Business owners across Somalia are showing resilience and determination, but many remain frustrated by the barriers preventing growth. Surveys conducted in 2023 and 2024 across five cities—Mogadishu, Baidoa, Beledweyne, Bosaso, and Kismayo—captured the experiences of 700 formally registered firms. These findings, supported by the Somalia Multi Partner Fund and complemented by the World Bank’s diagnostics, highlight the private sector’s central role in driving jobs and inclusive growth.
The data revealed encouraging signs: 54 percent of firms reported higher sales between 2023 and 2024, and nearly three‑quarters expected further growth. Business sentiment improved across cities, reflecting cautious optimism. However, employment expansion lagged behind sales growth, with only 14 percent of firms increasing their workforce. Productivity gains were modest and uneven, and investment in fixed assets remained below benchmarks, often due to insufficient demand. Most firms remain locally oriented, with only 7 percent exporting directly.
Constraints continue to hold back performance. Market competition was identified as the most binding challenge, driven by price distortions, entry barriers, and competition from informal businesses. Access to finance is another major obstacle—over half of firms reported being credit constrained, yet only 10 percent applied for loans in 2024. Women remain underrepresented in business ownership, with just 7 percent of firms majority female‑owned, and female‑owned firms investing far less in fixed assets compared to male‑owned businesses.
Policy reforms are proving critical. Through the World Bank‑funded SCALED‑UP project, Somalia has modernized systems such as digital identification, online business registration, and interoperable payment infrastructure. These reforms have reduced administrative burdens and risks for firms. The wholesale financing facility, Gargaara, has extended over $42 million in credit to more than 4,000 enterprises, demonstrating that lending to small and medium firms, even in risk‑prone sectors like agriculture, is possible with tailored incentives.
The next phase of reform, through the Somalia Productive, Resilient and Inclusive Growth Project (SPRING), focuses on strengthening institutions, improving financial oversight, and expanding business development services beyond Mogadishu. SPRING responds directly to firms’ concerns, aiming to link sustainable growth to broad‑based productivity gains and ensure that businesses ready to expand are not held back by weak systems.
In sum, Somalia’s private sector shows promise, but unlocking its full potential requires stronger institutions, better access to finance, and inclusive reforms that empower all entrepreneurs—especially women—to grow, invest, and create jobs.
