Women business’ access to finance

Women business’ access
to finance in Somaliland

Research Report

– Women business’ access to finance in Somaliland 1
Research Report

Author: Khadar A. Abdi

Acknowledgements

The Author would like to thank the many people
who made this study possible. In particular,
he would like to thank Mr. Ahmed Adan who
made huge contribution to the development
of the report. Staff of Oxfam, in particular Amy
Croome and Abdiaziz Adani were instrumental
in supporting the research, sharing related
documents for review, and facilitating key
interviews with national stakeholders. Thanks
also to Hibo Adam, Amount Adam, Hibak Adam
who played a vital role in data collection
and transcription processes and other data
collectors as well.

Finally, thanks to the organizations and people
who were interviewed for this report, who gave
their time, information, and viewpoints to the
researchers so readily. While the author takes
responsibility for any errors in the report, their
contributions are greatly appreciated.

SomRep and Oxfam would like to thanks the
Chamber of Commerce for taking the research
further and launching it.

Cover photo: Abdiaziz Adani/Oxfam

2 Women business’ access to finance in Somaliland
Research Report

Contents

Acknowledgements 2

Executive summary 4

List of acronyms 6

Introduction 7

Research methodology 9

Qualitative methods 10

Quantitative methods 11

Sampling 12

Challenges and limitations of the research 12

Analysis of the broader financial sector in Somaliland 13

Legal and regulatory framework 13

Financial ecosystem in Somaliland 14

Which financial products are available and what are the terms and conditions? 15

Formal financial service providers 18

Islamic Commercial Banks 18

Informal financial services 21

How are women accessing available financial services and products? 22

Women’s access to formal financial services 29

Accessing finance through business development services 32

Women’s voices on accessing finance 33

Women’s access to informal financial services (alternatives to formal financial services) 35

Barriers that prevent women to access finance and leads women to self-select out 36

Demand-side constraints 36

Supply-side constraints 38

Enabling environment constraints: 39

Socio-cultural constraints 40

Enablers of women’s access to credit 42

Implications of women accessing grants on formal bank loans 44

Do men have better access to finances than women? 45

Conclusion 47

Recommendations 48

– Women business’ access to finance in Somaliland 3
Research Report

Executive summary

Despite financial institutions knowing women over half were accepted, while nearly half
business owners have lower default rates than were rejected. Of those who did not apply for
men, financial services are not designed to a loan, the key reasons they mentioned were
serve them. While half of urban female business expensive repayment rates, that financial
owners are aware of the financial service offers, service providers charge interest/riba, lack
fewer than 10% have applied for a loan and half of awareness of what services are available,
of those applications were rejected. Women lacking a male guarantor and National ID, which
often lack the collateral or male guarantor requires a male guarantor and expensive service
required, their businesses are not formally fees. 54% of urban businesswomen are aware
registered and they are often seeking smaller of financial services or institutions that provide
and more flexible loan offers, which they business loans.
find through their informal networks and NGO
support. 74% of women businesses, do not have bank
accounts and are not legally registered with
The purpose of this research study is to better the Somaliland Chamber of Commerce or the
understand how women business owners Ministry of Commerce, but 95% of have mobile
access finance in Somaliland. The research money accounts used to store and transfer
data collection covered MaroodiJeex and money. Registering business at 300-400 USD
Awdal regions and included a desk review, a is very expensive for small business owners
survey with 150 women business holders, 19 and is a complicated process which involved
key informant interviews, nine focus group having/obtaining a nation ID card, which in turn
discussion with women groups, religious and requires a male guarantor. This is a significant
traditional leaders, three case studies with challenge which makes it harder for women to
women business owners and observations on register businesses and open a bank account.
the gender-responsive infrastructures available
in the financial service providers’ premises. One of the main challenges women face
when trying to access finance from financial
The Somali Resilience Program (SomReP) is a institutions is the collateral and/or guarantor.
resilience-building consortium that addresses If the condition of the grantor or collaterals
the underlying causes and impacts of is satisfied, it is likely that financial service
vulnerability to climatic shocks. Oxfam is the lead providers waive some of the other due diligence
member of this research and has been working processes—a process that women struggle
in Somalia/Somaliland for over 40 years and to access due to an unequal socio-economic
implemented different project coving different positioning. Women themselves are often
locations. This work supplements Oxfam’s writing their son’s and husband’s names on
existing work to strengthen communities’ their asset titles such as land, which in turn
resilience to shocks and women’s economic forces them to access their land through
empowerment by ensuring there is adequate husbands and sons when applying for a loan
linkage between relief and development. from formal financial institutions. Women
become trapped in a vicious circle of relying on
Only 9% of the surveyed women business male guarantors whenever accessing finance.
owners have applied for a loan from formal Also, the family male guarantor requirement for
financial institutions, while 91% have never women to get a national identification card is
applied. Of those who applied for a loan, just unwritten but fully enforced in practice.

4 Women business’ access to finance in Somaliland
Research Report

“I wanted the loan to expand my business [and] women’s and the financial institutions trust in
though I have met all the other conditions, each other.
my application was rejected for lack of
guarantor. It was very disappointed as I have 61% of surveyed women think that men
spent weeks to put together requirements businesses are better positioned than women
and visited the office multiple times while businesses to get a loan from the local financial
forgoing running my business and household institutions, while 39% did not agree. Along with
chores. With little hope, I am now appealing many other barriers and constraints, men have
to the senior management of the bank, I more time to socialize and access information
believe my application was turned down due while women suffer from time poverty which
to my gender. I will approach other financial is often due to a large amount of unpaid care
institutions for similar purpose. I am also aware work.
of many other women whose applications were
rejected by commercial banks. I am urging the To advance women business owners’ access
government to intervene and convince the to finance in Somaliland, the research finds the
financial institutions to relax the conditions for following recommendations:
accessing loans.” - A female small business
owner in Hargeisa • The government must coordinate with
commercial banks, micro-finance
All the financial institutions interviewed institutions, donor community, development
for this research unanimously agreed that agencies and women organizations
women’s default rate on loans is meagre to create micro-credit schemes that
compared to men. There are five main groups provide soft loans for women-managed
from Somaliland’s formal financial ecosystem: small businesses with a special focus on
Somaliland Central Bank, Islamic Commercial the rural settings, IDPs and poor urban
banks, Money Transfer Organizations (MTOs), neighbourhoods
Microfinance Institutions (MFI), Mobile Money
Operators (MMOs) and NGOs. Commercial • Local and International NGOs must also
banks and microfinance institutions are credit continue nurturing and capacitating
service providers, MTOs and MMOs are money nascent women Self-Help Groups across the
transfer platforms, and NGOs provide interest- country and increase approaches for NGOs
free revolving funds and grants to poor and and donors to act as guarantor for credit-
marginalized groups. worthy SMEs that could not find a guarantor
to access finance. Such a scheme should
Many women prefer informal loans, as they be dedicated to women business only
are more flexible, have low-interest rates and
extended repayment periods. Women small • Somaliland government must expand and
business owners can access cash grants and formulate detailed regulatory frameworks
loans through friends, relatives, neighbours, for the finance sector and reform the fees
diaspora networks, clan members, extended for registering businesses and obtaining
families, moneylenders, and Hagbed. The lowest national ID cards to ensure they are gender-
credit limit is 3.000 USD for many commercial sensitive
banks and women small business owners are
generally looking for loans between 200-800 • The government, civil society organizations
USD to grow their businesses and women groups must join forces to
advocate for increased representation
NGOs play an important facilitator role for of women in decision making bodies and
marginalized women accessing formal finance. within the banking sector
To overcome the stringent conditions of
accessing loans, local NGOs organize women’s • More investment in literacy and numeracy
self-help groups and connect them with formal outreach programs for marginalized women
financial institutions. More marginalized women groups to independently manage their small
groups are now accessing credit through these businesses and read written information
mechanisms as it has increased both the that helps them to access financial services
and products

– Women business’ access to finance in Somaliland 5
Research Report

List of acronyms

MTOs Money Transfer Operators
MMOs Mobile Money Operators
DBI Dahabshiil Bank International
SHGs Self-Help Groups
ID Identification Card
DSB Dara Salaam Bank
NGOs Non-Governmental Organizations
LNGOs Local Non-Governmental Organizations
INGOs International Non-Governmental Organizations
HR Human Resource
RM Research Matrix
US United States
IRW Islamic Relief Worldwide
SOYDAVO Somaliland Youth Development and Voluntary Organization
WAAPO Women’s Action Advocacy Progress Organization
SOS Societas Socialis
EU European Union
UNICEF United Nations Children’s Fund
IDPs Internationally Displaced Peoples
SSF Somali Stability Fund
AECF Africa Enterprise Challenge Fund
DFID Department for International Development
GEEL Growth, Enterprise, Employment and Livelihoods Project
NRC Norwegian Refugee Council
SMEs Small and Medium Enterprises
ID Identification Card
BoD Board of Directors

6 Women business’ access to finance in Somaliland
Research Report

Introduction

Equal access to finance is critical a critical Job Creation & Investment Climate Private-
component when striving for gender equality. Public Business Dialogue”. The primary concern
Access to financial services is essential for the of women participants was identified as having
empowerment of women and for equitable and access to the full range of banking services
sustainable economic growth and development which men currently have access to. The Nagaad
(UN,2009). Globally, women’s access to and Oxfam Somaliland Gender Gap Study and the
finance is lower compared to men, access to international literature reinforced this concern:
finance is often a key indicator of a person’s “women were denied access to some banking
socioeconomic status and is also closely linked services that men enjoyed even though their
to human rights. According to the World Bank’s repayment rate was higher than that of men.”
Global Findex database of 2017, approximately A lack of access to essential banking services
1.7 billion people do not have a bank account, has significantly impacted women’s economic
of which 980 million are women. In sub-Saharan empowerment and has impacted their capacity
Africa, only 37% of women have a bank account to grow businesses.
compared with 48% of men, a disparity that
has widened over the past several years due to The current evidence suggests differential
increased gender inequalities at societal levels1. access between men and women to available
financial services and products. This research
In Somaliland, this gap is likely to be wider due investigates this claim along with the additional
to demand-side (sociocultural norms and gender research objectives shown below:
roles; collateral and application documents; • To recommend ways to adapt and improve
literacy and access to information) and supply-
side (lack of capacity to design gender-tailored policies, offers and practices of Somaliland
services and products; inadequate services financial institutions to create a more
and products; unsuitable delivery mechanisms) women-friendly environment with better
constraints. Research conducted by the and easier access for women-led business
World Bank, the Enterprise Survey (ES 2013) in development.
Somaliland, revealed access to finance was
identified as the biggest obstacle to conducting • To identify better ways for women to
business in Somaliland. In that survey, 48.8% access finance to expand their businesses,
of the firms interviewed chose poor access livelihoods and to formalize their economic
to finance as the most important, or biggest activity.
obstacle to their business from a list of 16
business-related challenges. • To analyze the root causes of differential
access for women to the full range of
In Somaliland, women dominate the small, services in banking and microfinance
informal business sector, but accessing financial institutions.
services in this sector is increasingly becoming
difficult and historically women have been • To provide recommendations to relevant
treated unequally by banking services. In April stakeholders such as the Chamber of
2019 the European Union and the Chamber of Commerce, banks, and the Ministry of
commerce Somaliland hosted the “Promoting Commerce, to better equip organisations
with information on how to support small
and medium-sized women-led businesses
on how and what they can access.

1 https://www.imf.org/external/pubs/ft/fandd/2020/03/pdf/africa-gender-gap-access-to-finance-morsy.pdf 7
Women business’ access to finance in Somaliland

– Research Report

• To analyze the challenges that women to the full range of services in banking and
face when, and if they try to get finance microfinance institutions?
from the banking system and analyze 6. Which new products, services, policies, and
what opportunities there may be so practices need to be reformed or introduced
improvements may be made. to enable better access for women’s
business? (What are the gaps? What are the
Based on the research objectives the study challenges for providers to offer services to
provides responses, details, and insights to the women?)
following research questions:
1. How are women (diverse group) businesses Although there is evidence in the wider
literature that women’s access to finance in
accessing finance in Somaliland? Somaliland is disproportionately low compared
a. Formally through financial services to men, there is no in-depth research to inform
b. Informally through family networks advocacy and programming. This research aims
to generate relevant and current evidence to
(including savings group) better understand women’s access to finance
2. Which financial services are available and in Somaliland, while also developing several
best practices which can be adopted to
what are the conditions for access for foster inclusion. This report is organized into;
women? methodologies, research findings and practical
3. What are the implications of women recommendations to influence public policies,
accessing grants on formal bank loans/ institutional behaviors, and social perceptions.
financial institutions? The recommendations are categorized for the
4. What are the key barriers and enablers to relevant stakeholders such as government,
women accessing finance for business? financial institutions, development agencies and
What are the behavioral differences between public opinion makers.
men and women to understand if/why
women are self-selecting out?
5. What are the underlying causes of
differential access between men and women

8 Women business’ access to finance in Somaliland
Research Report

Abdiaziz Adani/Oxfam

Research methodology

The research adopted a mixed-methods an in-depth understanding of the complexities 9
approach to provide a balanced overview of of key issues that reinforce each other and
the current context for women. Key methods constrain women’s access to finance. The
included desk review, survey, Key Informant study adopted a flexible methodological
Interviews (KIIs), Focus Group Discussions approach which was necessary because of the
(FGDs), case studies and observations. Whilst changing context caused by COVID-19. This
conducting the research, gender sensitive, meant accounting for existing challenges and
right-based, culturally sensitive, participatory uncertainties and new challenges that could
and “learned oriented approach” was adopted arise due to the pandemic. During the data
at all levels to ensure that the research process collection process, interviews were conducted
was not extractive but was empowering and in spaces that participants felt comfortable
transformative for the women and other and could talk freely whilst complying with
stakeholders in recognizing their rights. The COVID-19 prevention measures. Specifically,
research approach did not provide answers the study ensured that women participants felt
for the research questions but explored the safe and comfortable in relation to interviewers
intersections between key issues to provide and research questions, this encouraged open

– Women business’ access to finance in Somaliland
Research Report

discussions and lead to full disclosure in relation Qualitative methods
to their thoughts and feelings on accessing
finance. The qualitative methods included: desk
review, Key Informant Interviews (KIIs), Focus
To ensure the study was gender-sensitive, Group Discussions (FGDs), Case Studies and
several methods were incorporated into observations.
the research design including: (1) the lead
consultant was gender specialist and had Desk review: The research team reviewed more
experience working with women in a range than 35 relevant documents including Somaliland
of contexts; (2) enumerators and facilitators financial legal and regulatory frameworks; UN
received training with gender-inclusive reports, World Bank reports and databases;
methodologies to conduct the research with women access to finance research; publicly
women and marginalized groups, and (3) female available information on local financial service
enumerators and discussion facilitators were providers; Somaliland development plans and
all women to minimize the chances of women other related materials.
feeling a power imbalance.
Key Informant Interviews: The research
As part of the research design, a Research Matrix compromised 19 interviews in total with 11
(RM) was developed that contained the research women and 8 men representing financial service
questions, potential indicators to collect data for providers, Somaliland Chamber of Commerce,
the research questions, sources of information Local and International NGOs, Somaliland
and other specifics. The RM framework was government and women businesses. Below table
used to guide the development of relevant data shows the key stakeholders interviewed:
collection tools and other research protocols.

