2025, Vol. 8, Issue 2

author(s)
Amina Omar Mohamud and Layla Abdullahi Osman

abstract
Microfinance has become an essential tool for improving economic resilience and reducing poverty in developing countries. It is also becoming a critical component in Somalia's economic recovery due to its fragile post-conflict economy. The study focuses on how microfinance can be used to improve sustainable livelihoods in Somalia. More specifically, the study examines whether microfinance improves the incomes of those receiving microfinance loans, if microfinance leads to employment opportunities for those receiving microfinance loans and how both of these aspects of microfinance lead to sustainable livelihoods. The study uses thematic analysis of 27 peer reviewed articles, policy documents and sectoral reports published between 2013-2025 to analyze the results of microfinance in Somalia. The study finds that microfinance provides a positive benefit for household income and self-employment, however, there are limitations to microfinance in Somalia including weak institutional capacity, regulatory issues and limited access to rural populations. The study recommends strengthening hybrid microfinance models, promoting digital finance literacy and establishing social outcome measurement frameworks to promote equitable and sustainable development.