How Stronger Financial and Digital Services are Supporting Women’s MSMEs and Jobs in Somalia

Somali women are prolific micro-entrepreneurs and job creators. They own more than half of all household businesses, which account for a quarter of paid female jobs. Yet, without foundational financial, business registration, and digital ID services, more than half of these businesses are unable to meet their credit needs or create more and better jobs.

Khadija Ibrahim had grown accustomed to these challenges in her peanut-processing business, which had not grown in 15 years. Without access to affordable finance, investing in better equipment had remained out of reach. That changed after she received a loan from KIMS Microfinance, a financial service provider extending more affordable credit to women entrepreneurs. With new roasting equipment, Khadija tripled her production and was able to start supplying products in three new districts. She now hopes to begin hiring employees-a milestone that had previously seemed out of reach.

Enhancing women's access to finance

Khadija was one of the more than 1,800 women micro-entrepreneurs that have received credit from a financial institution supported by Gargaara, Somalia's first wholesale financing facility. Established in 2019, under the World Bank's $101 million World Bank's Somalia Capacity Advancement, Livelihoods and Entrepreneurship, through Digital Uplift Project (SCALED-UP, 2019-2025) SCALED-UP project, Gargaara has been bridging a long-standing gap in Somalia's financial services architecture by prioritizing lending to women. For women entrepreneurs, closing this financing gap is difficult but essential for growing businesses that can create more and better jobs.

Gargaara has responded by providing lines of credit to 12 financial institutions (FIs) that target at least 40% of their loans to women-owned micro, small, and medium enterprises (MSMEs). It has also built capacity within FIs to adopt tailored outreach and product development strategies for women customers. As a result, 47% of loans under the program have benefitted women-owned MSMEs.

Strengthening the policy environment for women-owned MSMEs

Access to finance for women-owned MSMEs also depends on the broader policy and regulatory framework. A critical building block of this framework has been supported under the $250 million World Bank Economic Resilience Development Policy Financing (DPF) series, which enabled the adoption of a new financial institutions law and licensing regulations for non-deposit taking microfinance institutions (MFIs). These measures have strengthened the ability of FIs to attract external financing and support, including through Gargaara. They have also enabled MFIs, one of the main providers of credit to women entrepreneurs, to expand access to finance for women-owned firms, boosting their potential to grow and create jobs.

Leveraging identification and business registration

Under SCALED-UP and the new $105 million SPRING Project, women's low uptake of identification and business registration services is being addressed, increasing their potential to form businesses, access finance, and create more and better jobs. The expansion of online business registration makes it faster, more convenient, and less costly for women to register their businesses, reducing barriers that have kept many women-owned MSMEs informal.

Similarly, under support provided to the National Identification and Registration Authority (NIRA), women in Somalia now have access to a digital proof of identification, addressing one of the key barriers to their access to financial and government services. With enhanced support from the World Bank, registrations by women have increased from 21% to 31% between 2024 and 2025, with additional efforts underway to close the gender gap further.

Turning access to finance, ID, and registration into growth and jobs

Looking to 2030, World Bank support will continue to prioritize women's access to credit through SPRING. An innovative risk-sharing mechanism will provide financial institutions enhanced credit guarantee cover for women-owned MSMEs. Further, targeted business development services will enhance business management skills and financial literacy for 2,000 female micro-entrepreneurs. Coupled with continued support under Gargaara, these measures are expected to unlock an additional $4.3 million in loans for 330 women-owned businesses and create at least as many new jobs for women.

Transformative results are expected through reformed digital ID and business registration systems. Both SBRS and NIRA will expand their footprint in second-tier cities and rural areas, where women's uptake of digital ID and business registration has been low. Such efforts will be backed by applied research into the barriers that prevent women from using digital registration services. By 2030, these measures are expected to provide digital ID to an additional 2.5 million women and support registration of over 1,500 women-owned MSMEs, increasing their financial inclusion and entrepreneurial potential.

Every newly issued loan, digital ID, and business registration document for a woman entrepreneur is important because it provides a launch pad to go even further and faster in the future. As demonstrated in Khadija's case, supporting women-owned MSMEs can help create more and better jobs and advance women's economic empowerment, both immediately and over the long term.

This feature was contributed and written by Ahmad Shah Durrani, Gender and Social Inclusion Consultant, Asta Bareisaite, Senior Private Sector Specialist, Sameer Goyal, Senior Financial Sector Specialist.