Stakeholders interviewed Respondents Female Male Location
Dahabshiil Bank International 2 1 1 Hargeisa
MicroDahab 2 1 1 Hargeisa
Premier Bank 1 0 1 Hargeisa
Dara salaam Bank 1 0 1 Hargeisa
Somaliland Chamber of Commerce 2 1 1 Hargeisa
WAAPO (LNGOs) 1 0 1 Hargeisa
SOYDAVO (LNGOs) 1 0 1 Hargeisa
NAGAAD (LNGOs) 1 1 0 Hargeisa
Concern Worldwide 1 1 0 Hargeisa
PLAN International 1 1 0 Hargeisa
SOS 1 1 0 Hargeisa
NAFIS Network 1 1 0 Hargeisa
Oxfam 1 0 1 Hargeisa
MESAF (Ministry of employment, Social affairs, and
family) 1 1 0 Hargeisa
Woman large business holder
Women medium business holder 1 1 0 Hargeisa
Total 1 1 0 Hargeisa
19 11 8

10 Women business’ access to finance in Somaliland
Research Report

Focus Group Discussions (FGDs): The research conducted 9 discussions with urban women business
holders, women in IDPs, rural women business holders, religious and cultural leaders.

Participants # of Female Male Location
Participants
Group of women 7 0 Qaran Women Group, Sheikh Nuur, Hargeisa, urban area
7 9
Group of women 0 Sareeda Luul Women Group, Huluuq village, rural area,
9 9 MaroodiJeex region
Group of women 8 Damal Women Group, Abaarso village2, rural area,
9 9 0 MaroodiJeex region
Group of women 8 9
Group of women 9 7 0 Naruuro Women Umbrella, State House IDPs Camp, Hargeisa
Group of women 9 9
Group of women 7 0 State House IDPs Camp, Hargeisa
Group of women 9 0
Religious 0 Nasahablood IPDs camp, Hargeisa
Leaders, cultural 7
leaders 0 Khayre Women Group, Ahmed Dhagax IDPs camp, Hargeisa

0 Hodaale Women Group, Daami, Hargeisa

7 Hargeisa

Case Studies: The research conducted three in-depth case studies with one rural woman and two urban
women business holders. The case studies focused on a woman who had previously applied from a
local financial institution and had been rejected; and two women who applied for a business loan and
had been accepted.

No case Respondent Location
studies
A rural woman small business holder who applied for a loan from Huluuq village, MaroodiJeex
1 the local bank and got accepted region
Sh. Nuur Neighborhood,
1 A woman small business holder who applied for a loan from the Hargeisa, MaroodiJeex region
local bank and got rejected
A woman large business holder who applied for a loan from the Hargeisa
1 local bank and got accepted

3 case studies in total

Observations: The research team completed an observation checklist where possible throughout the
study process specifically paying attention to gender-sensitive infrastructures available in the visited
financial service providers.

Quantitative methods databases to extract relevant numerical values
and statistics that add value to the report.
The quantitative methods included a
representative survey and literature review of Survey: The research conducted a
the relevant statistical data on women’s access representative survey of 150, (100 in Hargeisa
to finance. and 50 in Borama city) with women-owned
businesses including small, medium, and larger
Literature/desk review: The research accessed enterprises. The survey was administered by
various documents including the world bank Kabaalconsulting utilizing the mobile data
collection platform ONA/ODK.

2 Abaarso village is semi-urban area but the focus group discussion participants were women from the rural area that convened in Abaarso for 11
the discussion.

Women business’ access to finance in Somaliland
– Research Report

Sampling

The survey was conducted using purposive- limited by practical constraints for example
then-randomized sampling technique. Women- the wide-spread population and accounting
owned businesses were the target population, for time and budget constraints, the sample
taking into consideration socio-economic size of 150 respondents was deemed suitable
characteristics of the population including when working within these constraints but
the type of business, age, disabilities, and would be large enough to provide an accurate
geographical location. The research was assessment of the context.

Challenges and limitations of the
research

The field data collection took place from late fieldwork was administered in Hargeisa and two
December 2020 to early January 2021, when the selected rural villages in MaroodiJeex region.
impact caused by the COVID-19 pandemic had It is important to take into consideration when
peaked. To ensure the safety and health of the generalizing the various results presented in
researchers and the target population, complying this report at a national level as more nuanced
with COVID-19 instructions delayed some of variations between the regions may not be
the fieldwork and national engagements. This evident.
was also a festive season in Somaliland and a
busy time for the financial institutions as some Usually, the self-selection bias occurs in
key staff were on leave or their time was fully research that involves people’s voluntary
absorbed by closing their annual accounts. participation. Those who choose to join may
Some of the financial institutions were very share characteristics that makes them different
cautious and sensitive and raised concerns that from those self-select out of the research.
the information generated through this research Hence, the surveyed are those who consented
would be used by their competitors against them. to participate. A common anticipated reason the
However, the research team overcame these participants could self-select into the research
barriers by ensuring all ethical and due diligence is their perceived expectation of benefiting
processes were strictly followed. Because of personally or by their institution, such as
this, some interviews with financial institutions through monetary rewards/aid or partnering with
were delayed significantly until clearances were Oxfam. To mitigate respondents’ expectations,
obtained from their HR departments. Even after they were informed the sole purpose of the
obtaining HR clearance, some financial service research was to better understand women’s
providers withheld key information that could be access to financial services before any interview
useful and impactful for the research. took place, reinforcing the notion that their
participation would not yield any immediate
The research survey was conducted in Hargeisa benefits or rewards.
and Borama cities while the qualitative

12 Women business’ access to finance in Somaliland
Research Report

Abdiaziz Adani/Oxfam

Analysis of the broader financial
sector in Somaliland

Legal and regulatory framework failed to achieve parliamentary approval in 2016
and is currently still pending. This is largely due
The Somaliland financial sector is still at the to interest groups who have fiercely opposed the
early stages of development, and the legal and bill on the grounds that it is not fully compliant
regulatory frameworks that ensures effective with Islamic finance laws. The failure to pass the
governance are still being introduced, developed conventional/commercial banking act has halted
and enforced. The Somaliland government the establishment of local and international
has introduced several legal frameworks commercial banks in Somaliland. As a result,
including the Somaliland Central Banka Act larger money transfer organizations (MTOs)
(Act No: 54/2012)3, Islamic Banking Act (Act No: engaged in banking activities including taking
55/2012)4, Monetary Transfer Business Law deposits and making loans has transitioned into
(Law No. 86/2019)5 that regulate the Somaliland Islamic Commercial Banks.
financial sector. The commercial banking bill

– Women business’ access to finance in Somaliland 13
Research Report

The introduction of existing policies and legal external/foreign reserves; and (7) Adviser
instruments emanating from Article 13 of the of Government on financial and economic
constitution of the Republic of Somaliland, “The issues9.
state shall establish a Central Bank which shall
direct the monetary system and the currency II. Islamic Commercial Banks are sharia-
of the nation. The opening of commercial and compliant10 banks licensed by the Central
development banks shall be made possible and Bank of Somaliland. The main Islamic
private banks shall be accorded preferential Commercial Banks in Somaliland are Premier
status6”. No other laws exist to regulate the Bank, Dahabshiil International Bank (DIB),
bourgeoning financial sector, the existing laws Dara Salaam Bank (DSB) and Amal Bank.
contain serious gaps that weaken their full These banks provide services mainly
enforcement and further clarification on their accepting deposits and giving loans to the
application is needed. Although progress was public.
made in developing policies and laws to regulate
the sector, operationalizing these instruments III. Microfinance Institutions (MFIs) provide
has been a challenge due partly to limited sharia-compliant financial services mainly
resources, capacity constraints and political loans to low-income segments of the
will.7 However, the finance sector is growing and society. The main MFIs in Somaliland are
offering various financial products and services Micro-Dahab, Kaaba Microfinance Institution
to the public. (K-MFIs), Kaah International Microfinance
Services (KIMs) and Shuraako11.
Financial ecosystem in Somaliland
IV. Money Transfer Operators (MTOs) are engaged
There are five main groups in Somaliland’s in international money transfers. The
formal financial ecosystem: Somaliland Central main MTOs that operate in Somaliland are
Bank, Islamic Commercial banks, Money Transfer Dahabshiil, Amal, Jubba, Kaah Express, Taaj,
Organizations (MTOs), Microfinance Institutions Tawakal, Iftin and Bakaal Express. The Larger
(MFI), Mobile Money Operators (MMOs) and NGOs8. MTOs including Dahabshiil, Al-Barakat12 and
Amal have established commercial banks
I. Somaliland Central Bank is the main regulator and telecommunication branches providing
of Somaliland’s financial sector which is also mobile money services.
mandated to operate as a commercial bank.
The bank’s core activities are (1) Issuance of V. Mobile Money Operators (MMOs) allow
Somaliland’s national currency/legal tender, Somalilanders to receive, store and spend
the Somaliland Shilling (SLSH); (2) Regulation money using a mobile phone. The largest
of money supply through Monetary Policy; Mobile Money Operators in Somaliland are
(3) Banker to the Government of Somaliland; Telesom/Zaad and Somtel/E-Dahab. The
(4) Banker to Commercial Banks; (5) MMOs provide both local and international
Supervision and regulation of Financial money transfers. For international transfers
Institutions; (6) Management of the country’s this goes through money transfer operators
e.g., Taaj.

VI. NGOs provide loans, grants and revolving
funds to women in businesses in Somaliland.

3 www.somalilandlaw.com/Xeerka_Baanka_Lr54-2012.pdf (Last accessed on 6 February 202)
4 XEERKA BAANANKA ISLAAMIGA AH (somalilandlaw.com) (Last accessed on 6 February 202)
5 Xeerka-Xawaaladaha-Somaliland-Xeer-Lr.-86-2019.pdf (somalilandlaw.com) (Last accessed on 6 February 202)
6 SOM88085 Eng.pdf (Last accessed on 7 February 2021)
7 Financial Sector Diagnostic Study for Hargeisa, Somaliland, April 2013, International Labour Organization (ILO), Hargeisa, Somaliland.
8 NGOs are considered under formal financial service providers as they provide grants, loans, and revolving funds to women businesses in
Somaliland.
9 https://bankofsomaliland.net/about/ (Last accessed on 6 February 2021)
10 Shariah-compliant banking refers to finance or banking activities that adhere to shariah (Islamic law). Two fundamental principles of Islamic
banking are the sharing of profit and loss, and the prohibition of the collection and payment of interest by lenders and investors.
11 Shuraako is focused providing both small and large loans mainly to Small and Medium-sized Enterprises (SMEs)
12 Al-Barakat was closed in September 2011 in suspicion that it has links with Al-Qaida – US designated terrorist group. In 2006, the US and UN
officially removed Al-Barakat from their blacklists, finding that there was no evidence of the company’s involvement in funding of any terrorist
activities. Telesom telecommunication company and Taaj money transfer is believed to have been off-shoot of Al-Barakat money transfer.

14 Women business’ access to finance in Somaliland
Research Report

Abdiaziz Adani/Oxfam

Which financial products are
available and what are the terms
and conditions?

There are formal and informal financial service (L/INGOs). The informal financial service providers
providers in the market. The main formal include friends, relatives, neighbours, Hagbed13,
financial service providers are Commercial self-help Groups and revolving funds14. Below
Banks, Microfinance Institutions, and Local and are the financial products with set terms and
International Non-governmental Organizations conditions.

13 Members of women group receive fixed money usually from NGOs, and each member repays agreed amount of the debt each week or month
and then the ‘collected money’ is given to a different member in turn.
14 A contract of sale between the bank and its client for the sale of goods at a price plus an agreed profit margin for the bank. The contract
involves the purchase of goods by the bank which then sells them to the client at an agreed mark-up. Repayment is usually in instalments.

