Determinants of financial sustainability of small and medium-sized enterprises in Somalia

Small and medium-sized enterprises (SMEs) are central to employment creation and private sector development in Somalia, yet many in Mogadishu continue to operate under fragile, cash-based, and underbanked conditions that make long-term financial sustainability difficult to achieve. This study examines the effects of access to finance, financial awareness, accounting skills, and budgeting on the financial sustainability of SMEs in Mogadishu. Using a quantitative cross-sectional design, data were collected from 221 SME owners, managers, and accounting personnel across trade and retail, services, construction, and manufacturing. The data were analyzed using partial least squares structural equation modeling. The findings show that budgeting and financial awareness have positive and statistically significant effects on financial sustainability, with budgeting emerging as the strongest predictor. By contrast, access to finance and accounting skills does not show significant direct effects in the structural model. These results suggest that in Mogadishu’s constrained business environment, sustainability depends less on finance availability alone and more on how effectively SMEs plan, prioritize, and manage the resources already under their control. The study therefore underscores the importance of practical budgeting systems and context-sensitive financial awareness initiatives for strengthening SMEs’ resilience and continuity in Somalia.