Community Dividend

Little Mogadishu in the All-America City? Somali entrepreneurship in Willmar, Minnesota

Somali immigrants encounter acceptance and some challenges as they establish businesses in a small city in central Minnesota.

Nima Hassan | Community Development Intern

Published October 1, 2011  | October 2011 issue

Community Dividend Extra

Willmar - All American City Sign

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Minnesota State Demographer Tom Gillaspy has said that if you want to know what Minnesota will look like in 2020, look at Willmar.1/ And Willmar is an interesting picture indeed. In 20 short years, the minority population of this small city in central Minnesota has risen from 2–3 percent to more than 25 percent.2/ Today, it is estimated that out of a total population of nearly 20,000, there are approximately 5,000 Latinos and 1,500 Somalis in Willmar, though many in the latter immigrant community believe their numbers to be higher.

How did such change come about in the town that has been named an "All-America City"?3/ The answer is, of course, immigration. Many people who came to the U.S. seeking employment or political asylum have come to the Willmar area in search of jobs. Latinos have had a presence in Willmar since at least the 1920s, when they left homes in southern states for summer agricultural work in the Upper Midwest. When the economic slowdown of the 1970s led to mass layoffs, many Latino migrant workers decided to stay in the state permanently. After Hormel acquired the locally based turkey-processing company Jennie-O in 1986, demand for factory workers rose sharply in the meatpacking industry in town. This led to further immigration to Minnesota by Latinos.

In the 1990s, civil war in Somalia forced hundreds of thousands to flee across international borders, ultimately leading many to become refugees and asylum seekers in countries such as the United States. Resettlement agencies in the U.S. that were searching for communities with employment opportunities for individuals who had little formal education and limited English proficiency identified Willmar as such a community. And so, Somalis joined earlier immigrant groups in working in Willmar's turkey-processing plants.

According to Les Heitke, former mayor of Willmar, approximately 500 Somalis are currently employed at the Hormel-owned turkey-processing plant, now known as the Jennie-O Turkey Store. Coincidentally, the founder of Jennie-O—Earl B. Olson—had an immigrant background himself, being the son of Swedish émigrés. Thus, as Heitke points out, the current influx of Somali and Latino immigrants into Willmar is by no means an unprecedented trend. Rather, it can be understood as a continuation of the city's long history of immigration. According to Heitke, the area started out as a service center for passing trains and was settled by immigrants working on the railroad. As time passed, businesses sprang up and the community grew. He says that this colorful history is evident in Willmar's annual cultural fair, an event boasting representation by more than 40 nationalities. At the fair—as in the city—Somalis are only the most recent addition.

Acceptance, yes, but also challenges

Reportedly, Willmar initially struggled to adjust to its relatively new status as a destination for minority populations—particularly 20 years ago with the Latino community. According to Ken Warner, president of the Willmar Lakes Area Chamber of Commerce, "With the first wave of the Latino community, we struggled. But we've learned from it and done better. [The Somalis] are acclimating well and have the acceptance of the community." As a result of lessons learned during the city's prior experience with the settlement of Latino immigrants, various public institutions in the town have been better prepared to accommodate the current wave of Somali migration.

One such lesson is evident in Willmar's public schools, says Candy Anderson, a retired teacher in the district and a volunteer adult education instructor.

"Before, there was this notion that we have our established ways of doing things, and that you [the immigrant community] are the ones that have to adapt. Now the schools have become much more considerate of the various cultural backgrounds of their students and how that impacts student learning."

Although Willmar's adjustment to the arrival of Somalis has been smoother than it was with the Latino community in the past, the city's newest residents still face several challenges. One significant barrier is the lack of affordable housing in the area. According to Heartland Community Action Agency, a nonprofit organization that works to address the causes and conditions of poverty in a four-county area in central Minnesota, there are few rental properties in Willmar, and the few that are available are as expensive as those in the Twin Cities of Minneapolis and St. Paul. Reportedly, the majority of Willmar's Somali population resides in housing in the downtown area, quite separated from the city's European-American residents.

