Business in Somalia

Somalia's business economy is mainly made up of small and informal activities. The 2024 Somali Integrated Business Establishment Census recorded 174,149 fixed-location establishments in 16 urban centres, excluding agriculture, household businesses and hawkers or mobile vendors. Wholesale and retail accounted for 136,626 establishments, while accommodation and food services accounted for 16,894. The census recorded 83,008 micro-establishments, called Kabar in local business usage, and 47,934 formal establishments. Self-employment and informal work remain widespread, and entry is often driven by the need to earn income rather than by access to substantial start-up capital. A business can operate informally as a trader, household enterprise or Kabar, but no single nationwide legal identity and closure process for all such activities is currently evidenced. A registered company follows a more defined process through the federal Ministry of Commerce and Industry and its Registrar of Companies. The usual sequence is name search or reservation, an application through the Somalia Business Registration and Licensing System or SBRLS, submission of the Memorandum and Articles of Association, founder or shareholder passports, address and management details, and any required beneficial-owner information. After approval, the company receives an incorporation certificate and applies for a general business licence. A sector-specific approval may be required before operations begin. A Tax Identification Number from the Ministry of Finance is relevant for taxable or import-related activities, and customs operators require one. Somalia's company framework recognizes private, public, unlimited private, limited-liability and foreign companies under the Company Law 2019 and Regulation 001/2021. A registered company has separate legal personality and can enter contracts, own property and sue or be sued. The published federal tariff lists USD 20 for name reservation and USD 100 for an incorporation certificate. A complete accepted application may receive an incorporation certificate in one working day, while a business licence may take about two working days. Fees and processing times can change. The eBusiness fee page gives examples ranging from USD 300 for some ICT and service activities to USD 300–500 for food, medical and import activities, and up to USD 3,000 for energy and some general services. The federal process is strongest in Mogadishu and Banadir and in areas connected to SBRLS. Somaliland operates a separate de facto system through its Ministry of Trade, Business Registration and Licensing System, Ministry of Finance and Inland Revenue Department, and Attorney General's Office. Its published 2024 benchmark was four working days, nine requirements and approximately USD 157–3,000, with a Tax Identification Number issued without a fee before business activity. Federal registration does not automatically transfer to Somaliland. Requirements in federal member states and municipalities also vary, and businesses may face parallel licence, tax, customs and municipal records because a unified nationwide regime is not yet in place. A registered company must file an annual return within 10 working days after each incorporation anniversary under the current company regulation. Changes to directors, shareholders, activity or address require an update with the Registrar. Beneficial ownership disclosure, company books, records and financial or operational reporting can also apply. Non-compliance can lead to fines, suspension or removal from the register. A voluntary strike-off has a published fee of zero, while merger or major-change re-registration costs about USD 100. A delay of four months in an annual return can trigger a penalty of 10% of the business-licence value; a delay exceeding one year can lead to a warning, a 60-day cure period and then removal from the register. A complete nationwide insolvency and informal-business closure framework has not been adequately evidenced. Access to finance remains a major constraint: private-sector credit was below 5% of GDP in December 2023. The Ministry of Commerce and Industry's SME, Entrepreneurship and Cooperatives Department provides business-development support, finance linkages and market-access support through programmes and cohorts. SPRING Subcomponent 1.1 has an USD 11 million allocation for incubator and business-development support linked to participating Gargaara financiers. The SDRB Investment and Recovery Programme covers agriculture, fisheries, livestock, renewable energy, SMEs, cooperatives and start-ups, with preference for a business plan and operating history; its 13 September 2025 deadline has passed, and no current open call is evidenced. These programmes do not create a general entitlement to funding. Women-owned businesses face network and access barriers, while rural, mobile and household businesses often have weaker access to identification, digital systems, fixed addresses, capital and formal approvals. Security, energy, logistics, corruption, political and social networks, weak institutions and fragmented regulation affect business decisions. SOMINVEST can facilitate foreign investment, and the 2023 Investor and Investments Protection Act and regional integration efforts support investment access, but foreign companies still need to comply with the applicable registration, licensing, tax and sector rules.