– Women business’ access to finance in Somaliland 15
Research Report

Formal financial service providers VII. An employment contract that will remain
valid until the loan is fully paid.
Islamic Commercial Banks
VIII. Two passport size photos
1) Dahabshiil Bank International (DBI) IX. Copy of Passport/ID/Driving license.
X. Somtel18 contact number
Dahabshiil Bank International (DBI) is a Sharia- XI. 30% upfront payment for vehicle financing.
compliant bank that provides various financial
products. The main Sharia-compliant credit 2) MicroDahab Microfinancing
financing instrument DBI offers is Murabaha15
which involves the purchase of real state, MicroDahab is a microfinance institution
vehicles, and goods only. Murabaha mode of that was established as a subsidiary of
financing remains the most common mode Dahabshiil International bank that works
of financing and has the largest share of the to alleviate poverty and promotes financial
bank’s clients. Musharakah16 and Mudarabah17 inclusion by providing microfinance services.
credit financing exists but are not common and Although the majority of Micro-Dahab clients
are approved under specific circumstances are women-led, small business holders, it is
which require management approval. also beneficial to youth, men, farmers, and
Through the existing credit instruments, students. MicroDahab has seven branches in
DBI finances businesses, trade, agriculture, Somaliland and nine branches in South-Central
energy, technology, fishers etc. The terms Somalia demonstrating a strong presence
and conditions for the Murabaha – the most across all regions of Somaliland and Somalia.
common credit financing, are as below: The most common MicroDahab credit financing
instruments are: (1) Murabaha, (2) Mudarabah;
Terms conditions for Murabaha credit financing (3) Ijara; and (4) Qardh Al-Hassan. The most
recent MicroDahab projects which reflect their
I. The applicant must be an employee who credit services are solar-powered water pumps
earns a minimum salary of 800 dollars or for Barwaaqo19 farming cooperatives to irrigate
an owner of a legally registered profitable their farms; Aluminium milk cans and milk
business with a tax clearance certificate cooling stalls for Gobonimo and Waheen milk
traders; laptops for students and businesses;
II. The applicant must submit a completed and businesses for Self-Help Groups (SHGs)
request letter specifying: (1) Murabaha through Murabaha credit scheme. Overall,
subject matter; (2) the price of the goods MicroDahab finances sectors shown in the table
to be purchased; and (3) the proposed on the next page:
repayment period
MicroDahab conducts regular outreach visits
III. Performa invoice addressed to Dahabshiil in local markets to share information about
Bank International their products with target customers. This is
specifically designed to reach illiterate women
IV. Documentary evidence of employee’s salary who own a small business and who may not
i.e., contract or financial statement for the otherwise be able to access such information.
businesses. Whilst conducting outreach visits, loan
applications are also submitted for customers
V. Customer certification letter from Dahabshiil who need business financing. MicroDahab also
Bank or the Money Transfer section

VI. Print out of the last annual financial
statement

15 A contract of sale between the bank and its client for the sale of goods at a price plus an agreed profit margin for the bank. The contract
involves the purchase of goods by the bank which then sells them to the client at an agreed mark-up. Repayment is usually in instalments.
16 This is partnership agreement. All parties involved contribute to towards the financing of a venture. The parties share profits on a pre-agreed
ratio while losses are shared according to each party’s equity participation. Management of the venture is carried out by all, some, or just one
party member.
17 it is a contract in which all the capital is provided by the Islamic bank while the business is managed by the other party. The profit is shared
in pre-agreed ratios, and loss, if any, unless caused by negligence or violation of terms of the contract by the entrepreneur is borne by the
Islamic bank. The bank passes on this loss to the depositors.
18 Is Dahabshiil owned telecommunication company that is headquartered in Hargeisa.
19 An association of 600 hundred farmers in the west and north of Hargeisa city.

16 Women business’ access to finance in Somaliland
Research Report

Sectors Description
Agriculture Providing Murabaha to small subsistence farmers i.e., fertilizers, seeds,
Fishing Financing fish for retailers and fuel, ice, nets and food for boat owners
Education Providing laptops and other educational materials to our clients
Livestock Providing Murabaha to small livestock traders across the region
Renewable energy Promoting Murabaha initiatives to adopt and mainstream solar energy
Manufacturing Availing Murabaha finance to small craftsmen by investing in stocks

shares updates on their products through social reputation, and overall societal acceptance.
media, local TVs, and Radio Hargeisa. Terms and Some guarantors are self-referencing because
conditions of MicroDahab financial products of their position in the society while others’
are not publicly available rather the applicants information is accessed through influencers
attend the nearest branch or engage with an such as traditional leaders, religious leaders,
outreach visitor to obtain the requirement politicians, and established business owners.
verbally. Collateral and/or guarantor is the Since markets are dominated by men, they
mandatory requirement of MicroDahab finances are more likely to be known in their respective
to fund informal businesses. Collateral is an sectors unlike similar businesswomen in the
asset in the borrowers’ name that MicroDahab market which excludes them to be recognized
accepts as a security protection for the as guarantors for loan applications.
loan. If the borrower defaults on his/her loan
payments, MicroDahab can seize the collateral MicroDahab has been a beneficiary of various
and sell it to recover the loan. A guarantor is an donors and has implemented NGOs projects to
individual who agrees to pay a borrower’s debt provide low collateral loans to increase access
in the event the borrower defaults on his/her to finance for credit-worthy SMEs that lack
loan obligation. Guarantors pledge their own sufficient collateral or possess other non-
assets as collateral against the loan. financial credit challenges. Mercy Corps and SSF
projects have ended while AECF, GEEL and NRC
MicroDahab credit officers help applicants to are on-going and continue to provide collateral
complete the application and other required for SMEs to access finance. Interestingly,
documentation. MicroDahab finances Self- the SMEs are not aware of the availability of
Help Group business through an inter-member collateral. Hence, the financial service provider
guarantee framework. All group members recovers the loan if the client defaults.
are responsible for the loan payment and
if a member defaults the rest shall recover 3) Premier Bank
the loan for the company. The minimum loan
MicroDahab offers is $300 while the maximum Premier Bank is Sharia-compliant commercial
is $5000, although there are instances, they bank offering different financial products
offer slightly higher or lower in this price range. to customers in Somaliland. The bank
If an applicant cannot meet the terms and offers (1) businesses financing including
conditions, specifically a guarantor, there are trade, asset, and projects; and (2) personal
no alternative arrangements for her to obtain a financing for individual needs unrelated to
loan. the business activities. Premier Bank’s main
investment sectors are energy, trade, and
Generally in Somaliland, the concept of production sectors i.e., agriculture. Premier
collateral and guarantor is fluid. Because Bank has adapted a unique financing model
there is no formalised system to verify asset which requires the client to submit his/her
ownership instantly, financial service providers investment proposal to be reviewed by a credit
do not accept guarantors for his/her asset committee. If the credit committee approves,
claims only but consider broader socio- the client is notified of the bank’s preferred
cultural issues including truth-worthiness, credit instrument to finance the proposal. The

– Women business’ access to finance in Somaliland 17
Research Report

available credit financing instruments are Ijara20, microfinance instruments other than scaling up
Istisna’a (progressive financing)21, Musharakah, the existing micro-credit facilities.
Mudarabah, Murabaha and Qardh al-hassan
(benevolent lending)22. Premier bank does not Terms and conditions for Murabaha credit
have dedicated micro-finance instruments financing
but the Qardh Al-hassan credit instrument
which is part of the bank’s larger credit facility a. Requirement for Employees
provides small loans two to three times a year I. Premier Bank Account
with a maximum limit of 5000 USD to the clients. II. Request Letter to be filled by the
Over 80% of the microcredit (Qardh Al-hassan) applicant
applicants are women and youth with small III. Copy of the passport/National ID
scale businesses. Some of the applicants are IV. Photo – Passport size
referred by NGOs while others are independent V. Copy of supplier details/Pro forma
individuals. The bank does not levy small loans, invoice or quotation
and service costs are absorbed by the bank. VI. Letter from employer (Employment
The minimum investment through other credit status, Salary, behaviour, and position)
instruments is 3000 USD, meaning there is an VII. Copy of the employment contract
overlap between Qardh Al-hassan and other VIII. Bank statement (last six months)
available credit instruments. The difference is IX. Security and/or third-party guarantor
that Qardh Al-hassan is an interest free loan (copy of the guarantor ID needed)
paid in cash whilst another Murabaha credit
instrument requires the client to pay the mark- b. Requirements for self-employed/sole
up or “cost-plus” price for the goods purchased. proprietor
I. Premier Bank account (which has been
In the absence of specific financial products for active for the last three months)
women, the bank accepts the referrals of local II. Request letter to be filled by the
NGOs like Candlelight which support organized applicant
women Self-Help Groups (SHGs) to access III. Copy of passport/ID
credits collectively. For example, 10 women may IV. Valid business license or registration
receive $5000 ($500 each) through an inter- certificate
member guarantee framework. The group signs V. Pro forma invoice or quotation
a contract stipulating collective responsibility VI. Business profile: history, nature of
for the loan repayment. If one member defaults, business and list of major customers and
the rest shall recover the loan for the bank. It suppliers.
is reported that the default rate for the SHGs is VII. Financial statements (statement of
very low (less than 3%) with genuine reasons. financial position and income statement)
For individual applicants, the bank assesses the VIII. Bank statement (last 6 months)
business credit history, requires a guarantor, IX. Collateral and/or guarantor (copy of
visits the site of the business, interviews guarantor ID needed)
the applicant and cross-checks documents
including tax payment receipts to approve c. Requirements for companies/partnerships
or reject the loan. At the end of each cycle I. Premier Bank account (which functional
payment, the bank evaluates the commitment for the last three months)
of the debtors in the loan repayment; those who II. Copies of ID (or passport) each of the
pay on time and pay off their debt will benefit owners/shareholders
from a high credit score and are accepted for III. Fill in a bank request form
more likely to be accepted for future loans IV. Approval of the business’s Board of
whilst the defaulters are blocked or backlisted Directors (BoD)/Shareholders of the
to access future loans. Premier bank does not credit request
have imminent plans to establish dedicated

20 A leasing agreement whereby the bank buys an item for a customer and then leases it back over a specific period.
21 A contract of sale of specified goods that have to be manufactured before delivery is possible.
22 Is an interest free loan. In a qard al-hasan transaction, the borrower repays the principal amount of the loan without interest, mark-up, or a
share in the business for which the loan was used.

18 Women business’ access to finance in Somaliland
Research Report

V. Pro forma invoice/quotation addressed income – salary, income from rents, 19
to Premier Bank profits from business (balance sheet,
income statement, cash flow)
VI. Business profile: history, nature of III. Registration documents and Article of
business and list of major customers and association
suppliers. IV. The applicant and the guarantor must
have a bank account with DSB
VII. Notarized copy of memorandum/ V. Registration/list of the applicant and
articles of association. In the case of guarantor assets (real state, land titles,
a partnership, certified copy of the vehicles, cars etc.)
partnership deed/agreement VI. Pro forma invoice or quotation of the
goods to be purchased
VIII. Copy of the certificate of registration/ VII. The applicant must not make a deposit
business license together with a to the seller of the goods at any
certificate of change of name (if circumstances.
applicable) VIII. Assign the space where the buyer
(client) shall receive the items once
IX. Copy of the last annual financial purchased.
statement (balance sheet, income IX. The items (land, house, vehicle, or
statement and cash flow statements) – car) must bear complete and legal
audited statement needed if the facility documentation for the bank to finance
exceeds $100,000 X. The bank reserves the right to withdraw
the transaction if any issues are
X. Copies of bank account statements for detected at any stage of the process
the past 6 months XI. The buyer (client) must make 30%
upfront payment of the total price value
XI. Schedule(s) of current and previous bank of the item to be purchased.
borrowings with details of maturity – if XII. The repayment period is 12 months for
any. an investment of less than $10,000.
XIII. Request letter addressed to the bank
XII. Proposed security: collateral and/or XIV. Photo -- passport size and national IDs
guarantor. In case of collateral security: both for the applicant and the guarantor
valuation reports (s) and copy of the XV. A notarized collateral asset including
documents evidencing ownership of the business shares, property, etc.
asset offered as security. XVI. Valuation letter if the collateral is
property i.e., houses.
4) Dara Salaam Bank (DSB) XVII. Applicants last three months financial
statement
DSB is sharia-compliant bank established XVIII. Documentary evidence of the income
in 2010 that is licensed by the central bank sources as stipulated in bullet number
of Somaliland. DSB offers a wide range of two.
Sharia-compliant products and services. DSB
investment is categorized: (1) Debit based b. Terms and condition for DSB Mudarabah and
financing (Murabaha and Istisna’a); (2) Equity Musharakah
based financing (Musharakah and Mudarabaha); I. The applicant must have at least one
and (3) Credit based financing (loans and Qardh year experience of the proposed project
Al-Hassan). DSB provides investments to both II. Business’s last annual financial
businesses and individuals. However, a high statement (balance sheet and income
default rate obliged DSB to stop providing statement)
microfinance services. $ 3000 is the minimum III. Feasibility study on the project
loan that the bank offers through different credit IV. Guarantor to be liable for any losses or
financing instruments to all clients irrespective defaults.
of their gender. Hence, the bank does not have V. The applicant must not use the
specific credit facilities for women.
Women business’ access to finance in Somaliland
Terms and conditions for different DSB credit Research Report
instruments

a. Murabaha terms and conditions
I. Collateral and/or guarantor.
II. Official letter evidencing sources of

–

purchased items for his/her other IX. Request letter addressed to the bank
business motives.
VI. Ascertain the item/s to be financed by X. Photo-passport size and national IDs
the banks both by the applicant and the guarantor
VII. Is illegal to spend the funds for the
agreed items on other businesses. XI. A notarized collateral asset including
VIII. The applicant or the guarantor will be business shares, property, etc.
liable for any written off debts.
IX. For the Mudarabah, the profit is shared XII. Valuation letter if the collateral is
as per the contractual agreement while property i.e., houses.
any loss is absorbed by the bank given
it does not result from applicant’s XIII. Applicants last three months financial
negligence. statement
X. For the Musharakah, the profit is shared
as per the contractual agreement while XIV. Final design of the construction or
any loss is split as per the share values. detailed description of the item to be
XI. There is no profit from Mudarabaha manufactured.
unless the principle is secured first.
XII. Musharakah begins when the involved 5) Local and International Non-governmental
parties confirm the transfer of the Organizations (L/INGOs)
agreed money to the new DSB account.
XIII. The Musharakah and Mudarabaha L/INGOs are not formal financial institutions
investment shall have financial but their capacity to provide grants and loans
procedures detailing staff salaries and (known as revolving fund) to low-income women
other expenses. and women small business holders qualify them
to be analysed as formal financial providers
Terms and conditions for DSB Istisna’a in this research. Care International, ActionAid,
Concern Worldwide, World Vision, Islamic Relief
I. The applicant must submit a quotation Worldwide (IRW), SOYDAVO, WAAPO, Candlelight,
for the items to be manufactured or Nagaad, SOS Somaliland and some UN agencies
constructed. For house construction, the are among those currently providing grants
applicant must submit the land location, and loans to low-income women and women’s
land size and proposed construction groups. UN agencies mainly provide grants or
design. For items to be manufactured, the loans (revolving fund) to such groups through
applicant must submit a description of local organizations. Before giving out cash
the item and the manufacturing location. grants and loans, women are organized into
groups. For example, Concern Worldwide
II. Agreement on the construction and supports village-based women associations by
manufacturing time scales. providing grants to rural women to create their
own businesses which subsequently increases
III. Agreement on the delivery location once their financial independence and self-reliance
manufactured through economic empowerment. The groups
receive grants collectively after completing
IV. Collateral and/or guarantor one year of capacity building and mentorship
V. Income evidence – employment training. The grant size is $3300 for each group
of 20 members. The EU funded project SOYDAVO
contract, income from property rents, has also provided grants to women groups
income from businesses (balance sheet, in Burao in Togdheer region in 2020. After
income statement and cash flow) completing two months of business training,
VI. Registration of business and the article each woman received $324 seed money to start
of association her own business. WAAPO is managing a UNICEF
VII. Must have an account with DSB and print funded UPSHIFT micro financing scheme for 80
out of financial statements of the last women groups in IDP camps. The project goes
three months through three phases: (1) intensive training and
VIII. 30% upfront payment of the total value mentoring of the beneficiary groups; (2) seed
of the item/s to be constructed or money after completion of the training course;
manufactured. and (3) monitoring of the businesses during the
incubation period and linking them to potential
credit service providers. The UPSHIFT project

