Rima Abdukadir Ahmed exemplifies the transformative power of access to finance through her business in sesame oil production. With a $2,200 loan from Premier Bank, she significantly increased her output and showcased the challenges women face in accessing financial resources in Somalia. The Gargaara Company has been pivotal in facilitating capital for underserved sectors, although women entrepreneurs still receive a disproportionately lower share of total funding. Continued efforts are required to ensure equitable access to finance for all.
Rima Abdukadir Ahmed began her journey with a traditional camel-powered grindstone to produce sesame oil in Mogadishu. Recognizing the growing demand for sesame oil, particularly for medicinal purposes, she transitioned to a mechanized cold press, significantly enhancing her production capacity. To meet market demands year-round, Rima sought financial support from Premier Bank to increase her sesame seed storage. With a loan of $2,200 granted on the basis of her established business credibility, she was able to boost production from 150 to 400 liters per month, demonstrating the critical role of financial access in empowering entrepreneurs.
In Somalia, the struggle for access to financial resources is particularly acute, especially for individuals operating Micro, Small and Medium Enterprises (MSMEs) in high-potential sectors such as agriculture and fishing. A recent survey highlighted that only 46% of Somali enterprises had access to overdraft facilities, with women-owned businesses facing even greater challenges, accessing only 21% of this source of funding. In response to this barrier, the Somali government launched the Gargaara Company in 2019 to facilitate capital access for underserved businesses.
Since its inception, Gargaara has been instrumental in promoting lending to MSMEs, receiving initial backing of $15 million from the World Bank, along with additional funding to support businesses affected by the COVID-19 pandemic. This initiative has broadened the financing landscape in Somalia, allowing entrepreneurs in crucial economic sectors, including education and healthcare, to access necessary funds. Moreover, in 2023, Gargaara secured $19 million from the German development bank KfW, further expanding its capacity to support varying business needs.
Despite notable advancements, women entrepreneurs remain disproportionately underfunded, as their loan value accounts for less than 10% of the total funds disbursed, despite holding nearly half of the loan numbers. Rima’s success story exemplifies the transformative potential of financial support. Upon receiving her loan, she expanded her business by exploring new sales opportunities and planning to establish a second production site.
Gargaara is poised to further its impact by enhancing the operational capabilities of Somali financial institutions and expanding access to business development services. The initiative aims to bridge the funding gap for women-led MSMEs by fostering an environment conducive to financial inclusivity. By prioritizing women’s access to credit and ensuring broader participation in the economy, the Gargaara Company continues its efforts to uplift Somali entrepreneurs toward financial equality.
Access to finance is critical for the stability and growth of businesses, particularly for underserved demographics such as women in Somalia. The traditional obstacles in the financial landscape require innovative solutions to expand lending to those driving local economies, especially through MSMEs in essential sectors like agriculture and fishing. The Somali federal government, alongside international partners, has recognized this gap and developed targeted initiatives to enhance financial inclusion. The Gargaara Company exemplifies such efforts by providing a mechanism for financing MSMEs, promoting not just economic growth but also the empowerment of women in business.
In conclusion, Rima Abdukadir Ahmed’s entrepreneurial success underscores the importance of financial access in transforming businesses in Somalia. With the Gargaara Company acting as a catalyst for MSME funding, particularly for women entrepreneurs, there is a growing emphasis on creating equitable financial opportunities. Yet, with women representing a smaller portion of total loan values, continued efforts are necessary to ensure that financial services are genuinely inclusive, enabling all entrepreneurs to thrive.
Original Source: www.worldbank.org
