Rima Abdukadir Ahmed, an entrepreneur from Mogadishu, has been able to expand her sesame oil business thanks to a loan from Premier Bank. Her business, Macsarada Salida Khaaluduun, initially used traditional methods involving a camel to grind sesame seeds into oil. She later mechanized the process using car parts. The demand for her product required her to increase storage of sesame seeds, prompting her to seek additional working capital.
Premier Bank approved a two-year loan of $2,200 with an 8% annual margin and a four-month grace period. This financial support allowed Rima to boost production from 150 to 400 liters per month and maintain a steady supply of oil.
Accessing finance is challenging in Somalia, especially for women-led Micro, Small and Medium Enterprises (MSMEs) in sectors like farming and livestock. According to the World Bank Group's report on Somalia's private sector, only 21% of women-owned businesses can access overdraft facilities.
In response, Somalia’s federal government launched the Gargaara Company in 2019 with initial funding from the World Bank’s SCALED-UP project. It serves as an apex institution distributing funds through Participating Financing Institutions (PFIs). In 2023, Gargaara secured an additional $19 million from German development bank Kreditanstalt für Wiederaufbau (KfW), allowing it to expand its portfolio into sectors such as education and health.
The Gargaara Financial Facility has issued over 1,600 loans since its inception in 2019 but acknowledges that financial equality remains elusive for Somali women. Although women-owned businesses represent nearly half of these loans by number, they account for less than 10% in loan value out of more than $23 million lent so far.
Gargaara plans to increase its impact by onboarding more financial institutions and scaling up their capacity to reach women-run MSMEs while offering new products like risk-sharing mechanisms.