AECF Finance for Inclusive Growth partner financial institutions in Somalia help create jobs among the youth.
Despite comprising up to 80% of the population, the youth in Somalia remain largely out of the income-generating studies showing that 67% of the youth in Somalia lack a source of income.
This economic exclusion has been cited as one of the contributing factors to some of the youth joining extremist groups in the hope of earning a livelihood. Others risk dangerous journeys to Europe through theseas, with some losing their lives before reaching their destina4tions in the desert and oceans.
However, the trend is gradually changing as more youths are now starting up small-scale businesses and slowly building sustainable sources of income. For Ahmed Mohamud, starting a business in the coastal town of Bossaso Puntland state of Somalia was the best alternative to attempting the perilous journey through the desert and sea and hopefully landing on a European nation border. “My friends told me they were planning to travel to Europe through Sudan and Libya before taking an overcrowded boat to Italy,” Mohamud said. He says he pondered the idea and decided it was not worth the risk. “I approached a distant family member running a business in Beletweyne. He loaned me US$200, and I immediately started my fruit juice business.”
After six months, Mohamud says he needed to expand his business to meet the growing demand but needed someone to turn to. “I heard from a friend that MicroDahabMFI (AECF FIG programme partner MFI in Somalia)offer loans for young entrepreneurs. I approached them, and they loaned me US$500, which enabled me to buy more equipment and increase my juice production, thanks to MicroDahab MFI for creating a Dhalin-kaal product which supports youth to access finance and join economic acvities.”
The story of Mohamud resonates with many youths in Somalia who are keen on starting up their business and earning an income instead of travelling overseas or even falling to extremist groups. Many young people lack collateral and businsess data history to access credit from financial institutions. Still, with the gradual increase in access to finance from MFIs, more youth can now acquire capital to start or expand their businesses.
Hannah Hassan, the marketing manager at MicroDahab MFI, a microfinance arm of Dahabshiil Group, says MicroDahabMFI has developed credit facilities to support the youth to start and run businesses. “MicroDahab has contributed to support job creation among youth in Somalia by providing them with an avenue to secure funding that they otherwise may not receive anywhere else to start a business or expand an already existing one thanks to AECF’ FIG programme technical and revolving loan support,” Hannah said
She says the lack of funding impedes youth employment in Somalia but adds that MicroDahabMFI has been at the forefront of addressing this challenge. The Finance for Inclusive Growth programme in Somalia (FIG-Somalia), funded by the European Union and implemented by AECF, has been instrumental in widening access to finance in Somalia through financial institutions such as MicroDahab MFI.
Professor YahyeAhmir, the dean of Mogadishu University and an economics professor, says financial institutions in Somalia are critical in supporting the youth to start businesses and create jobs. “Financial institutions can impact job creation by contributing to the growth and sustainability of small and medium enterprises by offering credit/loans,” Professor Ahmir says.
He adds, “Moreover, MFIs can boost employment through access to finance for youth and, if benefited correctly, canprovide significant employment and spillover impact to the agricultural product value addition.”
As the population in Somalia grows, thanks to the improving economic situation and relative stability, the demand for sustainable incomes equally rises. Therefore, financial institutions must continue innovating and developing responsive products to widen access to finance among the youth and spur economic growth through job creation.