20 Women business’ access to finance in Somaliland
Research Report

provides cash grants ranging between $1400 limited liability, and the creditor can legally
and $2000 to women groups based on the rigour recover the loan from debtors’ personal
and the scale of the business. The plan is to properties. In a country where investment legal
scale up the project to include an additional 100 frameworks are either weak or does not exist, it
groups. Grants are non-reliable as they are on a is an indemnity for the banks but burdens small
project-by-project basis. and medium-sized enterprises and threatens
formalization of businesses. The markup rate
Terms and conditions for implementing NGOs ranges between 12% to 20% depending on the
to provide grants or revolving funds depend on credit value and the risks associated with it
their own women’s economic empowerment whereas the credit repayment period is usually
strategies and specific project objectives. between 12 to 36 months depending on the
There are cross-cutting requirements for credit value and the risks associate with it.
most of the implementing NGOs for women to
qualify for grants or revolving funds. The key Informal financial services
terms and conditions are: (1) the potential
grant and/or revolving fund recipients must Along with the formal financial services, there
participate capacity building training; (2) are informal financial chains that individuals
recipients of grants should be a member and women smallholders can go to access
of an organized group such as Self-Help grants and loans. The sources of informal
Group (SHGs); (3) continuous monitoring and financial chains include friends, relatives,
evaluation of grants or revolving funds; and neighbours, diaspora networks, clan members,
(4) the groups must have clear structures extended families, moneylenders, Hagbed, etc.
including leadership and treasury. In addition, Informal financial credit is embedded in the
some implementing NGOs demand that groups Somali culture which furthers redistribution and
have registration from a relevant government sharing of resources among the community.
department, have a functioning bank account, There are societal expectations that clan
have a recommendation from the community members help each other when facing
leadership committee, national identification temporary difficulties. Although the more
cards and a guarantor that will be liable to pay wealthy members assist poor relatives or clan
the money if the funds are misused. members, there is reciprocity between equals.
There are no written terms and conditions for
Overarching issues on financial service credit services rather it is built on mutual trust
providers and verbal agreements that should be honoured
by the parties of the transactions. When a
It is worth to mention that most of the dispute arises, the parties seek justice from the
banks prefer to contract individual business local elders and sometimes the formal/secular
shareholder or guarantor instead of directly justice system when necessary. Informal credits
contacting the business enterprise. This such as Hagbed are popular in the rural, IDPs
is because if the individual shareholder or camps, poor urban neighbourhoods and to a
guarantor defaults on the loan there is no smaller extent in urban areas.

– Women business’ access to finance in Somaliland 21
Research Report

Abdiaziz Adani/Oxfam

How are women accessing available
financial services and products?

Access to finance is understood as the ability due to informalities. Due to a large number of
of individuals or enterprises to obtain financial dependents, women are more likely to spend
services including credit, deposits, payment, their business revenues on immediate family
insurance, and other risk management services. needs and other social priorities rather than
This section focuses on how individual women spending on business development. When in
and women business holders are accessing discussion with female participants from Khayre
existing financial services in Somaliland. Axmed Dhagax IDPs camp they said, “women
feel the heat of the daily family needs and
Women tend to dominate informal family-based spend business revenue on family priorities
small-scale businesses which makes them which affects business profitability and the
hard to make meaningful profits or savings loan repayments”. Moreover, the women focus

23 Demirgüç-Kunt, A., Beck, T., & Honohan, P. (2008). Finance for All?: Policies and Pitfalls in Expanding Access. Washington, D.C.: The World
Bank. Retrieved March 21, 2008,

22 Women business’ access to finance in Somaliland
Research Report

group discussion participants from State House obstacle for women businesses to grow”. This
IDPs camp mentioned, “women in the IDPs camp provides context to why women businesses are
do not have the confidence to seek loans for increasingly seeking loans or grants to bail out
businesses that wouldn’t make a profit; they businesses rather than to expand or grow them.
spend the loan on family priorities within weeks
and fail the repayment”. Low literacy also makes Women access loans from commercial
women unable to determine if the businesses banks, microfinances and women brokers in
are making profits or losses. Hodaale, Sareeda the markets that take loans from financial
and Damal women groups in Daami, Abaarso institutions and sell on to women business-
and Huluuq areas have mentioned that low owners usually located in markets with
literacy is the main challenge that fails extortionate charges. Such charges are
most women-owned businesses as they are negotiable between the credit provider and the
unable to calculate income and expenses and client. Even though women dominate informal
mitigate risks of over-expenditure. This was markets and are involved in formal markets to
also confirmed by male and female interview a smaller extent, they are also heavily involved
participants. A male interview participant in the charcoal sector, beauty salons, crop
mentioned, “literacy is a base of gaining farming, dairy businesses, fruits and vegetable
businesses management skills to determine business, remittances, retail business (shops,
profit and losses. Women currently spend butchery, etc.), khat trade, livestock, and
their income on family needs which makes poultry businesses. The survey disaggregated
it difficult for them to track loss and gains forms of business ownership by the categories
of the businesses” while a female interview of businesses to further understand how
participant said, “low literacy is the biggest different sectors impact women’s businesses.

Forms of business ownership disaggregated by categories of the business

72%

17%

9%

1% 2%
Sole proprietor
Large enterprises Partnership Sole proprietor Partnership Sole proprietor

Medium Enterprises Small and micro enterprises

– Women business’ access to finance in Somaliland 23
Research Report

Out of the surveyed women who own them. 45% of the surveyed women have a tax
businesses, 80% own small enterprises24, 19% registration certificate, 32% have no documents
medium enterprises25 and 1% large enterprises. and 23% have registration certificate
Of the 80% small enterprises, 72% are sole documents. However, when interpreting the
proprietors26 and 9% are partnership27 form data it is important to account for literacy when
business. Of the 19% medium enterprises, 17% understanding the appropriate documentation.
are sole proprietors and 20% are partnerships, Research from the focus group discussions
while 1% of large enterprises28 are sole and additional verifications found out the
proprietors. registration certificates and tax registrations
that women businesses claimed to have are
However, the majority of the women businesses mostly tax receipts issued by the local councils.
are not legally registered with the Somaliland
Chamber of Commerce and the Ministry of Do you have a bank account with a formal
Commerce. Most of them do not have bank financial institution in your name or
accounts with formal financial institutions but business name?
have mobile money accounts.

Which of the following documents do you 74%
have in your business name?

32% 26%
45%

23% No Yes

None 74% of the surveyed businesswomen do
Registration certificate not have accounts with a formal financial
Tax registration institution in their name or the business name
while 26% owned accounts. The reasons that
Women businesses were asked which of were mentioned in the discussions, interviews
the following documents they have in their and the survey are: (1) women are not aware
business name: (1) registration certificate; (2) of the financial services that provide account
tax registration; (3) audited tax accounts; (4) services; (2) women don’t trust financial
company shares; (6) others; and (7) none of institutions with their money; (3) it is difficult
for women to understand the requirements

24 In this research small enterprises are usually informal businesses in the open markets and along the streets, that employs 1-2 people and
with capital value of less than $2000.
25 Medium enterprises are usually formal business in building spaces that employs 7 people on average with capital value of tens of thousands
of USD.
26 A sole proprietorship also referred to as a sole trader or a proprietorship, is an unincorporated business that has just one owner who pays
personal income tax on profits earned from the business
27 A partnership is a formal arrangement by two or more parties to manage and operate a business and share its profits.
28 Large enterprises are formal business in building spaces that employ more than 10 people with capital value of more than hundred thousand
of USD

24 Women business’ access to finance in Somaliland
Research Report

due to low levels of literacy; (4) women lack the the available financial services such as opening
necessary documents including identification bank accounts, balancing the extra burden
cards; (5) the bank service fees/charges are of unpaid care work at home and business
expensive when opening an account; (6) some demands makes it significantly harder for them
women think banks charge interest/riba which to open or maintain business accounts. It is
is illegal in Islam – making them hesitant or also a concern for women trying to obtain a
in some cases caused them to abstain from national identification card as a male family
opening accounts with the local financial guarantor is required in addition to the sub-
institutions. clan chief which is required to guarantee all
applicants irrespective of their gender. Although
The above-mentioned reasons were the constitution of Somaliland guarantees
triangulated with local banks’ requirements equality for all genders, societal norms set
when opening accounts. The process of different expectations for women and men. The
opening a business account with local banks family male guarantor requirement for women
involves a due diligence process which to get a national identification card is unwritten
makes it harder for most of the women to but fully enforced in practice. The family male
meet the requirements. Although there are guarantor requirement applies only to women
slight differences between the banks, they all when getting national IDs and is a significant
have similar requirements to open business challenge which in turn makes it harder for
accounts. On average, it costs $20 ($10 service women to register businesses and open a bank
fees and $10 opening balance) to open an account.
account. Some banks require $100 for the
opening balance from the clients. “I was born and brought up in Somaliland. I
studied in Somaliland from primary school up
More importantly, Premier bank is the only bank to university. I urgently needed Somaliland
in which the application form for a business national Identification Card for personal use. I
account is available online for the public29. The went to the ministry of interior office to submit
online version is only available in English which an ID application. Although I completed all the
makes it difficult for many clients to complete requirements, I was told to bring a family male
without assistance. It is also mandatory to i.e., brother, uncle, father, or cousin30 who has
produce registration certificates from the Somaliland national ID to guarantee me. I told
Ministry of Commerce and the Chamber of them that my older sister has the ID card, but
Commerce. Registering business with these they refused and said only male members are
institutions is also complicated and very accepted31”.
expensive for women small business; it costs
$300 to $400 to obtain all formal registration Women’s financial exclusion is rooted in
documents. Identification cards, passports, several different avenues, the extortionate
2 passport size photos, article of association costs involved at different levels when opening
for the business, business address and a business account which at times equates
proof of location are among other mandatory to higher than the total value of women’s
requirements associated with opening a bank business, women’s limited mobility entrenched
account with a local financial institution. in unequal gender role at the household level
and the long-drawn-out due diligence process
Although lower levels of literacy among women that affects women disproportionately.
remains a key factor that excludes women from

29 https://premierbank.so/wp-content/themes/premierbank/download/Premier-bank-Business-Acc Opening-Form.pdf (Last accessed 2 25
March 2021)
30 From uncle’s side
31 A female key informant interview, interviewed, Hargeisa, January 2021

Women business’ access to finance in Somaliland
– Research Report

Do you have mobile money account in your bank or microfinance branch. The formal
name or your business’s name financial services share succinct information
around their services and products on social
5% media and TVs. Women small business owners
mentioned that they do not use social media;
No some do not have TVs at home while others
Yes may not have time to watch TVs due to heavy
95% unpaid workload at home. This demonstrates a
lack of means to access essential information
services.

Are you aware of any financial services/
institutions that provides loans to

businesses in your area/Somaliland?

Unlike a bank account with formal financial 46% No
institutions, 95% of women businesses have
a mobile money account, and 5% do not have 54% Yes
a mobile money account. This is in line with
World Bank study findings which indicate 78% 54% of the businesswomen are aware
of the Somaliland population use mobile money of financial services or institutions that
services while the Zaad accounts for 96.5% provide loans to business while 46% have no
of those mobile money accounts. The wide awareness. The large percentage of women
use of mobile money services necessitates who said they are aware of the available
businesses to open mobile money accounts. financial services can be explained by
The discussions and interviews confirmed that assessing the demographics: all the survey
only an identification card is needed to open a respondents are from urban areas (Hargeisa
mobile money account and there are no costs and Borama), but in-depth discussions with
involved. The identification card requirement rural women, IDPs and marginalized women
has recently been introduced and at times businesses living in the peripheries revealed
it is waived if a family member has already a a very low level of awareness. The dominant
mobile money account and can be the client’s way to explore available financial services
guarantor. and products is to physically visit the nearest
bank or microfinance branch. The formal
54% of the businesswomen are aware financial services share succinct information
of financial services or institutions that around their services and products on social
provide loans to business while 46% have no media and TVs. Women small business owners
awareness. The large percentage of women mentioned that they do not use social media;
who said they are aware of the available
financial services can be explained by
assessing the demographics: all the survey
respondents are from urban areas (Hargeisa
and Borama), but in-depth discussions with
rural women, IDPs and marginalized women
businesses living in the peripheries revealed
a very low level of awareness. The dominant
way to explore available financial services
and products is to physically visit the nearest

32 (https://www.altaiconsulting.com/wp-content/uploads/2017/11/WB-MME_Final-Short-Version_20170608.pdf (Last accessed on 5
February 2021)

