Agribusiness Performance and Rural Livelihoods in Somalia: What a 2025 Value-Chain Study Reveals
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A digest of Sheikh Ali, Farow & Mohamud (2025), Research on World Agricultural Economy
Agriculture sustains much of rural Somalia, yet farmers, processors and traders work with weak infrastructure, scarce credit and recurring insecurity. Whether better-performing agribusinesses actually translate into better livelihoods — and through what channels — matters for anyone designing value-chain programmes in fragile settings. This 2025 study combines Porter's value chain model with the Sustainable Livelihoods Framework and surveys 400 value-chain actors in Mogadishu and the Shabelle and Hiiraan regions to test how agribusiness performance relates to livelihood outcomes, and whether households' livelihood assets carry part of that relationship. It is relevant to policymakers, development agencies and researchers working on food security and rural development.
The survey covered 400 value-chain actors. Agribusiness performance is strongly linked to livelihood assets (β = .714), the indirect effect through assets is β = .353, and the model explains R² = .682 of the variance in livelihood outcomes.
Article at a Glance
The article is "Enhancing Agribusiness Performance and Livelihood Outcomes in Fragile Contexts: A Case Study of Somalia's Agricultural Value Chains," by Ali Yassin Sheikh Ali (SIMAD University), Mohamed Adan Ali Farow (Skillful Academy) and Zeinab Abdirahman Mohamud (SIMAD University). It was published in Research on World Agricultural Economy, Vol. 6, No. 3, pp. 370–388 (Nan Yang Academy of Sciences; open access, CC BY-NC 4.0), in 2025 (received 13 March; accepted 22 April; published online 16 July). Its research area is agricultural economics, value chains and rural livelihoods, and its study context is Somalia: Afgoye, Balcad, Mogadishu, Jowhar and Beledweyne, with farmers, processors, traders and transporters. The method is a cross-sectional survey (5-point Likert scales) analysed with structural equation modelling and mediation analysis. The DOI is https://doi.org/10.36956/rwae.v6i3.1853.
The Research Problem
Value-chain interventions are widely promoted to raise rural incomes, but in fragile states fragmented markets, poor roads and limited finance can block those gains. The authors note that few studies combine Porter's value-chain lens with the Sustainable Livelihoods Framework, and that the ways in which human, social, natural, physical and financial capital carry agribusiness gains into household welfare have not been examined in detail in settings like Somalia.
Research Objective
The study examines how agribusiness performance relates to livelihood outcomes in Somalia's agricultural value chains. It tests two hypotheses. H1 holds that agribusiness performance has a significant positive effect on livelihood outcomes (income, food security and resilience). H2 holds that livelihood assets — human, social, natural, physical and financial capital — mediate that relationship.
How the Study Was Conducted
A quantitative, cross-sectional survey of 400 people active in farming, processing, logistics and marketing, selected purposively and interviewed in person by enumerators. Agribusiness performance (productivity, profitability, market penetration), livelihood assets (five capitals) and livelihood outcomes (income, food security, employment, resilience) were each measured with multiple Likert items adapted from validated instruments.
The analysis followed six steps. In step 01, Sample, respondents were Afgoye 42% and Balcad 31.8%; 87% were male, 50% had no formal education and 67% were farmers. In step 02, Reliability, Cronbach's alpha was .77–.83 and composite reliability was .87–.90. In step 03, Validity, AVE was .68–.74 and all HTMT ratios were below 0.85. In step 04, Model fit, the indices were χ²/df 1.71, CFI .93, TLI .93, RMSEA .04 and SRMR .06. In step 05, Structural model, direct paths among performance, assets and outcomes were estimated. In step 06, Mediation, the indirect effect of performance on outcomes through assets was tested.
Key Findings
The results come from Tables 5–7 of the article, and all paths have p < .001. R² is .510 for livelihood assets and .682 for livelihood outcomes. The path from agribusiness performance to livelihood assets has β = 0.714 (t = 28.785, 95% CI [0.663, 0.760]). The path from agribusiness performance to livelihood outcomes has β = 0.396 (t = 10.038, 95% CI [0.316, 0.472]). The path from livelihood assets to livelihood outcomes has β = 0.495 (t = 12.795, 95% CI [0.418, 0.571]). The indirect path from performance through assets to outcomes has β = 0.353 (t = 11.894, 95% CI [0.296, 0.413]).
Stronger agribusiness performance goes with better livelihoods. Respondents who rate performance higher also report better income, food security, employment and resilience (β = 0.396), supporting H1.
Performance is closely tied to livelihood assets. The link from performance to the five capitals is the strongest in the model (β = 0.714), and assets in turn relate strongly to outcomes (β = 0.495).
Assets carry close to half of the total effect. The indirect path (0.353) accounts for about 47% of the total effect (0.749). Because the direct effect remains significant, the authors conclude partial mediation, supporting H2.
Reading note: The discussion ranks individual capitals — human and financial capital as key mediators, physical capital with a "moderate" effect — but the model treats the five capitals as one combined construct, so no capital-by-capital estimates are reported. The paper also reports covariance-based fit indices (CFI, TLI, RMSEA) while crediting SmartPLS, and describes 51% of variance as relating to outcomes rather than assets.
What the Study Contributes
The contribution is primarily empirical and conceptual: it applies a combined value-chain and livelihoods framework to survey data from Somalia and shows that livelihood assets carry part of the link between business performance and household welfare. The authors recommend Sharia-compliant microfinance, rural feeder roads and irrigation in high-potential areas such as Lower Shabelle and Hiiraan, stronger extension and market-information services, gender-responsive and youth-focused programmes, and climate-smart practices.
Important Limitations
Identified by the authors: Purposive sampling concentrated in Afgoye and Balcad limits generalisability across Somalia. Self-reported data may carry response bias, and the cross-sectional design limits causal inference. There is also no breakdown by gender, age or livelihood group, and qualitative validation is recommended.
Skilful cautions arising from the study design: All three constructs are perception ratings from the same respondents, so common-method bias may inflate the paths. Performance and outcomes are not measured with objective data such as sales, yields or standard food-security scores. Finally, only 13% of respondents are women, which limits conclusions about gender-inclusive value chains.
Why This Research Matters
Value-chain programmes are a common tool for rural development in Somalia. Evidence that livelihood assets carry a large share of the benefit supports pairing market-focused programmes with investment in skills, networks, infrastructure and finance.
Skilful Research Insight
Editorial commentary — not a finding of the study. Three lessons stand out. First, when a model combines several dimensions into one higher-order construct, claims about which dimension matters most need their own estimates; testing each capital as a separate mediator would sharpen the policy message. Second, match fit statistics to the estimation method: PLS-SEM and covariance-based SEM report different measures. Third, the framework is well suited to follow-up with objective indicators — household income, yields, the Food Consumption Score — and with longitudinal data from the same households.
Read the Original Research
The original article is "Enhancing Agribusiness Performance and Livelihood Outcomes in Fragile Contexts: A Case Study of Somalia's Agricultural Value Chains," published in Research on World Agricultural Economy, 6(3), 370–388 (2025), by Ali Yassin Sheikh Ali, Mohamed Adan Ali Farow and Zeinab Abdirahman Mohamud. Its DOI is https://doi.org/10.36956/rwae.v6i3.1853, and the publisher/journal page is NASS, journals.nasspublishing.com/index.php/rwae (CC BY-NC 4.0). Skilful summarises; all findings belong to the original authors.
SEO Information
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