1. Kaah International Microfinance Services
Bringing Electricity to Somalia through Solar Microfinance
Somaliland Investment Forum
20th September, 2016

2. The Origin of KIMS
KIMS engages in the provision of Sharia-compliant microfinance services across the Somali territories, leveraging off Kaah Express’ extensive network
Kaah Express is a leading international money service business that operates in 40+ countries, serves hundreds of thousands of customers, remitting US$ millions each month
Extensive presence worldwide and a network of branches (50+) and agents in Somalia, through which money transfer services can be accessed in all cities and many of the towns and larger villages in the Somali territories
Partnership between Kaah Express, Silatech (Qatar based Foundation) and American Refugee Committee in 2013 to test utilising Kaah’s infrastructure / client base to offer credit /savings
Kaah Express recognised that the successful introduction of Sharia-compliant microfinance services could enable it to make an important contribution to the economic development of Somalia as well as offering a profitable diversification of their own business
Kaah Express is the promotor and sole shareholder of KIMS
US$3m in donor funds raised, additional $1m in the pipeline

3. The Context
Two decades of civil war have destroyed economic institutions
In the absence of a formal financial sector, remittance companies support $1.3 Billion in diaspora inflows per annum
GDP per capita in 2012 was $ 284, much lower than SSA average of $1,300
Somalia is not homogenous - Somaliland and Puntland have regained some peace and stability, security challenges remain in South-Central
According to the 2012 Somalia Human Development Report:
73 % live in poverty (less than $2 a day), 80% in rural areas
42% of the population comprises of youth. Youth unemployment is 67%
80% informal enterprises are run by women
Independent financial institutions only recently permitted and the market remains nascent - 7 Banks and 3 MFIs
Recent market studies (KIMS, ILO 2013) shows <5% of Somali MSE needs for finance needs are met
Over two million potential enterprise credit clients who require tens of millions of dollars of finance
Significant scope for growth in the market - capital a key constraint, particularly for MFIs not affiliated to banks

4. KIMS Objectives
Provide Sharia-compliant microfinance with a priority focus on low income but economically active Somali’s
Ensure a priority focus on the most vulnerable population segments (women & youth)
Achieve rapid growth and cost savings through operating via Kaah Express’ infrastructure, brand and remittance client base
Achieve commercial viability unlike historic microfinance in Somalia
Ensure financial literacy of the population through combination of lending with training and provision of savings
Contribute to economic stability and recovery in Somalia – e.g. the impact of KIMS lending in Kismayo after its liberation by African Union forces

5. KIMS Timeline
2013
KIMS registered as NBFI in Somaliland and Puntland
BOT model delivered with the support of K-REP Advisory(Kenya)
2014
KIMS registered as NBFI in South Central
Lending operations launched in Somaliland and Puntland
2015
Lending operations launched in South Central
SME Product ‘KIMS Pluz’ launched
2016
Rural lending launched
Diaspora engagement, refugee returnee financing and agricultural lending
Solar household loan

6. Operational Performance
Operations as of 2016
10 branches in Kaah Express premises in 8 cities across 3 regions of Somalia
Two Islamic loan products (Murahaba and Ijarah) and parallel savings product launched
Mobile enabled repayment system introduced
Scalable Islamic core banking MIS introduced
Loan Performance
Cumulatively financed 4,500+ loans worth over $3.4 million
Active portfolio of 2,500+ loans worth over $1.85 million
99% repayment rate
Social Performance
Low-income youth aged18-35 make up 80% of all beneficiaries and women 50%, estimated 4,500 new jobs created
Strong community and religious leader endorsement
Partnerships with local government and service providers for financial literacy and business skills training

7. Solar Microfinance - The Challenge
Somalia has some of the highest energy costs of any country in the world
Estimated that only 25% of Somali’s have electricity, much lower levels in rural areas (2.8m rural and 3.2m nomadic Somalis)
The market is mostly reliant on privately owned diesel generators for electricity
Poorer families cannot afford to purchase connections (where access is available) and use charcoal for cooking and kerosene for lighting
Both these fuels are expensive and increasing in cost, significantly eating into household incomes (up to 30% of household income spent on energy)
Charcoal and kerosene present significant health and safety risks
Excellent climatic conditions for solar (3,000 hours of sunshine annually) and strong demand for products but market constrained lack of availability and affordability (high up-front costs)
“The use of solar energy has been limited in Somalia because of lack of information, lack of access to end-use devices and poverty” AfDB

8. Solar Microfinance - The Opportunity
Strong market opportunity to introduce high quality and affordable solar home systems for ‘off grid’ households in Somalia
Learning from the success of M-KOPA in East Africa, KIMS is introducing to the market an innovative home solar solution
Solar home systems that provides lighting and power for household appliances including phones, radios and fans
Sold in the market by KIMS using an innovative and affordable pay-as-you-go financing model
Financing is structured sharia compliant ijara (leasing) scheme with an initial down payment followed by weekly or monthly installments paid by Zaad Service mobile money
Sold via KIMS existing branches and also through Kaah Express branches and agent networks allowing for deep reach into rural and remote areas

9. Solar Microfinance - The Product
Sky Power 10w Home Solar System

10. Solar Microfinance - The Benefits
Affordability – KIMS Solar microfinance loan, with its staggered payment plan will make solar energy systems affordable to low income families and business owners
Reduction in household expenditure – lifetime usage costs of the solar systems are significantly lower than other options enabling families to have more income available each month to pay for food, education and healthcare
Longer Working hours – entrepreneurs will now be able to work longer days increasing their productivity and incomes
Increased education - By providing solar lighting children and youth can study at night and improve their academic performance
Reduced Risk – Household lighting can improve safely around the home and deter opportunistic thieves
Health - replacing non-renewable fuel resources with solar reduces respiratory illness and greatly reduces fire hazards
Environmental impact – this solution will contribute to reduced environmental degradation (deforestation for charcoal production) in Somalia and lower CO2 emissions

11. Solar Microfinance – Partnership Opportunities
Grant based co-financing - to support KIMS effectively pilot the solar home system in Somalia at scale
Grant based technical assistance – to develop in-house training and after-sells care for KIMS staff including dedicated technical and sales staff for the solar product
Grant based or in-kind support to marketing and consumer education – raising awareness amongst consumers of the benefits of solar home system verses non-renewable energy resources, particularly the cost savings that they offer.
Grant based monitoring and evaluation support - to determine the long term positive impact of low income families and businesses switching to solar on household incomes, heath and education levels.

12. Contact Details Kaah International Microfinance Services (KIMS)
Hargeisa Main Road , Bahsane Building opposite Darasalaam Center T: E:
W: kimsmfi.com