Hawa Ali Adan is a 50-year-old mother, who has benefitted from the Salaam Somali Bank’s Qard-ul-Hassan microfinance fund, transforming her business for the better. Prior to receiving the loan, Hawa used to hawk clothes struggling to put basic provisions on the table for her children.

She now owns a big shop that sells women’s clothes and cosmetics for women in Mogadishu’s Hamarwayne distirct. Her decision to grow her business dawned upon her three years ago when she had realised that she was going nowhere with her unsupported small-scale business.

“When you have to feed children and the meagre income you get is not more than the day’s meal expenses, it is tricky to expand your hustle without a supportive hand,” she noted.

Hawa received loans from Salaam Somali Bank’s Qard-ul-Hassan microfinance fund twice enabling her to establish her new business, using the fund to finance on rental, interior design and stocking the essential supplies.

Salaam Foundation monitors and records the data of vibrant and hardworking small-scale business owners with a view to helping them with the necessary documentation and accounts to prepare them to take advantage of the bank’s loan fund.

“Imagine an undocumented person approaching a bank for a loan! I now own a bank account and enjoy a reliable banking system, so it is not only about the financial support but more than that,” she remarked.

It took her up to six months to clear her first loans, and she decided to take another loan to further expand her business by adding a section that sells curtains. According to Hawa, the second loan process was easier and less worrisome given her newly acquired experience in the banking system.

Her youngest daughter of her seven children is currently pursuing a university degree, and Hawa is excited about the future as she looks forward to fulfilling her long-held ambition of educating all her children up to a university level.

Encouraging small traders

The Microfinance fund dubbed ‘Qardul-Hassan’ is a loan fund which the Somali Salaam Bank has been disbursing to small traders since 2010, with a view to developing their fledgling businesses as well as families.

Over 3,000 beneficiaries, mostly drawn from low-income traders benefitted from the fund, enabling them to establish their new business while others developed their business. Thanks to the loan, some small traders transformed into big traders now.

Most of the local small businesses are run by women whose engagement with the banks is relatively low, hence the fund’s resolve to look into ways of attracting this section of the society. As the bank’s main target group, the Qardul-Hassan fund gives the utmost priority to women traders.

“Our main intention is to enable the Somali families to improve their lives through the microfinancing system. Since women are the breadwinners of the majority of households, we give an utmost priority to them in our loan system in order to help boost their businesses,” said Yasin Omar, Head of the Bank’s Microfinance fund.

“We have a social responsibility to support small businesses which in fact are the backbone of the economy as they provide for many Somali families. Helping the Somali women adopt the financial systems contributes immensely to the country’s overall economic progress,” he added.

Documentation process

The majority of the Somali women in the small-scale business sector do not possess proper identification, resulting in the drop of the number of women engaging with banks. This proved to be the biggest obstacle faced by the fund system whose main motive was to improve the level of women-run businesses.

As a result, in collaboration with Salaam Foundation, the bank shouldered a second responsibility; to offer specialized advice for women in the small-scale business sector, on market, sales, accounting systems and the required banking documentations.

The collaborations helped address the obstacles faced by women resulting in the increase of women enrolling for loans.

Research conducted by the Hormuud salaam Foundation found out that 60 per cent of the 592 beneficiaries of the microfinance fund in the past three years are recurring clients for a second or a third time after satisfactorily clearing previous loans.

Most of the female beneficiaries are women who were in the small-scale business previously, and who were aspirin to expand their businesses. The majority trade in wholesale and vegetable businesses.

A comprehensive study released by the United Nations Development Programme (UNDP) in 2014 on the ‘Role of Somali Women in the Private Sector’ highlighted the challenges faced by the Somali women in the business sector.

The study categorised women into three groups; the first group of women is in the micro-enterprise sector and represents by far the majority of women-owned businesses. They tend to have limited education, lack the most basic business skills, are often the only breadwinner in the family, enter into business purely as a coping mechanism and will remain the sole individual in the business.

The second group of businesswomen tend to be educated (often university-educated), can take more risks due to family backing, and can be either individual businesswomen or part of a cooperative. (This group can also include diaspora, but not necessarily)

A third group, but a very small number of women, is represented by returned diaspora. They can and are willing to take much larger risks, have access to vital national and international business connections, and have the financial means to invest in innovative business ideas or buy existing companies.