"There's definitely a division, and a lack of communication between the two [populations]. And that's a shame," says Anderson. Although the city's school system—particularly its athletics program—is a significant source of integration, the division between Willmar's long-time resident and recent immigrant communities extends to many areas of life—including business.

Expanding outside the Somali market

While the primary market of most businesses owned by Somalis in Willmar is the Somali community itself, some entrepreneurs are eager to expand their customer bases to include the city's non-Somali population. Safia Ahmed, who was a small business owner for 17 years in Nairobi, Kenya, prior to coming to the United States, is one such entrepreneur. Ahmed now owns a women's clothing store in downtown Willmar and sells almost exclusively to other Somali women. She observes that because of the economic slowdown, many customers have begun to ask to make purchases using credit lines. Finding it difficult to accommodate such requests and continue to sustain her business, she hopes to expand her client base beyond the Somali community. However, this may prove difficult.

According to Shirley Bugbee, a volunteer English language instructor at the Willmar Women and Family Center, many long-time residents of the city feel uneasy visiting the area where the Somali community has concentrated itself. "Unfortunately, many people do their shopping at the Walmart or the Kmart or the other little strip malls and don't even come downtown," Bugbee says. She and Anderson suggest that Somali entrepreneurs open businesses in the strip malls that lie outside of Willmar's downtown area, as such spaces are closer to the mainstream businesses frequented by the city's European-American community. The idea is that such a change in location would make non-Somali Willmar residents feel more comfortable entering Somali stores, thus increasing the likelihood that immigrant shop owners will be able to expand their clientele. When asked about this possibility, Ahmed responds with reservations, explaining that just as many white residents of Willmar may feel uncomfortable with the prospect of being surrounded by a sea of unfamiliar faces, so do many Somalis in the town.

Brian Gazelka, a long-time Willmar resident and frequent customer of Bihi's General Store, a Somali grocery shop, feels that one solution to the comfort problem lies in increased communication between the European-American and Somali populations of Willmar, as well as an acknowledgement of the unique contribution Somalis can make to the Willmar community. Gazelka illustrates his latter point with the item he purchases from Bihi's shop most frequently: tea. According to Gazelka, prior to the arrival of Somalis in Willmar it was impossible to find quality tea locally. Upon the recommendation of a friend from Oman, he visited Bihi's shop in search of the product.

Bihi's General Store

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"Part of the beauty of it—and the benefit to Willmar—is the unique flavor that they [the stores] have," Gazelka says. He adds, "I do think one thing that would help in serving to integrate people and overcome some uncertainty would be learning each other's languages." Gazelka is currently learning Somali to facilitate his cultural bridge-building efforts.

In addition to being a critical factor in the ability of Somali entrepreneurs to expand their markets, the language barrier hinders their access to business development resources. The U.S. Small Business Administration has a Small Business Development Center (SBDC) in Willmar, but anecdotal evidence suggests that few Somalis are utilizing it, and language is a likely factor. Just as the language barrier makes it difficult for business development organizations to disseminate information about their services to immigrant entrepreneurs, it makes it difficult for Somalis to communicate details about the services they most need from SBDCs. This is one reason why many in Willmar are particularly excited about the recent opening of a Willmar office of the African Development Center of Minnesota (ADC), a Minneapolis-based nonprofit organization that provides microloans, business development services, and financial education within the state's African community. Ken Warner notes that ADC has developed a business survey that it will be taking door-to-door in Willmar. According to Warner, the survey will "give us an idea of what their [the Somali community's] needs are, so our programs will be what they need, rather than merely what we want."

