepreneurs capacitated by minimum policy, standards, regulations and institutions for enterprise growth), and the launch of an inclusive financial sector (increasing access to financial services for poor and low-income Somalis, particularly to micro- and small-scale businesses).

This initiative aims to address some of the main impediments that restrain the development of the private sector, through the provision of targeted and focused assistance, and has the ultimate goal of unleashing private sector entrepreneurship and creating a more conducive environment for conflict de-escalation and peace promotion in Somalia.

Providing sustainable access to financial services to poor and low-income people is considered an effective tool for poverty reduction. The micro finance project provides capacity building and training to key policy-makers responsible for removing policy constraints; put in place a framework that allows the government and donors to coordinate funding based on best-practice microfinance from the start, minimizing potential harm to the credit culture; build the supportive infrastructure (service provider networks, partnerships with cell phone companies, audit, training institutes, statistics/data) necessary for the sector to develop; and bring immediate benefits for recovery, contribute to a competitive financial sector while identifying potential market leaders.


Expected outputs/outcomes of the project are:
Inclusive Market Development
•    Enhanced public-private dialogue
•    Regulatory, legal and institutional enabling environment
•    Business challenge funds set up, to increase pro-poor service delivery
Inclusive Financial Sector
•    Potential leaders of the microfinance industry have addressed institutional weaknesses that allow them to          make clear progress toward sustainability and considerably increase their outreach to launch an Inclusive Financial Sector
•    Strategic partnerships are built with other donors and private sector in joint support of an Inclusive financial      sector
•    Ensure an optimal enabling environment for the launch of an inclusive financial sector and integration into          the financial system.
•    Sound microfinance principles have been disseminated and are widely accepted and adopted


Implementation Description and Achievements:
As part of the initiative to create a business enabling environment, during the first year of project implementation, key selected laws were reviewed in an attempt to improve the quality of and strengthen legislations in place. In Somaliland, a private sector development strategy and public private partnership policy paper have been developed. This will forge stronger ties between the administration and private sector, and increase the levels of outputs of both actors. In addition, a meat quality assurance system has been designed and implementation initiated, and basic reference laboratories established. This quality assurance framework will increase the overall competitiveness of the Somali meat sector in global markets, thus contributing to an increase in employment and revenue generation in this sector.
In an attempt to achieve improved and uniform access to finance, a shared money transfer platform was procured and implemented for SOMTA members, and two training programmes on compliance delivered. Thus, substantial progress was made in procuring the money transfer platform for members of SOMTA, which will increase the capacity of the association’s members, ensuring they are compliant with international money transfer regulations. In addition to this initiative, a microfinance strategy for Somalia was formulated with UNCDF and investment committee is to be set up. As a joint project, UNCDF and UNDP will launch the micro finance project early 2008.