Financing the productive sectors in Somalia boosts production and ensures food security 

Every year, Somalia grapples with the perennial challenge of food insecurity which sadly leads to loss of lives, displacements and disruption of livelihoods. Erratic weather changes which have been attributed to climate change, underdevelopment of the productive sectors and insecurity among other factors all contribute to low food production forcing the country to overly rely on humanitarian aid.

Despite this gloomy situation, various interventions are gradually turning the tide albeit one such intervention is providing financial support to productive sectors through microfinance institutions in the country. A European Union-funded programme dubbed Finance for Inclusion in Somalia (FIG-Programme) supports select financial institutions to widen access to finance targeting productive sectors, including crop, livestock production and fisheries.

Omar Guled heads to the deep sea five days a week to ensure he delivers fish for his clients at Hamarweyne fish market in Mogadishu. He has been in this business for five years now but has been hiring a boat from a fishers association in the city but always dreamt of owning his boat. In September 2022, he approached IBS bank, one of the AECF FIG-Somalia implementing partners, after he heard from a fellow fisherman that the bank was offering loans to help people in the fishing sector. With a loan of US$1,700 plus his savings, Omar acquired a small boat which has now seen his fish yields rise to 100 kilograms per day from 50kgs.

Aisha Mohamed runs a greenhouse with a friend in the Afgooye area, located about 30 kilometres Southwest of Mogadishu. In July 2022, she secured a loan of US$600 from IBS Bank to expand her farm. Her yields of an assortment of vegetables have increased from 800kgs to 1,200kg per season of three months.

Abdiweli Mohamud Elmi, the head of credit at IBS Bank, says access to finance to the productive sectors has a direct correlation to increased food production and food security. “Our tailored BULAALSHE product, with the support of FIG-Somalia, has helped farmers, pastoralists and those in the fishing sector increase their yields,” said Elmi.

Elmi says he has seen more and more affordable food reaching the markets and, subsequently, tables in many households. “We used to import a lot of food products, especially fresh produce, but now people are setting up greenhouse farms and producing these products and making them more accessible,” Elmi adds.

According to economics professor and dean of Mogadishu University Professor Yahye Amir, ‘improving access to finance helps farmers to find investment an increased yield which increases household income and food security.’

Liban Alim, an independent economist based in Mogadishu, also observes that advancing credit to the productive sectors directly impacts food security. “Our productive sectors, such as crop farmers, use obsolete technologies, resulting in low yields. This is because they do not have the capital to purchase modern implements,” said Elim. “But if local banks can advance them loans, they can acquire these tools and significantly boost their production, thus contributing to sustainable food production.”