Despite financial institutions knowing women business owners have lower default rates than men, financial services are not designed to serve them. While half of urban female business owners are aware of the financial service offers, fewer than 10% have applied for a loan and half of those applications were rejected. Women often lack the collateral or male guarantor required, their businesses are not formally registered and they are often seeking smaller and more flexible loan offers, which they find through their informal networks and NGO support.

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

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

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

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

Women business’ access to finance_web.pdf