Aisha: an inclusive financial product brings hope for host and refugee entrepreneurs

Addis Ababa, ETHIOPIA (ILO News) – In the bustling town of Kebribeyah, home to over 18,000 refugees from Somalia, two women stand as shining examples of resilience and entrepreneurship. Aisha Abdi, a 49-year-old Ethiopian mother of nine, and Kadra Yonis, a 57-year-old mother, are among the first beneficiaries of a new financial product that is transforming lives in the Somali region of Ethiopia. 

Launched by the Shabelle Bank in partnership with the International Labour Organization (ILO) in February 2024, “Aisha” is an innovative financial product providing working capital loan tailored specifically for refugees and host communities.

Aisha used the loan to expand her small shop, now stocked with a variety of consumable goods. Kadra scaled her business expanding her consumer base as well as profits allowing her to reinvest in more products. Both women have not only expanded their livelihoods but have also consistently made timely loan repayments, showcasing their commitment to responsible financial management.

Localized solution eases access to finance

In Ethiopia’s Somali region, religious norms that prohibit taking loans or paying interest have long made it challenging for financial institutions to operate. This, coupled with a lack of capital, has stifled business growth and job creation in both refugee and local communities.

“To overcome this barrier, Shabelle Bank introduced the "Aisha" program, offering an innovative, Sharia-compliant solution for small and medium enterprises. Instead of providing traditional loans, the bank acts as a supplier, selling essential products, machinery, or equipment to entrepreneurs at a marked-up price. Business owners then repay the bank in manageable instalments, allowing them to grow without violating religious principles,” explained Ahmed Abas, Microfinance Operations Director at Shabelle Bank

The impact is already evident. Take Kadra, for example, an entrepreneur who received 50,000 Birr worth of butter from the bank. She sold the stock within a week, earning a 6,250 Birr profit. With this income, she reinvested in more products, further expanding her business.

Financial education boosts business success 

Before launching the "Aisha" financial product, Shabelle Bank invested in training 21 loan officers and frontline staff to ensure they could effectively support this new market segment. Entrepreneurs like Aisha and Kadra, the program’s beneficiaries, also received training in Financial Education and Business Development Services, equipping them with vital skills to better manage their businesses and finances.

Using modules from the International Labour Organization (ILO), such as Start and Improve Your Business and Get Ahead, the training helped entrepreneurs strengthen their financial management practices. “After the training, we were able to manage inventory, keep records of sales and purchases, and even plan our savings and loan repayments more effectively,” shared Kadra.

In addition to individual training, Shabelle Bank introduced a peer support model. Entrepreneurs were grouped together to encourage one another to save and make timely repayments. With each successful payment and growing savings, participants improved their credit ratings, unlocking access to more capital for future expansion.

“The ILO's support has been instrumental in guiding the development and launch of this innovative financial product,” added Abas, Microfinance Operations Director at Shabelle Bank. “It’s allowed us to serve refugees and host communities, offering the financial services they need to thrive.”

Aisha’s journey exemplifies the transformative impact of financial inclusion. By opening access to credit and education, Shabelle Bank is helping marginalized populations build sustainable livelihoods. 

Stephen Opio, Chief Technical Advisor for ILO PROSPECTS in Ethiopia, said, “At the ILO, we believe that financial inclusion is key to fostering resilience and sustainable development in marginalized communities. PROSPECTS is not only providing refugees and host communities with access to capital but also equipping them with the knowledge and tools to build stronger businesses, helping them achieve long-term economic stability.”