Access to Finance: Empowering Somali Women Entrepreneurs to Thrive

Rima Abdukadir Ahmed’s success in expanding her sesame oil business highlights the critical role of access to finance for women entrepreneurs in Somalia. Despite challenges, the Gargaara MSME financing facility is empowering women by improving access to loans and resources. Initiatives targeting financial inclusion are essential for overcoming disparities and fostering equitable growth in the Somali economic landscape.

In the bustling city of Mogadishu, Rima Abdukadir Ahmed has innovated her sesame oil business from a traditional camel-powered grindstone to a mechanized cold press. This evolution allowed her to better serve a niche market, producing high-demand sesame oil for medicinal uses. Seeking to enhance her production capabilities, Rima turned to Premier Bank to secure a $2,200 loan, enabling her to increase her output from 150 to 400 liters monthly. Despite facing profound challenges in accessing finance—particularly female entrepreneurs—initiatives like the Gargaara Company have begun to transform the financial landscape for women-owned businesses in Somalia.

Access to finance remains a critical issue in Somalia, especially for women-run Micro, Small and Medium Enterprises (MSMEs), where only 21% have access to financial services. This issue is compounded by traditional perceptions of the productive sectors being high-risk, which has limited lending opportunities. The Gargaara MSME financing facility, initiated by Somalia’s federal government in 2019, aims to bridge this gap by facilitating easier access to capital for underserved sectors, notably renewable energy and productive industries.

Since its inception, Gargaara has successfully issued over 1,600 loans, providing crucial funding that stimulates entrepreneurial efforts. Notably, while women-owned enterprises have received nearly half of the loans, they constitute less than 10% of the total loan value. This highlights an urgent need for additional resources and targeted initiatives to level the playing field for female entrepreneurs.

The introduction of new financing products and continued collaboration with various financial institutions positions Gargaara to further impact the availability of credit for women and MSMEs in Somalia. The organization’s commitment to enhancing financial inclusivity reflects an understanding of the unique challenges women face, aiming to provide not just loans but essential business development services that will ensure the success and sustainability of their enterprises.

In Somalia, the financial landscape poses significant challenges, particularly for women entrepreneurs. Despite their capacity for economic contribution, access to finance is notably limited for women-run businesses. In 2019, the Somali government implemented the Gargaara MSME financing facility to facilitate easier access to financial resources for underserved sectors. The facility supports a range of businesses, from agriculture to renewable energy, and has emerged as a pivotal entity in Somalia’s financial ecosystem, working to empower entrepreneurs and stimulate economic growth. Such initiatives are crucial in addressing the gender disparities prevalent in the country’s business sector.

The story of Rima Abdukadir Ahmed exemplifies the transformative potential of access to finance for women entrepreneurs in Somalia. Despite systemic challenges, initiatives like the Gargaara Company continue to pave the way for increased financial inclusion. While substantial progress has been made, the journey remains fraught with obstacles, particularly for women-owned businesses representing a minority in loan value. Continued commitment to addressing these disparities will be essential in fostering an equitable and thriving entrepreneurial environment in Somalia.

Original Source: www.worldbank.org