How does your proposed innovation leverage public intervention in catalyzing private SME finance?
Public intervention provides a foundation and the first loss money to formalize an operation.
For the past three years, we have been working to make Port Hope a reality. A missing ingredient has been the start-up financing. Without a grant, it has not been possible to formalize operations, and as a result, many of the positive efforts made could not be sustained.
Other forms of capital were considered, but investors found the first money to be too risky. Many stated that if there was an on-going operation, they would consider participation in the port development and related investments.
With a grant of $7.5M, we have the ability to plan. A grant provides stability to this initiative and enables efforts to be sustained and dedicated, which can lead to results. With operational stability, we have the assurance that the operation will have a future.
If a pilot SME Fund of $15-$20M can also be put together, providing limited partners with a standard venture product and return characteristics, we have a high degree of confidence that we can make substantive change.
With these dual financing facilities, we believe that we will achieve be able to:
1. Generate cash returns for investors concurrent to draw-downs of capital, mitigating some financial exposure;
2. Develop a comprehensive port development plan;
3. Engage global aid agencies, providing insights from the ground in Berbera and working to make their efforts in Somalia more productive.
If these three achievements can be met, we will have created a focal point for outside groups – private investors, global companies, governments – to contribute and see progress.
As success generates additional success, we have a high degree of confidence that we can generate:
1) Subsequent SME and other private equity funds focusing on Somalia specifically and East Africa generally (Private funds);
2) Partnerships and funding sources in phases to build out the port at Berbera (private funds);
3) Identify infrastructure projects best suited to aid from governments. For example, the dredging of the harbor to remove wreckage from previous conflicts (Public and Private funds).
For any of this to occur, there has to be cornerstone funding to enable dedicated actions over time and we hope that you will enable us to make lasting change.