Minneapolis’ Somali-American Community Can Soon Bypass the Bank to Buy Homes

Said Sheik-Abdi describes himself as “one of the Somali-Americans residing in Minneapolis, Minnesota.” The state has 52,333 people who report Somali ancestry — the largest concentration of Somalis in America — and many live in the Twin Cities.

But since his arrival to Minneapolis 20 years ago, Sheik-Abdi has distinguished himself as a community activist skilled in mobilizing fellow community members. Almost a decade ago, he began collaborating with the American Refugee Committee on ways Minnesota’s Somali-American residents could support their home country. The result was the Neighbors for Nations initiative, which engaged the community in fundraisers including a sambusa cook-off, charity walks and a “1,000 giving $1,000” campaign to raise $1 million.

That work introduced Sheik-Abdi to the power of community funding, and he looked for other ways to apply it within Minneapolis. Since the first immigration wave of Somali-Americans in the 1990s, many had moved into the middle class. But Sheik-Abdi kept hearing about a roadblock: they couldn’t afford to buy a house in the city that had become their second home.

So again Sheik-Abdi mobilized his community to explore the potential of collective wealth. The result is Star Finance, a culturally appropriate, non-predatory mortgage option designed specifically for Somali immigrants and without the need of a bank.

“When I talked to community members, everybody was crying for solutions,” says Sheik-Abdi. “And I think the best way was to cut out the bank … do we really need the bank if we’re collectively investing and collectively creating wealth among all of us?”

This collective investment solution emerged from a twofold challenge. For one, there is fierce competition among Minneapolis residents to buy starter homes. According to a report by MinnPost, the city is experiencing a combination of rising home prices, high demand, low inventory and high costs of building new properties.

For Muslim home-buyers in the Somali-American community, there’s yet another hurdle. Koranic law forbids paying and receiving interest — known as “riba” in Arabic — so if practicing Muslims want to buy homes, they can’t go the traditional bank route.