26 Women business’ access to finance in Somaliland
Research Report

some do not have TVs at home while others application information from previous women
may not have time to watch TVs due to heavy loan applicants and some of their members
unpaid workload at home. This demonstrates a have applied while others are considering
lack of means to access essential information to apply. On the other hand, some women
services. who received loans were not able to pay in
full because of the impact of the COVID-19
Information about credit opportunities pandemic. The discussion participants also
often spreads via word of mouth and social mentioned that this has demotivated some
networks. For example, women in the women to seek loans from financial institutions
IDP camps mentioned that they receive other than Hagbed in the fear of unable to repay
information in weekly group meetings. The them on time. The market is generally slow
women in the same IDP camps or groups for small businesses to make profits. Informal
have differential access to credit information finances are compassionate to those who could
depending on unpaid care workload, mobility, not repay it and can possibly forgive the loans
and whether she participates in community or partially in some instances.
social spheres that information is shared.
Focus group discussion participants from Micro-Dahab/Dahabo subsidiary of Dahabshiil
Khayre IDPs camp in Ahmed Dhagax district Bank is revolutionizing and transforming the
have mentioned, “We are aware of Kaah way women access financial services by
express, Premier bank and Dahabshiil banks conducting outreach programs and setting up
and we are planning to reach other banks stalls in the women dominated local markets.
in the future. Some women get information This is easily accessible due to its flexibility,
through their other social networks and share businesswomen can drop in at a suitable
with their group in the weekly meetings”. time for them and receive information around
Contrarily, focus group discussion participants available financial products with associated
from the State House IDP camp also mentioned, terms and conditions. The staff who conduct
“We are not aware of any financial institution the outreach programs are mainly women to
that provides loans, if we were aware of create a safe space for the female clients to
it, we would have approached them”. This share their information and seek answers to any
highlights a disparity between different women questions. The main reason for the outreach
dependent on location and socioeconomic programme is to bring the services closer to
status. women dominated markets and increase their
access to the available financial services. The
In addition, women businesses access financial frequency and time of the outreach programme
information or opportunities through previous depend on market demands and if there is a
loan recipients. Nimo Abdi from Naruuro women budget available for it, however, this has been
group in State House IDP camp received two observed as a suitable approach to dispersing
cycles of loans from Premier bank with which information.
she bought a sewing machine for a tailoring
business and invested the rest in her shop. She Overall, there is a small window for women
said, “My shop is doing well, and you can visit accessing existing financial services. This
to see with your own eyes”. Loan recipients like is due to a deliberate lack of efforts from
Nimo act as sources of information for other the financial service providers to introduce
women and due to their success in securing targeted approaches for women in rural areas,
the loan and repaying the loan; their stories IDP camps and poor suburbs of the cities
spread across the area and as a result, more limits women’s ability to access finance.
businesswomen are considering applying This is likely to be because of the historical
for loans. Women focus group discussion marginalization of women at a societal level and
participants from Sh. Nuur area in Hargeisa and a lack of awareness around gender-sensitive
Khayre IDPs camp in Ahmed Dhagax district in approaches.
Hargeisa have mentioned that they heard loan

– Women business’ access to finance in Somaliland 27
Research Report

Which formal financial institutions provide loans to businesses in your area/Somaliland?

33%

24%
17%
13%
7% 7%

Dahabshiil Bank Dar Salaam Bank Premier Bank L/INGOs Micro-Dahab/ Kaah International
Dahabo Microfinance (KIMs)

Of those who are aware of financial services/ guarantor or collateral security for the loan; 10%
institutions that provide loans, 33% mentioned banks loan service fee is expensive; 6% do not
Dahabshiil, 24% Dar Salaam Bank, 17% Premier trust the financial service providers; 5% lack of
Bank, 13% L/INGOs, 7% Micro-Dahab/Dahabo the necessary documentation (ID card, wage
and 7% Kaah International Microfinance (K-MFI). slips); 2% found it difficult to understand the
Although MicroDahab conducts outreach requirements/literacy; 2% availability of family
programmes their lower market share can be support or Hagbed money; 1% availability of
explained by the fact that respondents reported grants from L/NGOs; 1% financial institutions are
that they perceived MicroDahab as part of not women-friendly or gender-sensitive; 1% the
Dahabshiil Group of companies. financial services are too far from our location
while the rest were unsure.
Have you ever applied loan from any formal
financial institutions? Was your loan application accepted by the
financial institution
9%

No 46% No
Yes Yes

54%

91%

91% of the surveyed businesswomen have Of those who applied for a loan (9% only) from
never applied for a loan while only 9% have the formal financial institution, 54% said
applied from formal financial institutions. Of their applications were accepted while 46%
those who did not apply for a loan, 18% said got rejected. The discussions and interviews
the reason that deterred them was that the found that the success factors for business
repayment rate is too expensive; 18% of financial application are mainly collateral or guarantor
services providers charge interest/riba; 15% do and identification card of the applicant.
not know if the financial services/institutions
provide loan services; 12% they do not have a

28 Women business’ access to finance in Somaliland
Research Report

Petterick wiggers/Oxfam

Women’s access to formal financial
services

Despite significant barriers and challenges groups, associations, or Self-Hep Groups
women face when accessing available financial (SHGs) which adapts inter-member guarantee
services and products, they are overcoming framework in collaboration with local NGOs
barriers and are working hard to address the which institutions like Dahabshiil bank, Premier
complexities through innovative and creative bank and MicroDahab/Dahabo microfinance
techniques and institutionalization. Although accept. Such women groups are formed under
there are limited individual women businesses various circumstances: (1) organized by
in the urban areas that access financial project implementing NGOs to provide grants
services, it is very difficult for women in IDP and/or revolving fund as part of their wider
camps, rural areas, and poor suburbs of the economic empowerment strategies; (1) self-
main cities to access financial products. An organized women to address social issues
effective strategy in engaging women with and later leveraged the structures to access
financial services is organizing women into financial services; and (2) solely organized

– Women business’ access to finance in Somaliland 29
Research Report

to access financial products in the local monitoring by the implementing NGOs. Capacity
market after series individual loan application building includes business management,
rejections by the banks with the intention that leadership, numeracy, literacy, resource
institutionalization can make the applications mobilization, entrepreneurship training
more competitive. and resources. The members of each SHGs
contribute a certain amount of money daily to
In addition, another fairly effective strategy is create a pool of revolving funds that are loaned
the Self-Help Groups (SHGs) approach which to women members. Only SHGs members who
was implemented by local NGOs with financial make a daily contribution can qualify for the
and technical support from Kindernothilfe33 in loan. For example, if the loan is below $70, the
Somaliland. The Self-Help Group (SHGs) approach members can pay over 3 months period. The
was piloted in Somaliland in 2013; the first phase borrower is expected to pay approximately $0.78
started in 2014 and ended in 2020. The target per day over three months to fully repay the
areas were urban and semi-urban areas in loan. The strategy is that the borrower pays an
MaroodiJeex and Togdheer regions in Somaliland. agreed sum of money, approximately $0.25 on
The second phase of the project began in 2021 top of the daily loan repayment to grow the pool
focusing on other regions in Somaliland including of money. It is now reported that each Self-Help
rural areas. The project is implemented by twelve Group is managing $1000 to $4000 illustrating a
local NGOs known as “SHGs promoters” led by collective growth.
Nafis Network along with Candlelight, ADO, BVO,
CCBRS, SOYDAVO, TASCO, WORDA, SAWDA, WAAPO, Currently, there are 1097 active SHGs in
and SAWRAG. ADO, SOYDAVO and TASCO are MaroodiJeex and Togdheer regions in Somaliland
implementing in Togdheer region while others forming large national federation known as
implementing in MaroodiJeex region. Danwadaag. The federation has more than
20,000 members. The CLAs are registered with
The project targeted low-income women in IDP local councils in their areas and use certificates
camps and poor neighbourhoods and organized to apply for loans from the banks along with
them into groups known as Self-Help Groups other required terms and conditions.
(SHGs) to collectively strengthen their capacity
to save money and create businesses incentive. Danwadaag federation is increasingly being
Self-Help Groups are units of 10 to 20 low- recognized as legitimate by the financial service
income women who want to improve their living providers, government, and national political
conditions by setting up their savings and loan parties because of their collective voice on
fund. The SHGs have become transformative and social, economic, and political issues. In May
empowering spaces that have strengthened 2018, Danwadaag women federation and Nafis
women’s collective agency to claim their rights network held a national conference in Mansoor
at a household and national level, and has led to hotel to showcase their achievements. The
further engagement on rights-based issues that conference was attended by representatives
affect their lives. When there are 8 to 10 SHGs of the Civil Society Organizations (CSOs), the
known as “the first level of people’s institution”, minister for environment and rural development,
the groups come together to form Cluster Level minister for employment, social affairs and
Associations (CLAs) known as the “the second family, vice president of Somaliland and other
level of people’s institution”. Two members are dignitaries. The government had committed
elected from each SHGs to represent the group at to include funds for the Danwadaag women
the CLA. When there are about 8 CLAs, they come federation in the upcoming 2019 national
together to form a Federation “the third level of budget. Further research into this suggests that
people’s institution”34. The aim of the SHGs is to the government had not allocated funds in the
increase women’s self-reliance and economic 2019 budget for the federation. However, it is
empowerment. becoming coming apparent that Danwadaag is
enabling marginalized women groups to share
The project does not provide grants or loans issues that affect their lives by providing a
to SHGs rather provides capacity building and platform to voice their concerns. Furthermore,

33 Homepage - Kindernothilfe
34 Self-Help-Group-Approach5827.pdf (nafisnetwork.net) (Last accessed 7 Feb 2021)

30 Women business’ access to finance in Somaliland
Research Report

it is has led to engagement with different instalment basis. Members are also planning
stakeholders and has enabled duty bearers to to secure additional loans from Dahabshiil and
be held to account pressuring them to increase Premier banks. Nasahablood women group
women’s economic empowerment35. members from Nasahablood IDP camp have
received loans of $400 in the first tranche
The increased institutionalization of women and $200 in the second tranche from SOS
groups in rural, semi-urban and urban areas organization which benefited 100 women. In
has increased the interest of development addition, a group member has received a loan
agencies to provide grants and revolving funds. of $200 from Dahabshiil bank with a monthly
The project is building and developing the repayment of $10; she has fully repaid the
independent capacity of women themselves, loan already. Hodaale women group in Daami
thereby supporting sustainable change in area, Hargeisa have received business start-
their communities. The extensive capacity up revolving funds from SOS organization. SOS
building ensured the SHGs worked effectively, works with Hodaale women group management
and an increase in women’s income amounts committee and asks members to submit
are challenging stereotypical gender roles in business ideas to obtain funding. The most
households and communities which usually feasible ideas are selected through a fair and
limit women’s meaningful participation in transparent selection process for funding. Each
economic and social spheres. selected business idea receives an interest-
free revolving fund of $500 which is expected to
The UN, INGOs and LNGOs are working with be repaid to the group committee within a fixed
existing women structures and organizing new period to loan other group members. The group
groups to increase women’s access to financial affirmed that the loans have been fully paid and
products from formal financial service providers are now in the process of bidding for other loan
and from implementing NGOs. cycles. The focus group discussion participants
advised the received loans helped members
Naruuro women group members in State to expand their business and increased their
House IDPs in Hargeisa have started different confidence to approach other credit providers.
businesses through accumulated membership
fees of $2000 for initial rounds. The group Nagaad Network is supporting Self-Help
consisted of 20 members and each member Groups (SHGs) and organized women groups to
received 200,000 Somaliland shilling equivalent access loans from formal financial institutions
to around $24. The group holds weekly meetings while also providing small grants for women’s
to share updates with the members. As the business start-ups. Nagaad also provides
group revolving fund grew, members received capacity building such as leadership skills,
500,000 Somaliland shilling to expand their financial management, business management
businesses. The group members have received and numeracy to women groups. Nagaad
two cycles of $300 each from Premier bank network acts as a guarantor for women groups
and now is in preparation for the third cycle. when they are applying for loans from the banks.
In addition, few group members have already The Nagaad Network as an organization is not
received three cycles of $250: 500 and 500 the legal guarantor rather the executive director
loans. The bank initially gave $250 to each uses the institution’s name to guarantee
woman, when the first loans were paid fully women groups. Nafisa Yusuf, Nagaad Network’s
on time, the bank doubled the amount in the Executive Director said, “Few days ago, I
subsequent cycles. The focus group discussion guaranteed a group of women to access loan
participants affirmed they paid back all the from Amal bank”. Although, this is informal and
loans and benefited from them significantly. carries a degree of risk, formalizing this initiative
through (1) Nagaad Network to secure money
Khayre women group members from Ahmed from donors dedicated to increasing access to
Dhagax IDPs have received a loan from finance for merit-worthy women small business
Dahabshiil bank and from within the group that lacks sufficient collateral or possess other
which have been fully repaid on a monthly non-financial credit challenges; (2) Leveraging

35 https://www.youtube.com/watch?v=DRa2m6XJzeQ (Last accessed on 4th March 2021)

– Women business’ access to finance in Somaliland 31
Research Report

Nagaad Network’s closeness to women groups, Oxfam through Working in Progress (WiP)
co-manage and monitor women revolving funds partners with Innovate Ventures to finance
and guarantee groups that reach safety net youth startups and small businesses. In 2020,
threshold to access loans from the bank, is after a competitive application process, the
likely to increase women’s access to finance. director of the Hargeisa Diabetes Center38 has
received funds from the WiP project to expand
Sida – Sweden’s government agency for her business initiative. “The 6,000 USD grant we
development cooperation is adopting a received from Innovate Ventures and supported
similar approach by investing Shurako to act by Oxfam transformed my business. My business
as guarantor for those credit-worthy SMEs works with other clinics to use biochemistry
that could not find a guarantor to access and CBC machines to analyze blood samples of
finance. The program was designed to target our patients. The clinics charge a fee every time
female and youth entrepreneurs and business I used their machines. This made our services
owners, but actual data suggests that women expensive and reduced our profit margins. The
small business holders are not benefiting as grant will help me to purchase biochemistry and
anticipated rather men businesses are the CBC machines to save the service fees charged
largest beneficiaries of the scheme36. us by the partner clinics, employ more staff,
make our service more affordable and expand
Accessing finance through business the business to other locations.”39
development services
The Somaliland government has also launched
There are other finance avenues for youth the Somaliland Youth Development Fund
entrepreneurs start-ups and opportunities (SYD). The total budget available for youth
to expand existing businesses. The donor entrepreneurs is $400,000. Little public details
community and international NGOs are are known about how the funds will be used
partnering with organisations such as as the governing regulatory framework is still
Shuraako, Shaqoodon and Innovate ventures to being devised, but sources indicate that it
finance startups and business ideas. Shurako’s will be used to fund youth startups and will be
Somaliland Youth Enterprise Fund (SYEF) is beneficial to youth through the creation of jobs.
a $550,000 fund intended for Somaliland
entrepreneurs between the ages of 18 to 35. Although such opportunities present promising
The fund aims to support 130 youth-owned opportunities for youth and provide funds to
businesses over a seven-year timeframe. The youth women initiatives and businesses, they
SYEF is intended for project sizes of $1,000 to do not extend to marginalized women groups
$25,000. These Murabaha loans are intended for in rural areas, IDPs camps and peripheries
entrepreneurs interested in starting their own of the main cities. There is no data available
business or funding existing businesses37. publicly to determine the beneficiaries of
these opportunities but the individuals or
Shaqodoon organization and Premier Bank groups who received funds are mainly middle
have also launched Tarmiye Fund with funding class, educated, young men. This is because
and technical support from Oxfam and Spark. the communication channels to spread
The one-million-dollar fund is aimed to information to the public are mainly social
provide funding opportunity for Somali youth media, billboards, emails, and TVs, resources
entrepreneurs until 2025 and is expected to which marginalized groups may not be able to
create at least 1,000 new jobs. The innovative access. On the other hand, these opportunities
aspect of the fund is that no collateral is required often require the completion of a large amount
for loans below $5,000, increased payback period of documentation and due diligence processes
to 90 days and comprehensive support in the which are excluding the marginalized groups
early stages of the business development. from accessing.

