A new OEF Research report examines the relationship between conflict, development funding, and local economies. Using the monthly reports provided by recipients of funding through our Shuraako program, this report analyzes how business operations and profitability in Somalia has been affected by armed conflict and the presence of large-scale international development aid.
The report finds that armed conflict plays a critical role in reducing business earnings. On average, businesses lose 2.2 percent of revenue a month due to active fighting. In the most extreme cases, they may lose up to 41 percent in monthly revenue as a result of ongoing fighting.
While aid significantly improves the well-being of communities in conflict affected countries, international aid may not particularly improve the immediate ability of businesses to increase revenue.
By far, increased access to capital plays the largest role in increasing business revenues. On average, a one percent increase in loan size offered to businesses boosts monthly revenue by 0.89 percent.
Read the full report and learn more about its findings.
Learn more about how One Earth Future’s Shuraako program connects entrepreneurs to needed capital in Somalia.