Despite financial institutions knowing women business owners have lower default rates than men, financial services are not designed to serve them. While half of urban female business owners are aware of the financial service offers, fewer than 10% have applied for a loan and half of those applications were rejected.

Women often lack the collateral or male guarantor required, their businesses are not formally registered and they are often seeking smaller and more flexible loan offers, which they find through their informal networks and NGO support.

The purpose of this research study is to better understand how women business owners access finance in Somaliland. The research data collection covered MaroodiJeex and Awdal regions and included a desk review, a survey with 150 women business holders, 19 key informant interviews, nine focus group discussion with women groups, religious and traditional leaders, three case studies with women business owners and observations on the gender-responsive infrastructures available in the financial service providers’ premises.


The Somali Resilience Program (SomReP) is a resilience-building consortium that addresses the underlying causes and impacts of vulnerability to climatic shocks. Oxfam is the lead member of this research and has been working in Somalia/Somaliland for over 40 years and implemented different project coving different locations. This work supplements Oxfam’s existing work to strengthen communities’ resilience to shocks and women’s economic empowerment by ensuring there is adequate linkage between relief and development.

Women Business Access To Finance In SomalilandDownload document (PDF | 973.56 KB | English version)

Women Business Access To Finance In SomalilandDownload document (PDF | 977.75 KB | Somali version)

Only 9% of the surveyed women business owners have applied for a loan from formal financial institutions, while 91% have never applied. Of those who applied for a loan, just over half were accepted, while nearly half were rejected. Of those who did not apply for a loan, the key reasons they mentioned were expensive repayment rates, that financial service providers charge interest/riba, lack of awareness of what services are available, lacking a male guarantor and National ID, which requires a male guarantor and expensive service fees. 54% of urban businesswomen are aware of financial services or institutions that provide business loans.

74% of women businesses, do not have bank accounts and are not legally registered with the Somaliland Chamber of Commerce or the Ministry of Commerce, but 95% of have mobile money accounts used to store and transfer money. Registering business at 300-400 USD is very expensive for small business owners and is a complicated process which involved having/obtaining a nation ID card, which in turn requires a male guarantor. This is a significant challenge which makes it harder for women to register businesses and open a bank account.

One of the main challenges women face when trying to access finance from financial institutions is the collateral and/or guarantor. If the condition of the grantor or collaterals is satisfied, it is likely that financial service providers waive some of the other due diligence processes—a process that women struggle to access due to an unequal socio-economic positioning.

Women themselves are often writing their son’s and husband’s names on their asset titles such as land, which in turn forces them to access their land through husbands and sons when applying for a loan from formal financial institutions. Women become trapped in a vicious circle of relying on male guarantors whenever accessing finance. Also, the family male guarantor requirement for women to get a national identification card is unwritten but fully enforced in practice.

“I wanted the loan to expand my business [and] though I have met all the other conditions, my application was rejected for lack of guarantor. It was very disappointed as I have spent weeks to put together requirements and visited the office multiple times while forgoing running my business and household chores. With little hope, I am now appealing to the senior management of the bank, I believe my application was turned down due to my gender. I will approach other financial institutions for similar purpose. I am also aware of many other women whose applications were rejected by commercial banks. I am urging the government to intervene and convince the financial institutions to relax the conditions for accessing loans.” – A female small business owner in Hargeisa

All the financial institutions interviewed for this research unanimously agreed that women’s default rate on loans is meagre compared to men. There are five main groups from Somaliland’s formal financial ecosystem: Somaliland Central Bank, Islamic Commercial banks, Money Transfer Organizations (MTOs), Microfinance Institutions (MFI), Mobile Money Operators (MMOs) and NGOs. Commercial banks and microfinance institutions are credit service providers, MTOs and MMOs are money transfer platforms, and NGOs provide interest-free revolving funds and grants to poor and marginalized groups.

Many women prefer informal loans, as they are more flexible, have low-interest rates and extended repayment periods. Women small business owners can access cash grants and loans through friends, relatives, neighbors, diaspora networks, clan members, extended families, moneylenders, and Hagbed. The lowest credit limit is 3.000 USD for many commercial banks and women small business owners are generally looking for loans between 200-800 USD to grow their businesses.

NGOs play an important facilitator role for marginalized women accessing formal finance. To overcome the stringent conditions of accessing loans, local NGOs organize women’s self-help groups and connect them with formal financial institutions. More marginalized women groups are now accessing credit through these mechanisms as it has increased both the women’s and the financial institutions trust in each other.

61% of surveyed women think that men businesses are better positioned than women businesses to get a loan from the local financial institutions, while 39% did not agree. Along with many other barriers and constraints, men have more time to socialize and access information while women suffer from time poverty which is often due to a large amount of unpaid care work.

To advance women business owners’ access to finance in Somaliland, the research finds the following recommendations:

  • The government must coordinate with commercial banks, microfinance institutions, donor community, development agencies and women organizations to create micro-credit schemes that provide soft loans for women-managed small businesses with a special focus on the rural settings, IDPs and poor urban neighborhoods
  • Local and International NGOs must also continue nurturing and capacitating nascent women Self-Help Groups across the country and increase approaches for NGOs and donors to act as guarantor for creditworthy SMEs that could not find a guarantor to access finance. Such a scheme should be dedicated to women business only
  • Somaliland government must expand and formulate detailed regulatory frameworks for the finance sector and reform the fees for registering businesses and obtaining national ID cards to ensure they are gender sensitive
  • The government, civil society organizations and women groups must join forces to advocate for increased representation of women in decision making bodies and within the banking sector
  • More investment in literacy and numeracy outreach programs for marginalized women groups to independently manage their small businesses and read written information that helps them to access financial services and products

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