36 Sweden Partners with Somali Financial Institutions to Provide Low Collateral Loans (oneearthfuture.org) (last accessed on 6 Feb 2021)
37 https://shuraako.org/funding-projects/somali-youth-enterprise-fund (Last accessed on 10 February 2021)
38 Female youth led initiative in Somaliland
39 Extract from case study on Hargeisa Diabetes Centre

32 Women business’ access to finance in Somaliland
Research Report

Petterick wiggers/Oxfam

Women’s voices on accessing finance

A rural farmer who applied for loan and got risk and received $2000 from Dahabshiil bank
accepted stated; which I established a green house and solar
system in my farm. I also purchased farm tools
“I am a farmer from Huluq areas, 5km east of and equipment. The greenhouse technology and
Arabsiyo village. I attended training provided by the solar-powered irrigation system helped me
Growth, Enterprise, Employment & Livelihoods to produce more and save fuel costs. The farm
(GEEL) project, a 5-year development project produces enough for the family sustenance;
designed to promote and facilitate inclusive and surplus produce is marketed in Hargeisa
economic growth in Somaliland and Somalia city.
funded by USAID40. During the training, I was
advised to apply a loan from Dahabshiil bank. The process of receiving the loan took about a
Initially I was hesitant in the assumption that I week. The bank asked me national identification
would not be able to repay it. Finally, I took the card, farm ownership certificate and guarantor.

40 Economic Growth and Trade | Somalia | U.S. Agency for International Development (usaid.gov) (Last accessed on 3 Feb 2021)

– Women business’ access to finance in Somaliland 33
Research Report

I was very fortunate that two male relatives application was approved with repayment
have accepted to guarantee me for the two plans. The application process is exceptionally
cycles. I have fully repaid the loan, and after tedious which took for a month. Among the
several interactions, I am now acquainted to conditions for women to access loans include
the staff at the bank. The only challenge that I collateral or male guarantor. Ironically, I took
encountered was that the farm did not produce my father who is businessman to guarantee
enough in the dry season and consequently me. However, the bank denied him, and I should
could not repay the loan instalment as per have to come with another man with big bank
the initial plan. The bank agreed a one-month account. As women, I felt ashamed to ask
payment holiday and I started paying the another businessman to guarantee me. It is also
following month. I would like to encourage disturbing that men are always reluctant to take
women in Somaliland to take the risk of taking risk of guaranteeing women. This has also put
loan and invest and earn income” me in a weaker position.

A small business holder women who applied I overcome all the challenges I encountered with
loan and got rejected stated; sheer determination. The due diligence process
is very complicated and unnecessary. Another
“I am a mother and have small shop at Sheikh challenge, the names of male relatives (either
Nour neighbourhood of Hargeisa city where sell father or husband) are often on the legal papers
vegetables and other items. I went to Dahabshiil of assets like land. Therefore, a male relative
Bank to apply loan, after recurrent discussions, has to represent a woman upon receiving the
they requested me to bring guarantor. I wanted loan. Furthermore, women are denied access
the loan to expand my business because the to bank managers and must deal with junior
COVID-19 has significantly reduced my business officers who cannot make decision on her case.
sales. Although I have met all the other The junior officer considers that being a woman,
conditions, my application was rejected for you are not that important to see the manager.
lack of guarantor. It was very disappointing as I Nonetheless, the most challenging is the strict
have spent weeks to put together requirements loan repayment timeline. If you miss even for
and visited the office multiple times while few days, the bank will penalize you to pay the
forgoing running my business and household whole sum in one time which is very impractical.
chores. With little hope, I am now appealing Despite the inconvenience, I took two cycles of
to the senior management of the bank, I loan from Dahabshiil bank.
believe my application was turned down due
to my gender. I will approach other financial Women friendly environment would have
institutions for similar purpose. I am also aware encouraged many women to apply for loans
of many other women whose applications were at the banks because women are too busy
rejected by commercial banks. I am urging the at home and the tedious application process
government to intervene and convince the is discouraging them. My access to the loan
financial institutions to relax the conditions for has sent a message to other women in the
accessing loans.” community about that it is possible to access
loan at the banks. Accordingly, several women
A large business holder woman who applied have now obtained loans from the banks. I
loan and got accepted but encountered would recommend for the banks to lower the
challenges throughout the process stated; mark up rate41;The bank charges between 12%
to 20%. The banks should promote and attract
“I run a business which I founded. I wanted women because women are the backbone
to take loan from Dahabshiil bank to expand of the society and should in turn help them
the school and to purchase school vans. to move forward. Despite the bureaucratic
I have received the information about the process, I would like to thank Dahabshiil bank
loan from a friend working with a NGOs who for the loan.”
was also interested in to take a loan. My loan

41 The percentage charged on the total amount you borrow

34 Women business’ access to finance in Somaliland
Research Report

Women’s access to informal
financial services (alternatives to
formal financial services)

Given the stringent terms and conditions difficult for women businesses. The majority
associated with accessing loans from formal of women small business holders’ resort
financial institutions, a large majority of women to alternative strategies of financing their
– mainly rural women, women in IDPs camps businesses plans such as joining Hagbed
and women in a poor neighbourhood – resort (rotating saving) group through which they
to informal financial credit chains supplied can repay debt in small instalment and with no
through friends, relatives, neighbours, diaspora interest rates. In addition, some women take
networks, clan members, extended families, goods on loan from the wholesalers to be paid
moneylenders, Hagbed, etc when facing within weeks or as soon as they sell the goods.
temporary difficulties. Lending and borrowing Once they repay the principal, they retain the
between extended families and clan members profit margin which grows their businesses.”43
are based on mutual obligations to help each
other during difficult times whilst getting Women in the local markets, IDP camps, rural
finance from informal lenders is based on trust areas, urban areas, and poor neighbourhoods
between the lender and the borrower. Although have reported that Hagbed (rotating saving)
there is no mark-up rate when repaying loans, scheme is an alternative strategy for women to
it is reported that there are women brokers who finance their businesses and basic household
obtain loans from formal financial institutions needs (school fees, health, food, etc). A fixed
and pass on to women in the markets with number of women contribute equal amounts
exorbitant charges. Although better off clan to a saving pot on an agreed frequency i.e.,
members will assist poor families, reciprocity is daily, weekly, or monthly, and a member is
a strategy that essentially operates between immediately the entire sum allowing each
equals42. member to access a larger sum of money
than she would generate individually. Most
“The loan conditions are inflexible. The markup of the women in the focus group discussion
rate is very expensive and discouraging women and interviews confirmed that Hagbed is an
to apply for loans. The profit margin is always accessible and appropriate alternative strategy
low to cover the loan repayment and other to finance a business project, especially in
business priority needs. Instead of asking for circumstances when they are unable to meet
business credit history, the credit providers the stringent conditions set by bank loans.
insist on collateral or guarantor which is very

– Women business’ access to finance in Somaliland 35
Research Report

Abdiaziz Adani/Oxfam

Barriers that prevent women to
access finance and leads women to
self-select out

This section explores the constraints Demand-side constraints
experienced by individual women and their
businesses in Somaliland in terms of their Demand-side constraints are individual and
demand for and access to financial services and household level constraints that exclude women
products. The research found four categories in using and accessing the available financial
of constraints: demand-side constraints; services and products. In Somaliland, women are
supply-side constraints; enabling environment often suppressed by constructed gender norms
constraints; and socio-cultural constraints44. and societal expectations that assign roles and

44 https://www.uncdf.org/article/5902/womens-demand-for-financial-services-in-conflict-and-post-conflict (Last accessed on 2 March
2021)

36 Women business’ access to finance in Somaliland
Research Report

responsibilities for women that influence their a history of business cooperatives or shareholder
ability to access financial services. companies.

Lack of formal credit history: formal financial Family needs are draining out women
institutions require businesses or individual businesses: women discussion participants and
credit history to provide loans. Although the interview respondents mentioned that women
required credit history varies from bank to bank, spend a larger amount of the business revenue
cross-cutting documents usually require the on family needs, unlike men who reinvest to
previous year financial statement, balance expand the business. This is affecting business
sheets, cash flow statement etc. Most of the growth and formalization to obtain credit from
women businesses are not legally registered financial institutions in the future. It also
while 74% of the women business holders do affects their capacity to maximise business
not have bank accounts in the business or the opportunities. For example, in addition to
owners’ names. Lack of registration documents cash or in-kind support, women businesses
and bank accounts that could be used to trace contribute to their family. It was also reported
the clients’ credit history reduces the chance to that some husbands collect money from women
accept the loan application. small businesses on daily basis to buy Khat47. “A
tailor woman used to buy Khat for her husband
Time poverty & unpaid Care work: for most of every day. One day, she told him that she is
the women, time spent on unpaid care work is yet to make a single transaction, but he could
disproportionately high compared to men. In not accept and beaten her up. Other women in
Africa, women spend 3.4 more time in unpaid the market, who were initially assuming that
care work than men. This means women are he was caring husband as he visits her daily,
working more hours than men when unpaid were surprised with the harassment”. Because
care work and paid work are added together45. of this, women are more inclined to spend
In Somali society, the situation is increasingly business money on immediate family needs
unbalanced, women are expected to carry out such as food, education, healthcare, etc. in
all unpaid care work while also being involved comparison to men and consequently find it
in business activities. This puts a huge burden hard to apply for loans or repay the loan.
on women and excludes them from engaging
in social and economic activities. “I am busy Low literacy levels: Low literacy levels
at household chores and managing my shop, and dependency on others to read written
I do not have time to visit banks and attend information decrease the confidence and
community social activities46”. Hence, time capacity of women to manage profitable
poverty remains a key issue that excludes businesses. “Young man was cheating his
women from accessing locally available mother who entrusted him managing a small
financial services and products. shop because she could not read and write.
When the business became bankrupt, she
Women are more risk-averse: women lack the found out that empty boxes and tins were
confidence of approaching financial institutions foolishly displayed on the shelves. It was too
in the assumption that they are not creditworthy. late!48” explained a participant. The low literacy
Respondents felt risk aversion is excluding levels also undermine women’s ability to build a
women from taking loans from established legitimate credit history (financial statements)
financial institutions; they are concerned about that could be used as a supporting document
repayments to the extent to which they do not for a loan application from the banks. Women
apply for loans. Women often feel pressure to businesses have also advised that loan
meet family demands, women spend money on application involves a huge amount of official
family priorities (food, education, healthcare etc.) documentation and since they are illiterate
which affects the business profitability and the or semi-literate it is difficult to complete by
loan repayments. Unlike men, women do not have themselves.

45 ILO calls for urgent action to prevent looming global care crisis (Last accessed on 6 February 2021) 37
47 Female focus group discussion participant
48 A stimulant plant that is grown in Ethiopia and other parts of the East and Horn Africa region
48 Key informant interviewee

Women business’ access to finance in Somaliland
– Research Report

Women business motives: the negative generate consistent credit history (financial
attitude towards women’s entrepreneurship statements, income statements and cash
entrenched in cultural and religious flows) many banks are forcing them to join
misconceptions restricts women businesses Self-Help Groups (SHGs). Commercial banks are
from expanding into more formal spheres. increasing favouring group application over
The main goal of female businesses if often individual applicants. This is setting a serious
to maintain a steady profit margin that can precedent that denies the rights of individual
continue to be enough support to meet women to access credit from commercial
with family immediate needs such as food, banks.
healthcare, education and so on. This is among
the key reasons why many small business Opening hours of the financial service providers:
holders are self-selecting out when accessing banks provide credit services mostly in the
available financial products. morning hours when women are busy attending
to family or on their businesses, women working
Supply-side constraints at the market being a dominant business.
Although women are busy throughout the
Supply-side constraints are market-level day - either on household chores or business
constraints that women face to access activities, morning appointments which is
financial services, products, and delivery the norm for many financial institutions is
channels. discouraging and restricting women to access
finances. Women focus group discussion
Subordination of women inside bank premises: participants have also confirmed that bank
male domination and the subordination of appointment is not fixed rather the client is told
women is manifested in day-to-day operations to come before noon which is difficult for many
and the policies that underpin; employee women to attend given the increased household
attitudes and behaviours; staffing arrangement; and business demands.
toilet and room facilities; and perception
towards women’s economic empowerment in Geographical proximity and bureaucracy of
bank settings. Although there is a variation the financial service providers: many potential
in attitudes towards women between banks, loan applicants are living in the peripheries
patriarchy is deeply entrenched and shapes whilst loan procedures are tedious and
bank services, treatment of female clients and discouraging to small business owners. The
products. These patriarchal environments are person must come to the office multiple
likely to increase women’s vulnerability and times before receiving the loan in-kind (i.e.,
financial exclusion. Women have reported that commodities), this is demanding on an already
some of the bank credit officers in the front busy schedule for women, who often have less
desks are not gender-sensitive and have a flexibility because of more time-demanding
dismissive attitude when women try and access responsibilities. The attached case studies
services. “I came to the credit officer to inquire estimated seven to 30 days per application
about a loan, and he sent me back to the with multiple visits to the credit office. Most
customer care in the assumption that I do not of the financial institutions have branches
belong to this line49”. Women have also reported in the urban areas specifically in the centre
that financial service providers are also male of the big cities. Women in IDPs camps, poor
dominated, and women do not feel comfortable neighbourhoods and rural areas are unable to
to speak about their personal issues with a visit due to expensive transport links or unable
male stranger, meaning that issues are not to locate branch locations.
addressed when they should be.
Securitization of the financial service providers:
Institutionalizing of the loan application: since the buildings of the financial service provider
women businesses are not legally registered are heavily guarded by security personnel; and
and do not have the financial accounts to

49 Female focus group discussion participant

38 Women business’ access to finance in Somaliland
Research Report

are often signposted and designed -symbolizing widely accepted as the norm. Women are denied
exclusion of marginalized groups such as rural ownership of land and have only usage rights
women, women IDPs and women from a poor as opposed to ownership53. In addition, it came
neighbourhood. “I was entering a bank in the out in the discussions that women are willingly
centre of the town in Hargeisa, I was prevented writing the names of their son’s and husbands
by the security personal because of my shabby on the asset titles such as land. This forces
clothes50”. women to access their land through husbands
and sons when accessing loans from formal
Gender responsive facilities: the branches of financial institutions. Since women are denied
the financial institutions do not have basic ownership to land by the deeply entrenched
facilities or spaces such breastfeeding rooms, unequal gender norms, male guarantors are
nappy changing rooms and so on. Many women increasingly becoming mandatory for women
do not visit bank branches, they fear when to access loans at the commercial banks in
children cry and they do not have access to a Somaliland. Additionally, in majority of the cases
suitable and safe space to deal with them51. in which women do own assets, banks do not
This pushes women away from visiting financial accept women’s assets (i.e., land) as collateral.
service providers to get information and apply Sometimes male guarantors charge commission
for loans. when they render guarantor services for women.

