Market size & demand signals
- Addressable population. Benadir (Mogadishu) hosts roughly 1.06m IDPs (30.4% of Somalia’s total) as of June 30, 2025; humanitarian partners project ~1.16m by September 2025 if current trends persist.
- Payments rails are ready. Somalia is a mobile-money-first market; multiple sources indicate very high usage, with GSMA/industry and academic work pointing to widespread reliance by firms and households. This lowers friction for small-ticket retail and utility payments inside camps.
- Energy is the binding constraint. National electricity access has improved to roughly ~50% overall, with urban access ~70–79%—but service remains patchy and costly. Typical end-user tariffs ~$0.60–0.80/kWh on isolated diesel grids keep cooling expensive.
- Site stability matters. Forced evictions in Benadir remain frequent, undermining micro-business capital formation. UNHCR logged >45,000 evictions since Jan 2025, 56% in Benadir alone.
What could scale (next 12–18 months)
Core camp-side services with low capex and fast payback:
- Cooling & ice (small freezers, shared cold-boxes, resale of ice/ice-blocks).
- Convenience retail (water, dry goods, phone charging/top-ups).
- Basic services (charging, refrigeration-as-a-service for vendors).
With cash-assistance seeding capital and mobile money easing payments, the immediate bottleneck is electricity cost and reliability; interventions that de-risk power unlock more enterprises. (For context on cash programming efficacy in Somalia, see recent Somali Cash Consortium assessments.)
Bottom-up scale scenarios (Mogadishu IDP sites)
Assumptions (transparent, conservative): ventures include kiosk + freezer or shared cold box; minimal staff (owner-operator); capex US$200–600 (used fridge + working capital); electricity is the dominant opex.
- Base case: 0.07% of IDPs become cooling/retail owner-operators → ~750 ventures across Benadir camps. Requires modest micro-grants and access to a power solution (mini-grid connection or solar-assist).
- Upside case (with energy + grant support): 0.15% penetration → ~1,600 ventures (mix of ice, charging, corner-kiosks). Achievable if donors co-finance solar-assist freezers or negotiate bulk tariffs with ESPs.
- Downside case (evictions or tariff spikes): 0.03% penetration → ~300 ventures. The main risk is site instability and diesel price pass-through, which has previously driven tariff hikes.
These shares are in line with observed micro-enterprise densities in large camps elsewhere in the Horn when energy access improves, and with Somalia’s high digital-payments readiness that supports micro-retail.
Unit economics: what makes or breaks viability
- Power price sensitivity. At $0.60–0.80/kWh, freezer-based businesses must maximise utilisation (batch freezing, daytime pre-cool, night-rate if available). Any reduction of $0.10/kWh meaningfully expands margin or lowers price to end-users.
- Working capital. Small, time-bound cash grants (US$150–300) have shown good livelihood effects when recipients already have a plan/market (Somali Cash Consortium evaluations).
- Tenure security. Each eviction resets capex and inventory; predictable site management materially increases investment willingness.
What to fund (actionable levers for donors, city and private providers)
- Power first: pilot solar-assist freezer kits or shared cold-rooms in large sites; negotiate camp-level bulk tariffs with private ESPs to bring delivered costs closer to $0.45–0.55/kWh.
- Targeted micro-grants (US$200–500) layered on existing cash-transfer rails; require a one-page business plan and mobile-money wallet for tracking.
- Tenure compacts: with municipality/landlords to reduce forced evictions in designated trading corridors; link site stability to donor-funded infrastructure (lighting, water points).
- Vendor services: bulk water access + hygiene stations to support food/cold-chain micro-retail; simple maintenance pools for fridges/freezers.
- Digital enablement: promote QR/mobile-money acceptance and low-fee merchant wallets; Somalia’s high adoption allows near-cashless micro-commerce from day one.
12–18 month milestones to watch
Donor programming: scale-up of solar-assist or mini-grid pilots in camps; renewed shock-responsive cash tranches with a livelihoods window.
Benadir IDP headcount and site stability (CCCM/UNHCR monthly). Sustained rise above ~1.1m strengthens demand; spikes in evictions dampen investment.
Tariff trajectory from ESPs/diesel costs; any move below $0.60/kWh is catalytic for cold-chain micro-retail.
