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The Challenges Facing Young Entrepreneurs in Somalia
December 12 2017

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 would look like. 

Since then, I have been residing and working in Mogadishu. During this period, I got the opportunity to travel across all the regions of Somalia including the South Central provinces, North-West and North-East parts of the country.

I experienced the real life on the ground and realized that most of the youth have a passion for entrepreneurship, but they don’t have the platform, experience, or the mechanism to venture into new adventures to unlock their entrepreneurship talents. This has caused 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 for emboldening our upcoming generation by giving them the necessary mentorship they need so as to realize and utilize their talents and energy.

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

Despite youth constituting 75% of the population in Somalia as per the Population Estimation Survey of Somalia, most of the youth entrepreneurs are unable to manage successful enterprises. Irrespective of the lack of skills and capital to manage enterprises successfully, youthful entrepreneurs have started business ventures and have gone into self-employment.  

Despite this some financial institutions are taking the ideas of vulnerable youth by investing in these ideas themselves. This has created a situation whereby young people no longer trust any funding institution with their entrepreneurial ideas.

The Federal Government of Somalia has instituted measures to curb the high unemployment levels among the youth in the country by employing some youth. Some youth were even given temporary contracts funded by EU/World Bank. However, these measures have not helped to reduce the underlying problem of youth unemployment in the country. It would have been ideal if it could initiate a project of rewarding youth who have the entrepreneurship sprit. Therefore, it could potentially develop solutions for the economic obstacles that are blocking the youth and the entire community from cultivating their potentiality and capabilities to make their own sources of incomes that can help improve the nation’s economy. 

The majority of the people living in the various regions in Somalia continue to experience high levels of poverty, poor-living conditions and often find it difficult to engage in business. This is due to a lack of capital and a lack of collateral to secure loans from banks. Banks usually apply policies to impose high restrictions on those who needs to take loans from them. This has discouraged young people who have successful business ideas but little or no financial power to change their ideas into action.

Young entrepreneurs operating in Somalia are faced with numerous challenges in their quest to pursue entrepreneurship as an option to meaningful employment. An employment route that can earn them a decent income that leads to sustainable development and wealth creation.

The main obstacles for 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 most business premises- or in some cases the cost of rent will be doubled on every six month depending on the status of the market.

Increased competition- which prevents the youth and the small business owners from bidding the contracts with the governments or any other lucrative project as the market. This is because the markets are dominated by large financial institutions that monopolize everything. 

Moreorver, there are high  rates of (Murabaha/musharako)on loans- due to the high-pitched 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 are not accepting the permits issued by the Federal Government in Mogadishu.

Therefore, in order to help the country overcome these challenges, it has to take several steps; such as drafting and passing patent laws and creating an environment where by investment and growth can be possible. Investment in education and proper infrastructure, and finally, establishing strong institutions and laws that tend to work for the majority of people, rather than just working for the benefit of the elites.

And as a young entrepreneur in Somalia, you need to have perseverance and intelligence as your allies and use them to your advantage. You have to keep working toward your goals, understand that you’re not the first to struggle, and because of that, there are many resources available to help you get through your darkest days. All of this can help you reap the immeasurable rewards that come with building your own successful business.

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. That’s why you must 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 a conclusion.
Mohamed Abdirizak Farah (irbad)

Email: [email protected]   

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