Challenges Facing Young Entrepreneurs in Somalia

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I was born in Somalia, but raised and educated in Kenya. It was 2012 when I came back to Somalia and decided to live in Mogadishu. The city was slowly recovering from the ashes of the civil war. However, the situation was relatively unpredictable and it was hard to imagine what the future might look like.

Since then, I have been staying and working in Mogadishu. During that period, I travelled across all the regions of Somalia including South central provinces, North-west and North-east part of the country.

I experienced real life on the ground and realized that many young people have a passion for entrepreneurship, but they don’t have the platform, experience, or the mechanism to venture into new ideas and unlock their entrepreneurial talents. This caused a sensation to me because if we the people don’t take the reins to develop our country, no matter our resources, we cannot develop the entrepreneurship talent of our youth. This has to pave the way to embolden our upcoming generation by giving them the necessary mentorship they need, to realize and utilize their talents and energy.

Personally, I have a passion for business, entrepreneurship and success, but my country (Somalia) faces complex challenges. These challenges include a pitiable economic participation by young people, which inhibits the country’s economic development and creates a high dependency on the working population.

Despite constituting 75% of the population in Somalia as per the Population Estimation Survey of Somalia, most youth entrepreneurs are unable to manage successful enterprises. Even without skills and capital to manage enterprises successfully, youthful entrepreneurs have started businesses and have gone into self-employment.

Some financial institutions have taken advantage of these vulnerable youth by investing themselves using the ideas forwarded to them. This has created a situation where young people no longer trust funding institutions for their entrepreneurial ideas.

One of the young entrepreneurs in Somalia.
Somali entrepreneur

Some Government Programs Not Working

The Federal Government of Somalia instituted some measures to curb high unemployment levels among youth. They employed some young people on temporary contracts funded by the EU/World Bank. However, these measures have not helped to reduce the problem of youth unemployment.

It would have been better to reward the massive numbers of youth who have the entrepreneurial spirit. The government could also have removed the economic obstacles that block youth and the entire community from cultivating their potential and capabilities to create their own sources of income that can help improve the nation’s economy.

Most people living in the various regions in Somalia continue to experience high levels of poverty and poor living conditions. The people often find it difficult to engage in business due to lack of capital, or lack of collateral to secure loans. The banks apply policies that impose high restrictions on those who need loans. This discourages the young people who have business ideas that could be successful, but they have little or no financial ability to change their ideas into action.

Youth entrepreneurs operating in Somalia are faced with numerous challenges in their quest to pursue entrepreneurship as an option to meaningful employment and earn decent income for sustainable development and wealth creation.

Obstacles to Establishing a Viable Business

The Main obstacles to establishing a viable business in Somalia as a young entrepreneur include;

  • Lack of suitable business premises
  • insecurity
  • poor infrastructure
  • Lack of credit facilities
  • Inadequate capital to venture into business
  • High rent for the most business premises
  • Rent that doubled every six month depending on the status of the market.

Moreover, there is increased competition – which prevents youth and small business owners bidding on government contracts or any other lucrative project. The market is dominated by large financial institutions that monopolize everything

There are high rates of (Murabaha/musharako) on loans – due to the high requirements of the Banks, and the other financial institutions across the country. It is also hard to get a business license that operates across the country as the regional states do not accept permits issued by the Federal Government in Mogadishu.

Thus, for the country to overcome these challenges, government must take several steps.

  • draft and pass Patent law
  • create an environment for investment and growth through education and infrastructure
  • establish strong institutions and laws that work for most people, rather than just elites

Young entrepreneurs in Somalia need to have perseverance and intelligence as their allies.

A Message for Somali Entrepreneurs

An entrepreneur’s life is not enviable, at least in the beginning. It’s extremely easy to get discouraged when something goes wrong, or when you’re not growing as fast as you’d like. Self-doubt creeps in, and you feel like giving up. Always have a rational mind to distance yourself from emotions when taking actions. It is good to take a break and tackle the problems when you are stress-free, instead of rushing to conclusions.

Mohamed Irbad holds bachelor of Public administration from the University of Somalia in Mogadishu majoring in local government and decentralization. He is a co-founder of IFIYE and a Master candidate at Jomo Kenyatta University of Agriculture and technology (JKUAT) in Mombasa, Kenya.