International Journal of

ADVANCED AND APPLIED SCIENCES

EISSN: 2313-3724, Print ISSN: 2313-626X

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 Volume 10, Issue 9 (September 2023), Pages: 174-185

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 Original Research Paper

Impact assessment of Islamic microfinance on small and medium-sized enterprises in Mogadishu, Somalia

 Author(s): 

 Iqra Hassan Mohamud 1, *, Ahmed Abdirashid Mohamud 2

 Affiliation(s):

 1Faculty of Management Science, SIMAD University, Mogadishu, Somalia
 2Faculty of Accountancy, SIMAD University, Mogadishu, Somalia

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 * Corresponding Author. 

  Corresponding author's ORCID profile: https://orcid.org/0009-0001-4643-5240

 Digital Object Identifier: 

 https://doi.org/10.21833/ijaas.2023.09.020

 Abstract:

Small and medium-sized enterprises (SMEs) play an increasingly vital role in the economic advancement of nations. Nonetheless, these enterprises often face challenges in accessing formal external funding channels. The emergence of Islamic microfinance presents a potential solution to alleviate the financial constraints confronting SMEs. Given the primary mission of Islamic microfinance institutions (MFIs) to uplift the socio-economic status of the underprivileged, it becomes imperative to scrutinize their influence on SME growth. This study aims to ascertain the effects of Islamic microfinance on SMEs in Mogadishu, Somalia. Employing a systematic random sampling method, a carefully selected sample of 100 SMEs was determined. A structured survey framework was developed to collect data, and data analysis was conducted using the Statistical Packages for the Social Sciences (SPSS). The study reveals that micro-savings significantly contribute to SME augmentation, with comparatively limited impact from micro-insurance. While many SMEs benefit from Islamic microfinance, there is a shortfall in the attainment of required funding among beneficiaries. This research sheds light on concerns related to borrower defaults, pre-financing screening deficiencies, resource inadequacy, and the absence of governmental and donor support in Islamic microfinance institutions. The implications extend to future research opportunities, emphasizing the need for governmental and stakeholder efforts to streamline financing acquisition from MFIs by relaxing collateral requirements for SME borrowers.

 © 2023 The Authors. Published by IASE.

 This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

 Keywords: Small and medium-sized enterprises, Islamic microfinance, Socio-economic status, Micro-savings, Financing acquisition

 Article History: Received 26 April 2023, Received in revised form 10 August 2023, Accepted 6 September 2023

 Acknowledgment 

No Acknowledgment.

 Compliance with ethical standards

 Conflict of interest: The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

 Citation:

 Mohamud IH and Mohamud AA (2023). Impact assessment of Islamic microfinance on small and medium-sized enterprises in Mogadishu, Somalia. International Journal of Advanced and Applied Sciences, 10(9): 174-185

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 Figures

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 Tables

 Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 Table 7 

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