Imagine a Somalia where every woman can achieve her financial dreams. A Somalia where a young entrepreneur girl in Mogadishu has the tools to start a thriving business. A Somalia where a mother in Kismayo can support her family. A Somalia Where displaced women have control over their finances. This is the vision – one where all Somali women can access financial services to unlock their potential, becoming leaders and participants as women who can save, borrow, invest and transfer money, with thriving families, communities and countries. In recent years, efforts have been made towards expanding access to loans for Somali women, though barriers remain steep. Microfinance institutions like MicroDahab, Amal Bank, and KIMS offer small business loans, and group lending programs targeting women clients. Banks like IBS and Salaam Somali provide microcredit and funding for women entrepreneurs. Still, women make up just a third of banking clients and 1% of financial institution staff, which creates difficulties for women in communication and feeling welcomed. Loans often require a male guarantor or higher collateral.
But the need and opportunity for further progress is immense. According to the World Bank, only 9% of Somali women have a formal bank account compared to 21% of men. Lower financial literacy, costs, limited mobility and cultural restrictions also cause disparity. This stifles women’s economic empowerment and broader development. Financial inclusion has proven potential to accelerate growth, reduce poverty and drive change globally. Unlocking this for Somali women is crucial, as conflict, instability and displacement have left millions of women marginalized and vulnerable. Women already fulfil essential economic roles, as entrepreneurs, traders, farmers and remittance recipients. Somali women have a lot of entrepreneurial spirit and ambition, but often lack tools and resources to grow their businesses and improve their living conditions, despite robust demand for financial services like savings, credit, and payments. Moreover, women’s financial inclusion. can have positive spillover effects on their families and communities, improving health, education and resilience outcomes.
To address these challenges and bridge the gender gap, it is crucial to establish a stronger financial ecosystem that is accessible and beneficial to women. A comprehensive, coordinated approach addressing limited financial access, usage, and affordability for Somali women can open the door to inclusion. With innovation, FinTech, digital financial literacy initiatives, and collaboration, an inclusive financial system that empowers Somali women and fosters overall economic growth for the entire nation is attainable.
Customized digital financial innovations
Digital financial services like mobile money, e-wallets, and agent banking can provide convenient, affordable and secure access. However, optimizing these services to meet the specific needs and preferences of women is crucial for overcoming systemic barriers. Collaboration between diverse stakeholders including regulators, banks, telecoms and innovation centres is key to developing customized digital financial products for women. The widespread mobile money infrastructure presents an opportunity, with over 70% of Somalis already utilizing platforms like EVC+ and Zaad. These services can be optimized to advance women’s financial inclusion if products are designed strategically around their particular needs, priorities and constraints. Banks can work with mobile operators, FinTech firms and innovators to conveniently deliver services through the mobile devices women already utilize daily. Innovation centres can pioneer solutions specifically addressing the financial service needs, priorities and opportunities of women entrepreneurs and business owners.
In fact, SIMAD iLab is already investing in the FinTech sector and Women’s Entrepreneurship to drive ecosystem and women’s financial inclusion. Our Women Entrepreneurship Department provides relevant training and builds critical skills. The Fintech Department drives disruption through digital finance innovations and Emerging Technologies pioneers solutions catering to women’s unmet financial needs. We recognize barriers faced by Somali women in accessing financial services. So we are proactively researching, assessing, and engaging stakeholders to innovate tailored FinTech products and services. Our goal is to leverage the mobile money infrastructure to empower women entrepreneurs and expand economic opportunities.
With broadening strategic collaboration between stakeholders and attention to women’s needs, innovative approaches can be developed to create affordable, accessible digital financial products catering to women’s unique requirements. This would unlock the potential to provide the on-ramp to greater financial access and empowerment for Somali women.
Financial Literacy
Expanding financial access must go hand-in-hand with strengthening financial literacy and capabilities. Financial literacy is essential for realizing the benefits of financial inclusion. Financial literacy is the knowledge and skills that enable people to make informed and effective decisions about their finances.It empowers people to the benefits and risks of different financial services, to compare and choose the best options for their needs, and to manage their money wisely.
However, in Somalia, financial literacy levels are extremely low, especially for women, who often have limited access to formal education and information sources. Gaps in foundational literacy and numeracy skills create barriers to financial participation. Female literacy is only 45 per cent compared to 64 per cent for males. Lack of tailored financial products and limited capabilities mutually reinforce exclusion.
Therefore, targeted financial literacy initiatives for Somali women should be developed, focusing on building relevant skills and knowledge covering topics like budgeting, saving, borrowing, investing, managing risks, and planning for the future. A diversity of instructional approaches should be used to reach women across literacy levels. These can include community workshops, radio and TV edutainment programs, SMS tips, mobile apps, peer learning, and in-person guidance. This will empower Somali women to effectively leverage financial services, creating a virtuous cycle of capabilities and inclusion.
Multi-sectoral Collaboration
A collaborative approach across sectors is key to creating an enabling environment for cost-effective and sustainable financial service-enabled women’s financial inclusion. The complex barriers women face require coordinated action by stakeholders spanning government, financial institutions, mobile network operators, innovation hubs, NGOs, and development partners.
Financial inclusion is not only a matter of providing access to financial services but also of creating an enabling environment that supports and encourages their use. These stakeholders need to work together to address the challenges and opportunities for financial inclusion in Somalia, such as improving the legal and regulatory framework for digital finance; enhancing the infrastructure and security for digital transactions; promoting consumer protection and financial inclusion standards; fostering innovation and competition among financial service providers; raising awareness and trust among potential customers; and measuring and evaluating the impact of financial inclusion interventions.
In closing, the path to financial inclusion and empowering women in Somalia is one filled with immense potential and promise. By providing women with access to a comprehensive suite of formal financial services and tailored solutions that cater to their needs, we can unlock their economic potential and drive positive change throughout society. As women gain control over their finances, the benefits extend far beyond individual success – children’s health improves, girls receive better education, and communities flourish.
Enabling inclusive and equitable financial inclusion in Somalia requires a collective effort. It calls for national strategies backed by diverse stakeholders, all committed to promoting women-focused financial inclusion programs to make a lasting difference, where women’s empowerment becomes a powerful force for positive change in Somalia. This will not only facilitate building businesses’ and households’ financial capabilities but also contribute to the recovery of Somalia’s economy.
Naima Hussien Ahmed, Head of Fintech Innovations, SIMAD iLab.