African Groceries

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Lending alternatives

Not only is the ADC able to help chambers of commerce and other relevant organizations determine the needs of the Somali community, it is also well-positioned to provide financial literacy training in the Somali language. And there is a great need for such educational opportunities in the Somali community. According to Mohamed Bihi, owner of Bihi's General Store and Bihi Restaurant, few people in the Somali community access financing from commercial banks for their businesses. He reports that many feel uncomfortable with the very idea of doing so, largely because of the association between formal banking and interest. Many Muslims avoid interest, or riba, in observance of Islamic law.4/ "Unless people know that a Sheikh [a scholar of Islamic jurisprudence] has made assurances that a loan is riba-free, they won't take it," says Bihi. This suggests a need for alternative forms of financing. However, many Somali immigrants may be ineligible for alternative loans because they lack an established credit history.

A number of Somalis avoid formal lending agencies altogether because, given the possibility of business failure, they fear the consequences of defaulting on an official loan. Instead, many Somali entrepreneurs use savings to finance their businesses. Others borrow money from family members or take part in a collaborative financing scheme called atooyo or hagbad. In hagbad arrangements, numerous people make modest contributions to a loan fund. Contributors then take turns withdrawing small portions from that common pool. In the event of an emergency, one member may even make an appeal to take another member's turn. In such cases, contributors collectively decide whether to accept or decline the request. Because no interest is being paid while an applicant waits for his or her turn to partake of the pool, some Somali immigrants find it a more attractive option than formal lending. However, others are quite skeptical of the merit of the financing method.

"I don't enter into hagbad because you run the risk of someone running off with the money. If they do, what recourse do you have? Unfortunately, I've seen that happen before," says Bihi.

Making banking comfortable

It is also possible that formal lending is not as inflexible an arrangement as many Somalis might assume. According to Shane Johnson of Bremer Bank, which has a branch in downtown Willmar,

"People might make that kind of assumption—that there won't be flexible payment terms. But just sitting down with us to talk through options does help. If someone comes to us and tells us about a bona fide hardship, we're open to working with them. We understand that there are a lot of what-ifs. What if somebody buys a house and loses his or her job? If something happens, call the bank, and maybe we can come up with a modified payment plan. We're open to doing those things as long as the communication is there and it makes sense."

The primary obstacle, then, may be the unease that many Somalis feel with the notion of dealing with formal financial institutions. Johnson recognizes this, stating, "I think that the biggest challenge in serving the Somali community is that many people just aren't comfortable with banks yet."

Given this challenge, it is unsurprising that Bremer Bank has identified community outreach and financial education as its primary objectives in serving what it calls Willmar's "emerging markets." Since 2008, Bremer Bank has hosted a number of community events called "Better Together" that have been attended by more than 200 diverse residents of the Willmar community. The events have featured "food, games, and conversation," according to Lois Schmidt, a nonprofit resource specialist at the Otto Bremer Foundation. Schmidt says the events are organized with the aim of "engaging new immigrant community members with bank staff and finding ways to enhance the cross-cultural experience. To connect with people whether they choose to bank with us or not and really help them feel welcome." The institution's efforts to make all clients, including Somali immigrants, "feel welcome" extend to the interactions that take place between community members and staff as a part of everyday banking.

"We're excited when we see people walking in through the doors, no matter who they are," says Johnson. "We emphasize that we want anyone to feel comfortable banking with us. Many times, I've seen Somali folks come in, sit down with a personal banker, and get an account opened. And those are the kinds of things we want to see."

According to Johnson and Schmidt, Bremer Bank expressly trains its employees to be approachable and curious about the community in which they work. "Building curiosity in our staff is crucial. We tell our employees that it's a virtue to be curious—to see what new immigrant community members desire in a bank. And that's how we get new customers," says Schmidt, who also mentions a recent staff development day in which Bremer Bank opened its doors to ADC in hopes of better understanding how to serve the East African community.