Due diligence and credit limits: the sheer Inflation and exchange rate uncertainty: big
documentation required to complete given that challenge against the small businesses is
most of the women in the market are illiterate unregulated inflation which can easily put petty
and the frequent branch visits are discouraging traders out of the markets. For example, women
many women to dedicate their valuable time purchase goods to sell in the market. They set
with unknown outcomes. Women reported that their selling price, and because of inflation, the
the decision-making process may take seven price of the goods changes. Since they do not
days to two months. In addition, the lowest access updated market information and are not
credit limit is $3000 for many commercial banks aware of price changes, they sell the products
which the majority of the women businesses the same price. When getting additional
cannot afford. Women small businesses are stock from the wholesaler the same amount
mainly looking for loans between $200 to $800 of goods cost higher than before. This puts
to grow their businesses. the business in deficit and many businesses
cannot survive because of the inflation
Enabling environment constraints: uncertainty. Women receive bank loans in the
United States (US) dollars, when repaying they
These refer to legal, policy and physical pay more Somaliland shillings to purchase US
infrastructures provided by the state in which dollars because of the increasing depreciation
when they are absent or poorly formulated can of Somaliland shillings. Moreover, due to the
constrain women’s access to finance service absence of regulatory frameworks, wholesalers
and products compete with the small-scale traders in the
retail markets.54
Women do not control assets and resources:
Article 31 of the Somaliland constitution Women under-representation in decision-
clearly states, “every person shall have the making circles: women are absent in both
right to own private property, provided that is community and national level spheres that
acquired lawfully52”. This means all citizens reach decisions that affect their lives; and are
of Somaliland have equal rights to property increasingly excluded with the caveat that
ownership. In Somali society gender relations it may weaken their primary household and
are patriarchal and women’s subordination is reproductive roles. In Somaliland there: (1) there

50 Female focus group discussion participant
51 Woman key informant interviewee
52 Somaliland Constitution (somalilandlaw.com) (Last accessed 3 February 2021)
53 NAGAAD/Ministry of Justice/Progressio Somaliland. Women’s Human Rights in Somaliland. 2010.
54 Key informant interviews and focus group discussion participants

– Women business’ access to finance in Somaliland 39
Research Report

are 364 elected local council representatives (institutional, product, market, and prudential
(355 males and 9 females); (2) 82 MPs at Lower regulation) power imbalance and disadvantages
House (81 male and 1 female); (3) 82 MPs at the most vulnerable specifically women small
Upper House (82 male and 0 female); (4) 29 business holders.
ministers (24 male ministers and 2 full and
1 deputy ministers female); (5) 32 Judges Socio-cultural constraints
(32 female and 0 males)55. The absence of
women representatives exacerbated by male These are informal rules and gender norms that
domination in the decision-making structure. dictate behaviours, expectation and individual
Women under-representation and male roles and responsibilities. They assign women
domination in the decision-making bodies mainly reproductive and household roles while
violates women rights and increasingly constraining their access to finance.
excludes women’s interest when decisions
are made including those related to access to Social scepticism of women’s entrepreneurship:
finance. This also blocks avenues for women to Somali culture discourages the woman from
raise issues that affect their lives to concerned entrepreneurship in the assumption that she
decision making bodies. would spend the money on family immediate
needs instead of business activities. Women
Ambiguity on the compliance of available encounter difficulties to get guarantors and
financial products with Sharia laws: It came out collaterals in accessing loans. Based on social
in the discussions and the survey that many stereotypes, potential guarantors hesitate to
women abstain from accessing loans with take the responsibilities of women managed
the belief that banks are charging interest/ businesses, particularly small businesses.
riba which is forbidden in Islam. It is worth to The culture assigs women to childcare and
mention that commercial banks in Somaliland households’ chores and discourages them to
are sharia-compliant, but some religious venture out into social platforms. Clan elders
leaders have misconceptions about the credit make unfair judgments on social issues in
schemes specifically those with financial favour of men.
support from aid agencies
Some religious interpretations are unfavourable
Legal and regulatory gaps: Gaps have to women’s entrepreneurship: although Sharia
been identified in the development and law entitles women the right to own and
enforcement of the policy and regulations of manage assets, some religious leaders insist
the financial sector such as the Somaliland that women should refrain from engaging in
Central Bank Act (Act No: 54/2012), Islamic productive and service sectors and stay at
Banking Act (Act No: 55/2012) and Monetary home to do unpaid care work. In the focus
Transfer Business Law (Law No. 86/2019)56. group discussions with religious leaders, some
The regulations are fragmented and are not argued that women engaging in business
embedded in the financial sector. They are may compromise their primary household
weak without supportive infrastructure and responsibilities such as carrying out unpaid
have not been fully operationalized due to care work and reproductive roles. In general,
limited resources and capacity challenges. Somali people respect the words of religious
The boom of technology such as mobile money leaders and interest groups can exploit this
and online banking are making obsolete the space to advance their radical version of
existing policies and regulations. There are no Islam. This creates an unsafe space for women
also adequate client protection mechanisms. businesses and financial institutions may fall
Furthermore, the research interview and into this line of argument and create structural
discussion participants have reiterated the barriers (poor customer’s service, stringent
perceived absence of the role of government terms, and conditions etc.) that discourage
in protecting the rights of small businesses women from accessing loans.
and the need for intervention. This creates

55 NAGAAD Somaliland Gender Gap Assessment FINAL.pdf (oxfam.org) (last accessed 4 February 2021)
56 International Labour Organization (ILO), 2013. ‘Financial sector diagnostic study for Hargeisa, Somaliland’, Hargeisa, Somaliland, Pge 7

40 Women business’ access to finance in Somaliland
Research Report

Limited networks and social linkages: given Availability of alternative credit schemes:
that there is not much information about the Although it was contested in the focus groups
financial products and services in the women discussions and interviews whether grants
markets and spaces, women rely on word of and revolving funds from implementing NGOs
mouth for information. Since women do not have are discouraging or complementing women to
free time to network and attend social spaces, access to formal financial services, women
they miss crucial information regarding credit have mentioned grants, and revolving fund
available for businesses. Although time poverty bear no interests and charges and repayments
is a key factor that excludes women actively period is longer if any. The absence of
participating in social spaces, it is worth to bureaucracy and stringent terms and conditions
mention that cultural rigidities entrenched in on grants and revolving funds inclines more
social norms limit women’s mobility and holds women business to seeks loans from informal
them back in private spheres. and implementing NGOs projects.

– Women business’ access to finance in Somaliland 41
Research Report

Abdiaziz Adani/Oxfam

Enablers of women’s access to
credit

Institutionalization of women groups: Despite loans. The institutionalization of women groups
the intractable challenges, women from has been a successful approach for women to
lower economic strata are doing business on access finances although it excludes individual
essential commodities and services in open women to access finances.
markets, street corners and peripheries. Women
are organized into groups that have structures Willingness of the implementing local INGOs: In
and records. Implementing NGOs train women on the absence of the government role, local NGOs
business management, bookkeeping, resource (NAGAAD, Candlelight, WAAPO) facilitate linkages
mobilization and business planning. Upon between commercial banks and women loan
completion of the skill development courses, seekers. For example, Amal bank has mapped
development agencies often provide revolving out women small scale businesses in Hargeisa
funds to the groups or link with commercial city and realized that majority of the women
banks and other financial institutions for group are members of NGOs supported self-help

42 Women business’ access to finance in Somaliland
Research Report

groups. Hence, the bank approached NAGAAD to women to apply for loans and improve the
guarantee the women in their existing groups to confidence of the financial service community
access finance. to offer loans to women businesses.

Chamber of Commerce: The Chamber of Technology/Mobile phones: A study by Altai
Commerce brings together the private sector consulting for the World Bank indicates that
offering business assistance. The chamber has 78% of the Somaliland population use mobile
25 board members representing the private money services while the Zaad accounts for
sector and an executive committee that runs 96.5%57. The population of people that own cell
the organization’s day to day operations. The phones may be higher than this. The widespread
board members include a representative of use of phone ownership can be used to send
commercial banks, agriculture, livestock, an audio message to women businesses to
fishery, trade, and services sectors. Although update on the available finance services and
women membership needs to be increased products that are suitable for women. The audio
there are also women representatives. The messages can contain information around the
Chamber of Commerce can be a platform to easiest ways they can access those services
discuss and influence the commercial banks and products to save valuable time that could
and other relevant stakeholders to increase be spent on trial and error
women’s access to finance. The Chamber of
Commerce as an independent government body Sida’s approach to act as guarantor for credit-
can amplify voices of the women businesses worthy SMEs to access finance: Sida provides
and civil society to higher levels. Although collateral deposit at the commercial banks
there is only one woman (now retired) in for merit-worthy women businesses that may
the executive committee of the Chamber of not find a guarantor58. This gives the bank
Commerce, they are willing to work with women assurance to recover the loan if the client
and civil society organizations to address defaults on the loan payment. Although Sida’s
challenges women face when accessing program is not specific for women businesses
finance. but establishing a similar approach dedicated to
women businesses is likely to increase women’s
Amplifying women’s loan repayment rates: All access to finance as stringent conditions are
the financial institutions interviewed such as waived by the banks for those who meet other
Dahabshiil bank, Dar Salaam bank, Premier bank requirements but find it hard to meet one or two
and Dahabo microfinance have unanimously conditions.
agreed that women’s default rate on loans is
very low compared to men. Premier bank has Microfinance institutions: Microfinance
confirmed the default rate is 3% which is way institutions such as Dahabo, KIMs and K-MFI are
below the acceptable level by the banks. Dar responding to small business priority needs.
Salaam bank, Dahabshiil bank and Dahabo Specifically, Dahabo outreach programs to
microfinance have also confirmed that women setups stalls at the women marketplaces with
are better in loan repayments than men. female staff are increasing women’s access to
Dahabshiil bank has recognized a woman with finance. Such outreach programs are bringing
a certificate because of her excellent credit the services closer to women and can increase
history. Amplifying such successful stories at women’s access to finance if NGOs and financial
communities and national level will encourage service providers adopt.

57 (Présentation PowerPoint (altaiconsulting.com) (Last accessed on 5 February 2021)
58 Sweden Partners with Somali Financial Institutions to Provide Low Collateral Loans (oneearthfuture.org) (last accessed on 6 Feb 2021)

– Women business’ access to finance in Somaliland 43
Research Report

Implications of women accessing
grants on formal bank loans

Many of the women groups have underscored or weeks. These credit schemes have neither
the preference of revolving funds and cash interest rates nor stringent conditions but are
grants over the loans from the formal financial based on trust among the members.
institutions regarding the stringent conditions
and inflexible repayment timeframes. However, Power in numbers is a driving force for women
women with small businesses have limited groups to access loans from commercial banks
social networks and live in the peripheries to and development agencies. Initial loans and
access timely information about cash grants. capacity building are strengthening the unity of
On the other hand, cash grants in Somaliland the groups and enhancing the confidence of its
are insignificant to have a negative influence on members. A focus group discussion participant
the credit services but rather facilitate a system mentioned, “We started with membership
in which money rotates among the members. contributions of 10,000 Somaliland Shillings (1.2
Moreover, self-help groups have adopted USD) a month. However, the group now manages
similar credit conditions to commercial banks. over 3 million shillings ($352) and still growing.
An interview respondent asserted that women The members of Hodaale group are planning to
would spend the cash grants on family needs own medium and large businesses such as fuel
instead of investing in business activities. stations to augment the capacity of the group
Contrarily, another respondent perceives that to access bigger loans with softer conditions.”
the financial grants are complementing the
credit services. On the same line, Qaran women Despite that, most women focus groups have
group believes that Hagbed and other informal never received cash grants, few have received
credit facilities motivate women to seek loans revolving funds from Oxfam (back in 2013),
at financial institutions. Concern Worldwide, WAAPO and SOS which
rotates among their group members. However,
Women fear that, if they fail to comply with the women believe that money from aid agencies is
repayment procedures, banks will confiscate a charity, not a loan, and would not return it to
their assets. Hence, they rely more on informal the agency but rather rotate among themselves.
credit system (e.g., Hagbed) for investments in The repayment rate of such varies between
their small businesses. When women cannot NGOs and depends on size, and the terms and
access formal credit facilities, they join Hagbed conditions of the loan and the women group
group or take commodities on loan from other bylaws.
business enterprises and cash in within days

44 Women business’ access to finance in Somaliland
Research Report

Abdiaziz Adani/Oxfam

Do men have better access to
finances than women?

The surveyed women businesses were asked 61% of women think that men businesses are
if they think men businesses are in a better in a better position than women businesses to
position than women businesses to get loans get a loan from the local financial institutions
from the local financial service providers. while 39% do not think so. The reasons include:
(1) men-owned business have the necessary
Do you think men businesses are in better documents (ID cards, legal registration
position than women businesses to get loan certificate etc.); (2) banks trust men than
women due to cultural and religious reasons;
from the local financial institutions? (3) financial serves are male-dominated hence
easier for men to access; and (4) men are more
61% literate than women.

