Prior to the fall of Siad Barre’s dictatorship in Somalia, all banks were owned by the state. When Somaliland declared independence from Somalia in 1991, the nascent government did not prioritize the establishment of a banking sector or regulatory environment to develop financial services. Today, Somaliland remains one of the few places in the world with no established commercial banking sector—resulting in a lack of access to capital that constrains the private sector.
The few large businesses in Somaliland generally have access to formal or informal shareholder agreements—mostly from Middle Eastern investors—while informal microenterprises often rely on savings groups and small-scale buyer-supplier credit models. By contrast, small and medium-sized enterprises (SMEs) have limited options to finance expansion, hire new employees, or purchase machinery.
To help close this gap, the Partnership for Economic Growth (PEG) program—funded by the U.S. Agency for International Development—created Somaliland’s first business plan competition, called the Partnership Fund, to identify some of the region’s best entrepreneurial minds and co-fund their ventures. Entrants could be from anywhere, so long as they were investing in Somaliland.
Our team’s call for concept papers reached more than 1 million people and their families through local and diaspora websites, radio, newspapers, and text messages sent by Somaliland’s largest mobile phone provider. The response: nearly 300 applicants from all regions of Somaliland and Somali diaspora in the United States, Europe, Africa, and the Middle East who are ready to invest in Somaliland.
Many of these proposals focused on Somaliland’s most promising but underperforming economic sectors, including horticulture, dairy, renewable energy, fisheries, gums and resins, information technology, light manufacturing, and microfinance. Our criteria included technical feasibility, market supply and demand,...