Small and Medium-sized Enterprises (SMEs) operating in fragile and conflict-affected settings (FCS) face numerous challenges, including weak regulatory frameworks, the presence of non-state armed groups, widespread corruption, and limited access to infrastructure and basic services. Despite these obstacles, many SMEs demonstrate remarkable resilience and ability to thrive in these challenging environments.

To showcase the resilience of Somali SMEs and responsible investment in the Somali territories, One Earth Future (OEF) foundation and TrustWorks hosted an exclusive webinar, ‘Peace Finance and SMEs; The Next Frontier for Sustainable investing’. This insightful session delved into practical strategies for investing in the Horn of Africa, focusing on SMEs’ resilience and growth, featuring transformational stories, expert panels, and a Keynote by Mark paper, former CEO of Business Partners Limited. Representatives from the Nordic Horn of Africa Opportunities Fund also shared their firsthand experiences from operating in FCS across the Somali territories.

OEF is manages the USD 35 million Nordic Horn of Africa Opportunities Fund (NHOAF) in Somalia and Somaliland. Through a long-term partnership with TrustWorks, OEF is taking steps to become the first and only impact investor to have in place an appropriate approach to responsible investing in FCS. This includes putting in place a conflict-sensitive investment framework and providing peace/conflict-oriented technical assistance to SMEs in the NHOAF. While OEF certainly has “first mover advantage,” we hope that other FIs will adopt this approach as a means to both manage their risks and maximise their potential positive impacts in FCS, with increasing support from DFIs.

TrustWorks CEO and founder, Josie Lianna Kaye, shared some insights from our work with development finance institutions (DFIs) and financial intermediaries (FIs) in support of SMEs in FCS in a panel discussion moderated by OEF Executive Director, Jon Bellish. Josie afterwards gave a short presentation on the role of SMEs in FCS, responsible investing and heightened human rights due diligence (hHRDD). Josie highlighted three critical dynamics that need to be better integrated in approaches to investing in SMEs in FCS:

1. SMEs do not sit outside the conflict system but are an integral part of it.

2. SMEs are highly exposed to conflict risks and may actively pursue anti-growth strategies as a means of survival.

3. The principal manner in which SMEs can contribute to peace is through alliance- and coalition-building amongst SMEs.

To learn more about these critical dynamics, check out our study on the role of SMEs in FCS through the lens of peace and conflict issues. (Link)