39% The discussions and interviews indicated that
men have a competitive edge and better social
No Yes networks to easily access information, obtain
business counselling, collateral and guarantors
regarding that societal norms and expectations
assign the man as the breadwinner of the family
whereas woman attends household chores
(unpaid care work). The adult men have ample
time to socialize in restaurants, coffeehouses
and chewing centres where they can easily
access information about the market dynamics,
including existing and emerging credit facilities.

Women business’ access to finance in Somaliland 45
– Research Report

Men also use distorted religious interpretation Yet, guarantors keenly assist male credit
to discourage women from commerce so they applicant than a woman in the assumption
can stay at home to do household chores. that, if he defaults, the clan system would bail
him out whereas a woman would encounter
Furthermore, the large enterprises are male- an identity crisis between the clan of her birth
dominated where men constitute over 90% of the and that of her marriage60. Women are usually
employees which provide men better linkages denied inheritance rights and the right to own
and business skills to outperform women property which automatically pushes women
competitors. Contrarily, women are constrained into the risk group when credit verification is
by unpaid care work. Women spend long hours administered. Moreover, men can make the joint
doing laundry, preparing food, caring for children venture and shareholding enterprises.
and the elderly. This time poverty limits women’s
access to markets while men spend most of their Nonetheless, in few locations, e.g., State House
time with paid work and social activities. Women and Huluq rural village, the respondents argued
also multitask – she may be carrying a baby on that women have better access to financial
her back, cooking and cleaning which further services than men because, “Women are
limits her to staying in private spheres. curious about what is going around”, the group
said. Hence, banks are more inclined to women
Moreover, women petty traders in the in giving loans. Despite being trustworthy, the
local markets are struggling, their work is focus groups reiterated that women emotionally
characterised by precarious and risky conditions. spend the money on immediate facility needs
They suffer an absence of social amenities such as clothes for the children and school fees
such as toilets, childcare centres, and clean than reinvesting in the businesses. As a result,
piped water in the open markets and along the women lack the experience and confidence
streets where they do business. Doing business in taking risks and over rely on informal credit
in unhygienic conditions for long hours affected systems such as Hagbed (rotating saving) than
the health conditions of the women and their bank loans.
babies. Yet, all the male respondents interviewed
confirmed that women are good taxpayers. Such Women discussion participants and survey
poor working conditions are likely to discourage respondents think that banks trust men
many women to establish new businesses in more than women in giving loans because
the market or expand existing businesses. This of employment opportunities and having
also constraints the formalization of women collaterals or strong guarantors. Moreover,
businesses as they are held in a cycle of informal men have better social and political links
economy that is mainly for subsistence59. for bailouts. Men business owners are even
trusted with bigger loans while a similar
Interestingly, all the male respondents women business owner should come with
interviewed confirmed informal women male guarantors61. For example, focus group
businesses in the local markets are good discussion participants reported that male
taxpayers. Reinvesting women dominated guarantors were required when receiving
markets by setting up gender-responsive the initial loan of $300 from Dahabshiil.
infrastructures such as toilets, childcare Nonetheless, the guarantor was waived in the
facilities; and allocating spaces for financial second tranche of $50062. A female focus group
service providers and government services can discussion participant narrated that her sister
free more time for women to grow their business had fallen sick and subsequently passed away
and access the available financial services on whom she spent the loan money. Hence,
she missed the payment day and suffered a lot
Despite all the above constraints, the in repaying the debt. When delayed with the
commercial banks confirmed that women are repayment, the banks show the reluctance of
more trustworthy than men in loan repayments. trusting the customer with another loan.

59 Women key informant interviewee, Hargeisa, January 2021
60 Rural women focus group focus group discussion participants, interviewed, Abaarso village, January 2021
61 Women business owners, interviewed, Hargeisa, January 2021
62 Women focus group discussion participants, interviewed, Axmed Dhagax district, Hargeisa, January 2021.

46 Women business’ access to finance in Somaliland
Research Report

Conclusion

This report generates evidence and provides reluctant to guarantee women small business
an in-depth understanding of women’s context holders whilst male members are family assets
when trying to access finance in Somaliland. for collateral. Despite the insurmountable
To obtain balanced and reliable data, the challenges, the financial service providers
research covered a wide range of social groups confirmed that women are comparatively
from demand and supply sides such as women reliable when it comes to loan repayments.
business holders, individual women, financial
institutions, government, religious and cultural In rural settings, women have limited
leaders, and development agencies. information about existing financial services
and are mostly discouraged because of
The research found that commercial banks stringent conditions and tedious loan
are major sources of formal credit whereas application processes of about a month.
development programs provide grants and Women do not have the time, resources, or self-
interest-free revolving funds. Even though confidence to endure this monotonous process.
banks claim that women and men have equal Therefore, they resort to informal credit
access, the intersections between barriers facilities (e.g., Hagbed) through which money is
make women less qualified for loans. As transferred with limited conditions.
a result, women business holders often
rely on informal credit and saving dealings The respondents of the research reiterated and
such as Hagbed and social support system. emphasized the importance of the role of the
Nevertheless, the number of women applying government which is currently less forthcoming.
for loans from commercial banks is steadily For example, women are underrepresented and
increasing. Local NGOs have established voiceless in state spheres. In addition, national
linkages between women groups and financial policies are either inept or missing to encourage
institutions. Moreover, few development and protect people with small businesses,
projects are or have been acting as guarantors especially women.
of women small business holders.
Finally, the analysis of the research findings
Collateral and financial guarantors are the indicates the constrains women face when
biggest obstacles against access to a loan at accessing finance are far worse than reported
the banks. In the absence of bank statements, in this report, but women could not raise many
women small businesses cannot prove right violations because they are not aware of
their financial strengths to access loans. their rights.
The businessmen and clan elders are often

– Women business’ access to finance in Somaliland 47
Research Report

Recommendations

Considering the research findings and government, civil society organizations and
conclusions, the following recommendation is women groups must join forces to advocate
made for future programming, policy influence for increased representation of women in
and advocacy work for the advancement of decision making bodies.
women’s access to finance: • The government must coordinate with
commercial banks, micro-finance
For government, sheikhs, and elders institutions, donor community, development
agencies and women organizations to create
• Since the existing financial regulations micro-credit schemes that provide soft loans
are general, the Somaliland government for women-managed small businesses with a
must expand and formulate detailed special focus on the rural settings, IDPs and
regulatory frameworks for the finance poor urban neighbourhoods.
sector. The frameworks should stipulate • The government and development partners
coherent approaches for public institutions, must strengthen the capacity of the
development agencies and the private central bank and other financial regulatory
sector to microfinancing programmes. authorities to enforce its regulatory and
The development of further regulatory oversight mandate on financial service
frameworks for the sector should put providers. In the meantime, priority should be
women at the centre to increase women’s given to regulating the interest rates on the
access to finance. credits to the small businesses.
• It came out in the discussion and survey
• The commercial banking bill has failed to that many women abstain from accessing
get parliamentary approval in 2016 and is loans with the belief that banks are charging
pending until now. The commercial banking interest/riba which is forbidden in Islam.
bill was fiercely opposed by interest groups The Islamic scholars in coordination with
who argue that it is not fully compliant with the financial service providers and the
Islamic finance laws. There is an urgent government must produce Fatwa that
need to create a multi-stakeholder pressure validate the compliance of the current
group to advocate for the approval of the financial products with the Islamic law to
commercial banking bill to attract foreign clear ambiguity. There is also an urgent
banks that provide finance alternatives need to promote proper Islamic banking and
for businesses. The pressure group should investment systems; not the pseudo version
work with relevant government bodies, currently practised by the financial service
religious leaders, and the finance sector to providers.
ensure it is Sharia-compliant and advances • Recognize, reduce, and redistribute unpaid
women rights. care work to free more time for women to
fully participate in economic, social, and
• Women are gravely underrepresented in political activities in the country. There is
executive, legislative and judiciary arms a need to frame interventions (including
of the government were issues that affect engagement of men, boys, religious and
their lives are discussed and decisions traditional leaders), and engagement
reached. It is also disturbing that male- with government and other stakeholders
domination in the decision-making is that challenge the stereotype of women
exacerbated by a limited understanding as caregivers and men as breadwinners.
of women rights perpetuating a culture of Whilst such interventions are a long time,
exclusion and marginalization. Hence, the

48 Women business’ access to finance in Somaliland
Research Report

short term interventions could include and loan service charges to encourage more
providing gender-responsive services in women applicants.
women marketplace such as toilet facilities, • Scale up or adapt Micro-Dahab approach to
childcare centres etc. take finance products closer to women –
• The government in coordination with setting up stalls in the women dominated
development agencies should prioritise local markets. This is increasing women’s
widespread literacy and numeracy outreach access to finance as businesswomen can
programs for marginalized women groups drop in when they are less busy to receive
to independently manage their small credit information and available financial
businesses and read written information that services. The female staff who conduct the
helps them to access financial services and outreach programs are also creating women
products. safe space to feel confident to share their
information.
For Chamber of commerce • Increase female staff both at a management
level customer-facing desks while
• Like many government bodies, women improving customer care for all staff
are under-represented in the chamber of through progressive gender sensitive
commerce. Only one woman (now retired) employee training and coaching to serve
is currently a member of the executive better marginalized women groups.
committee of the chamber of commerce. • Financial service providers in coordination
Hence, there is an urgent need to increase with the central bank and other relevant
women representation in the chamber if it stakeholders must create a context-
aspires to champion women rights. based credit scoring database that
collects information about individuals and
• The chamber of commerce must encourage businesses’ debts overtime. This must be
the registration of women businesses for accessible to financial service providers
women to assume leadership positions in to determine borrower’s creditworthiness
the Board of Directors through the power of when assessing loan applications. This
voting. must be the basis for accepting or rejecting
loan applications to free women from the
• Currently, the chamber of commerce male guarantors. However, there must be
charges the same fees irrespective of enforceable laws that protect the data
the company’s size. There is a need privacy of the customer.
to categorize the registration fees to • Financial service providers should have
incentivize women informal businesses to different credit rules and requirements
register which will facilitate them to open applicable to different business categories
bank accounts. This will formalize smaller such as medium, small, and large. A more
business and will help them to provide nuanced approach is needed that considers
financial statements to access loans. differences in the business categories to
yield fairer rules and requirements. The
• The chamber of commerce must be a voice generalization of the same terms and
for women small businesses by leveraging conditions to all businesses increases
on their position to advocate for softer exclusion and further marginalizes women
loans, women-only micro-credit schemes small businesses.
and women-centred regulatory frameworks
to create overall women-friendly markets. For development agencies

For Credit service providers • Continue building the capacity of grassroots
women on business management and
• In the current arrangements, women planning; and lobbying with public and
small businesses go through a tedious financial institutions for favourable policies
process for weeks, if not months, to access and services. The local NGOs must also
loans which discourages many potential continue nurturing and capacitating nascent
applicants. The required frequent visits to women Self-Help Groups across the country.
bank branches are also unnecessary as it
affects the small businesses. There is an
urgent need to reduce credit bureaucracy

– Women business’ access to finance in Somaliland 49
Research Report

• Development agencies must coordinate women, IDPs camps and other marginalized
intervention approaches aimed at improving women groups.
women’s access to finance to minimize • Civil Society Organizations and women
inconsistency and maximize impact. This organizations should coordinate with
will also consolidate learning which could religious leaders and traditional leaders to
be used to inform policy developments. organize public sensitization meetings aimed
at challenging negative stereotypes towards
• Adapt Sida’s approach to act as guarantor women’s economic empowerment that
for credit-worthy SMEs that could not find a become rooted in the lives of the ordinary
guarantor to access finance. Such a scheme people. The public sensitization meetings
should be dedicated to women business should secure a transformative commitment
only. This provides the bank assurance to from religious and traditional leaders to
recover the loan if the client defaults. This challenge structural barriers, discriminatory
is likely to increase women’s access to social norms and gender biases that impede
finance as a stringent condition is waived women’s ability to actively participate in
for those who meet other requirements but social, economic, and political activities.
find it hard to meet some conditions.
For women business owners
• The civil society organizations and women
right advocates must grasp the opportunity • The women collectives are the best strategy
that comes with the planned parliamentary of transforming social attitudes toward
and local council elections in May 2021 women in business and lobbying with the
to campaign for women candidates and financial institutions and public institutions
pro-women male candidates that would to support women-led small businesses.
advance women rights. There is also needed Women should join or support women-led
to exploit the window of opportunity that organizations that put women right issues
comes with as soon as elected MPs take at the centre to challenge discriminatory
office by influencing their agenda to pass norms and societal expectations that
laws that put women rights at the centre. perpetuate women’s marginalization.

• Development agencies must support the • Evidence suggests that literacy empowers
government in conducting a comparative women, enabling their mobility, enhancing
study on women receiving grants against decision making and ensuring better
those who did not receive any financial command over their own lives63. It also
support but capacity building in business came out in the discussions and interviews,
management such as SHGs. The findings that literate women can manage their
of this study will inform the development businesses, record their transactions, and
of policies and laws that advance women calculate profit and loss. Hence, there is
microfinance services and the wider women a need to enhance women’s literacy skills
economic empowerment approaches. to access information and claim their
rights. For example, rural women groups
• Work with the financial service providers used to order goods from main cities using
to identify women who achieved excellent symbols before they attended literacy
credit history and amplify their stories classes. Like tying a bone on the neck of
through different avenues at the community milk container for ordering meat; and when
and national level to sensitize the wider the goods arrive in bulks, they had to wait
women community to access finances for for somebody to read the labels of who
their businesses. owns which goods. However, with enhanced
literacy, they can now dial phones numbers,
• Since mobile phone use is widely spread in keep security numbers secret, and can read
Somaliland, coordinate with the financial the instructions. This is practical evidence
service providers to create audio message that literacy skills can transform women’s
systems containing available financial
services and products available for women
businesses and how to access them. Such
messages should deliberately target rural

63 DVV International: Literacy and Women Empowerment (dvv-international.de) (Last accessed 9 February 2021)

50 Women business’ access to finance in Somaliland
Research Report