Providing Entrepreneurial Opportunities for Somali Youth

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For Somali youth, unemployment and lack of economic opportunities are critical constraints on their ability to engage productively in Somalia’s reconstruction. In a recent survey , 67% of Somali youth expressed their interests in starting a business, but saw the unavailability of financing as the main obstacle to them acting on their entrepreneurial aspirations.

In recognition of the paucity of available financing mechanisms for youth, the Stability Fund designed the Somali Youth Entrepreneurship Initiative (YEI). This nationwide initiative, implemented by a consortium of two Micro-Finance Institutions – M-Dahab (member of the Dahabshil Group) and Kaah Islamic Micro-Finance Services (KIMS) – and two NGOs – Silatech (a Qatar-based foundation) and Shaqodoon (a Somali organization focusing on youth issues) – aims to enable and inspire young Somalis to start businesses and create employment through a competitive process of awarding loans and other financial products.

The initiative provides financing in the form of mid-size loans (between US$10,000 and US$50,000) to over 40 youth to establish or expand their business, moving away from traditional models of micro-financing that often do not provide the right incentive structure for at-scale business operations. Individuals or groups from Hargeisa, Bossaso, Mogadishu, Beletweyne, and Kismayo were invited to apply through an extensive multi-media marketing campaign.

entrepreneurial-opportunities.jpg Thus far, the application process has attracted numerous innovative business ideas. For example, Abdirizak, a 25-year-old has ambitions to become an herbal soap manufacturer after having extensively researched the health benefits of using frankincense, myrrh, opopanax, aloe vera and arrgan in soap production; and Zamzamis seeking start-up capital for a new gym and fitness firm in her native Bossaso.

As part of the award process, select applicants attended a two-month boot camp comprising financial literacy, coaching, mentoring and guidance on business plan development. Applicants were then given an opportunity to present their business plans to the consortium’s investment committee, who assessed plans based on profitability, viability and market demand before following-up with a thorough due diligence assessment to ensure that loans could be repaid under the proposed business model and in turn contribute to opportunities for subsequent cohorts. According to Ahmed Ali, Program Specialist for Shaqodoon, Abdirizak was among ‘the most committed, dedicated and business minded people during the boot camp”.

Both Abdirizak and Zamzam went on to win the competition. Abdirizak’s company, Nadiifo Industries, aims to manufacture 144,000 bars of soap in their first year, with a targeted client-base of low-income households in Somaliland. Abdirizak aims to have his soap being used in one of every three households in Somaliland. Abdiriziak has already hired five employees, and hopes to hire more in order to meet his target. Zamzam is no longer worried about finance, proudly saying that she ‘will be able to purchase necessary equipment to get the business up and running’.

Somalis are world-renowned for their entrepreneurial savvy yet are limited by a lack of access to finance, business know-how and networks to realize their dreams. The Fund hopes that the Somali Youth Entrepreneurship Initiative can offer a new source of financing to passionate youth to realize their business ideas and improve their life chances.