In the bustling Barwaaqo market on the outskirts of Baidoa, Amina Sheik Isse arranges fresh vegetables on her stall as customers begin to gather. Just a few years ago, she had no business, no income, and no place to sell.

Forced to flee her home in Hudur district due to conflict, Amina arrived in Baidoa as an internally displaced person (IDP), relying on occasional support to survive. Today, she runs a growing vegetable business, employs two other displaced women, and supports her family of eleven (nine children and her husband).

“This loan helped me stock more products. Now I don’t just feed my family, I support two other women by giving them space to sell,” says Amina Sheik.

Amina’s story reflects a broader shift underway in Somalia, one where access to finance is helping displaced communities rebuild livelihoods and regain a sense of stability. Somalia is facing one of the world’s most severe displacement crises. More than four million people, nearly a quarter of the population, have been forced to flee their homes due to conflict, climate shocks, and insecurity.

Through the project, local small-scale traders are strengthening livelihoods through access to finance. Photo: UNDP Somalia

For many displaced families, rebuilding livelihoods in urban areas is extremely difficult. Without collateral, financial history, or stable incomes, access to formal financial services remains out of reach, limiting business opportunities and slowing recovery in already fragile communities.

To help address this, the United Nations Capital Development Fund (UNCDF), with support from the Swiss Agency for Development and Cooperation (SDC), launched the Financing Durable Solutions for Forcibly Displaced Persons (FDS) initiative in 2022. The programme expands access to finance alongside targeted investments in local infrastructure, helping communities move from short-term survival toward longer-term resilience.

Through the initiative, UNCDF provides catalytic grant funding to RAAS Microfinance Institution, enabling it to extend small loans, typically around $1,200, to businesses owned or led by internally displaced persons. As borrowers repay their loans, the capital is reinvested into new lending cycles, creating a revolving fund that allows the same resources to reach more entrepreneurs over time.

Access to small loans is helping entrepreneurs in Baidoa and Bosaso rebuild livelihoods, support their families, and create new beginnings. Photo: UNDP Somalia.

Amina was among the entrepreneurs reached through the initiative. With her loan, she was able to expand her stock, increase her income, and create opportunities for others in her community. To date, the initiative has supported 137 small businesses, with 70 percent owned or led by internally displaced persons and 60 percent by women. Repayment rates of around 80 percent highlight both the viability of the model and the commitment of borrowers.

“This initiative shows what is possible when local institutions, communities, and partners work together,” says Omon Ukpoma-Olaiya, Regional Investment Team Lead at UNCDF. “By unlocking finance, we are enabling displaced entrepreneurs to rebuild their lives with dignity.”

Amina's experience is not isolated. Across Baidoa and Bosaso, other displaced entrepreneurs are regaining income and stability as access to finance begins to unlock new opportunities.

Sokor Ali Adan, a father of six, used a $1,600 loan to establish a grocery business in the Baidoa market. He now earns a steady income and supports his family. “When I received the loan, it felt like life was beginning again. For the first time, I can see a future for my family,” he says.

In the same community, Fos Ali Ibrahim runs a small shop that has become the primary source of income for her household. “The loan was easy to access, and it has changed my life,” she explains. “As the breadwinner for my family of four children, I can now provide for my children and pay their school fees.”

For many entrepreneurs, this is their first experience with formal finance, opening the door to business growth, financial stability, and independence.

Beyond access to finance, the initiative also supports the development of inclusive economic infrastructure. In Baidoa and Bosaso, new markets have been established to provide safe, accessible spaces for displaced entrepreneurs, (many of them women) to operate their businesses. These investments help turn displacement settlements into active economic centres, while also supporting local authorities to generate revenue and deliver services.

Together, access to finance and improved infrastructure are helping communities better absorb and support displaced populations while laying the groundwork for longer term recovery.

Somalia’s experience highlights an important shift. By combining access to finance, infrastructure investment, and local partnerships, the FDS initiative is helping displaced populations move toward self-reliance and resilience.

While each entrepreneur's journey is different, their experiences show how access to finance is helping displaced communities move beyond survival. For Amina, the change is simple but profound. “What I have now is hope,” she says. “I can work, I can plan, and I can build something for my children.” Her story, and those of many others, demonstrate that even in fragile contexts, access to the right financial tools can unlock opportunity and restore dignity.