Bremer has also partnered with the ADC to provide financial education. On July 26, 2011, Bremer Bank and ADC partnered to host a financial literacy event at the Willmar Women and Family Center. The free workshop instructed attendees on matters of savings, budgets, and credit ratings. According to Lul Yusuf, the center's executive director, many participants were surprised to learn that by paying the entirety of the balance at the end of the month, they could use credit cards without incurring interest charges. This is a payment method employed by community leader Mohamed Bihi, who—though generally wary of obtaining financing from external sources—encourages community members to use credit cards responsibly to meet expenses. He also identifies good record-keeping as an essential skill in which many Somali entrepreneurs in the area need further training.

"When you open your store in the morning, you need cash in the register to give change to customers. And every time you close, you need to make sure that you keep a record of your cash flows, whatever happens. That would be the biggest need in terms of financial literacy," Bihi says.

Financial literacy workshops, like those hosted by the Willmar Women and Family Center, further the goals of all involved by helping immigrants in non-metro areas like Willmar grow more comfortable with formal financial systems and processes. These educational approaches help immigrant entrepreneurs, families, and individuals adopt habits that promote economic success, partly by teaching community members how to use existing financial products to meet their needs. An example of the latter is Bremer Bank's "global banking package," which includes prepaid credit cards, specialized retail accounts, and Western Union wire transfers. According to Lois Schmidt, a theme that recurred in workshops was the concern immigrants had about overdrawing from their accounts. The use of prepaid cards appeals to many immigrant customers because it eliminates the possibility of overdrafts. Another service particularly well-suited to the Somali community is a retail account that features rewards instead of interest dividends, thus addressing the community's concern with riba. As many Somalis in the United States send remittances to family members living abroad, a Western Union wire transfer service located in the bank's offices is thought to be highly convenient.

Finally, Bremer has also done significant work with first-time home buyers. Such programs are particularly needed in Willmar because of the area's dearth of affordable rental properties. And while Roger Madison, the executive who oversees Bremer Bank's efforts to meet the needs of Willmar's emerging markets, states that the bank does not operate an official microloan program, he explains that Bremer provides loans of all sizes to its customers. Johnson elaborates on the point, reporting that the bank enforces no minimum loan size. "We really try to put any client of ours into a product that fits their needs. We like to sit down with folks, let them know what their options are upfront, and work with them as individuals," he says. By allowing the Somali community to start small and build credit, Bremer's products are helping immigrant customers become eligible for the larger loan amounts that they will need to start or expand their businesses.

Investing in the new face of Minnesota

One question remains: Why are institutions like Bremer Bank willing to embark on costly community outreach and financial literacy initiatives? The answer lies in the perspective introduced above—the notion that immigrants are the new face of Minnesota. Schmidt assents, saying, "In rural Minnesota, it is clear that these folks are our future, and we want to be knowledgeable—to be even more than accepting. We want to be secure in our ability to change, grow, and develop new products and banking services that meet the needs of all of our markets." And the increasing importance of emerging markets is clear by any measure. For example, the ADC has reported that the buying power of Africans in Minnesota is approaching $1 billion.5/ Viewed in such a light, immigrant communities can be characterized as an increasingly powerful economic engine in the region, rather than a drain on public resources. Thus, making the conscious decision to serve them better is not merely altruistic; it is a smart investment that may yield great returns in the future.

Photos by Nima Hassan

Nima Hassan served as a Community Development intern at the Federal Reserve Bank of Minneapolis in the summer of 2011. She is pursuing a degree in psychology at Harvard University.

1/ Christine Hierlmaier Nelson, "Imagine Nation," Initiative Quarterly, Initiative Foundation, Summer 2007.

2/ Ibid.

3/ Willmar received the "All-America City" designation from the National Civic League in 2005 for outstanding civic accomplishments. For more on the All-America City program, visit

4/ For more on this, see "Alternative financing: Issues and opportunities for lenders and interest-averse populations," Community Dividend, Issue No. 1, 2002, and "New Markets Mortgage program broadens homeownership opportunities in Minnesota," Community Dividend, Issue 3, 2009.

5/ Hussein Samatar, "Banking with Minnesota's African Community: A Growing Market," Minnesota Bankers Association News, February 2009.