ECONOMIC DEVELOPMENT AND EMPLOYMENT GENERATION IN THE PRIVATE SECTOR IN MOGADISHU, SOMALIA BY ISSE FARAH HASSAN MDS/39710/131/DF A THESIS REPORT SUBMITTED TO THE COLLEGE OF RESEARCH AND ifiGIIER DEGREES IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF MASTERS IN DEVELOPMENT STUDIES OF KAMPALA INTERNATIONAL UNIVERSITY MAY, 2015 DECLARATION I, Isse Farah Hassan, declare that this thesis report is my original work and has not been presented for a Degree or any other academic award in any university or institution of learning. Signed Date APPROVAL I confirm that the work in this thesis report was done by the candidate under my supervision. ___________ D—O 1 ~ Dr. Otanga R~Je Dat~ DEDICATION I dedicate this piece of work to my brother, Mohamed, my sisters, Ayan and Nasteho, my beloved wife, Ms. Samira, my son, Abdisamad, and my daughter, Hanan. iv ACKNOWLEDGEMENTS My sincere gratitude is accorded to the Almighty God for the gift of life that He gave me throughout my studies. I am deeply indebted to my research supervisor, Dr. Otanga Rusoke for his patience with my inadequacies as he guided me through the research. Without his parental and professional input, this research would have been difficult to elevate to its current level. Furthermore, i acknowledge with gratitude the contributions and co-operation made by the respondents from the selected private institutions for their willingness to provide the necessary information when i visited their offices during the research process. Without their cooperation, this study would have been impossible to accomplish. I also acknowledge the authors whose works have been referenced in this study. I would like to deeply thank all my lecturers at the College of Higher Degrees and Research. They adequately guided and equipped me with both theoretical and practical skills. I would also like to acknowledge the contribution of my colleagues from whom i enjoyed fruitful discussions on challenging topics. Last but not least, I acknowledge the contributions of my parents, siblings, relatives and friends for their emotional and financial support during the course of my studies. V LIST OF ACRONYMS EU European Union GDI Gender Related Index GDP Gross Domestic Product HEI Higher Education Institute SPSS Statistical Package for Social Scientists TFG Transitional Federal Government UN United Nations UNDP United Nations Development Programme US United States vi TABLE OF CONTENT DECLARATION APPROVAL DEDICATION iv ACKNOWLEDGEMENTS v LIST OF ACRONYMS vi LIST OF TABLES xi LIST OF FIGURES xii ABSTRACT CHAPTER ONE 1 INTRODUCTION 1 1.1 Background of the Study 1.1.1 Historical Background 1 1.1.2 Theoretical Perspective 3 1.1.3 Conceptual Perspective 4 1.1.4 Contextual Perspective 4 1.2 Problem Statement 5 1.3 Purpose of the Study 6 1.4 Research Objectives 6 1.5 Research Questions 6 1.6 Hypothesis 6 1.7 Scope of the Study 7 1.7.1 Geographical Scope 7 1.7.2 Theoretical Scope 7 1.7.3 Content Scope 7 1.7.4 Time Scope 7 1.8. Significance of the study 7 1.9 Operational Definition of Key Terms 8 VI I CHAPTER TWO .9 LITERATURE REVIEW 9 2.0 Introduction 9 2.1 Theoretical Review 9 2.2 Conceptual Framework 11 2.3 Review of Related Literature 12 2.3.1 Economic Development 12 2.3.1.1 The Transport Sector 12 2.3.1.2 The Telecommunication Sector 15 2.3.1.3 The Education Sector 17 2.3.2 Employment Generation 18 2.3.2.1 Recruitment of Workers 20 2.3.2.2 Development of New Businesses 21 2.3.2.3 Increase in Income 22 2.4 Related Studies 22 2.5 Gaps of Research 24 CHAPTER THREE 25 METHODOLOGY 25 3.0 Introduction 25 3.1 Research Design 25 3.2 Study Area 25 3.3 Research Population 25 3.3 Sample Size 26 3.4 Sampling Procedure 26 3.5 Data Collection Methods 27 3.5.1 Questionnaires 27 3.5.2 Interview Guides 27 3.5.3 Document Review 27 3.6 Validity and Reliability 27 3.6.1 Validity 27 VIII 3.6.2 Re1iabi~ity ~ 28 3.7 Data Collection Procedures 29 3.8 Data Analysis 29 3.9 Ethical Considerations 30 3.10 Limitation of the Study 30 CHAPTER FOUR 32 DATA PRESENTATION AND ANALYSIS OF RESULTS 32 4.0 Introduction 32 4.1 Demographic Characteristics of Respondents 32 4.2 The Nature of Economic Development in the Private Sector in Mogadishu, Somalia.. 34 4.3 Employment Generation within the Private Sector of Mogadishu, Somalia 38 4.4 The Relationship Between Economic Development and Employment Generation in the Private Sector in Mogadishu, Somalia 42 CHAPTER FIVE 45 DISCUSSION OF FINDINGS, CONCLUSION AND RECOMMENDATIONS 45 5.0 Introduction 45 5.1 Discussion of the Findings 45 5.1.1 Economic Development within the Private Sector of Mogadishu, Somalia 45 5.1.2 Employment Generation within the Private Sector of Mogadishu, Somalia 46 5.1.3 The Relationship Between Economic Development and Employment Generation in Mogadishu, Somalia 46 5.2 Conclusion 47 5.3 Recommendations 48 5.3.1 The Nature of Economic Development in Mogadishu, Somalia 48 5.3.2 The Level of Employment Generation in Mogadishu, Somalia 48 5.4 Areas for Further Studies 49 APPENDICES 54 APPENDIX I: TRANSMITTAL LETTER FOR THE RESPONDENTS 54 APPENDIX II: INFORMED CONSENT ss APPENDIX III: RESEARCH INSTRUMENTS 56 ix APPENDIX III A: QUESTIONNAIRES .56 APPENDIX III B: INTERVIEW GUIDE 61 APPENDIX IV: STUDY BUDGET 62 APPENDIX V: STUDY TIME FRAME 63 APPENDIX VI: SAMPLE SIZE TABLE 64 x LIST OF TABLES Table Page 3.1 Target Population and Determination of Sample Size. 25 3.2 Cronbach’s Results. 27 4.1 Demographic Characteristics of the Respondents. 30 4.2 The Nature of Economic Development in the Private Sector in 32 Mogadishu, Somalia. 4.3 Employment Generation within the Private Sector of 37 Mogadishu, Somalia. 4.4 The Relationship Between Economic Development and 40 Employment Generation in the Private Sector In Mogadishu, Somalia. 4.5 Regression Model 1. 41 4.6 Regression Model 2. 41 xi LIST OF FIGURES Figure Page 1.1 Conceptual framework 11 XII ABSTRACT This study investigated on economic development and employment generation in the private sector in Mogadishu, Somalia. This study was guided by the following objectives: i) to determine the nature of economic development in the private sector in Mogadishu, Somalia; ii) to find out the level of employment generation within the private sector in Mogadishu, Somalia; and to establish the relationship between economic development and employment generation in the private sector in Mogadishu, Somalia. The study employed a cross-sectional survey design. A sample population of 140 respondents was determined using Krejcie and Morgan (1970) table from a target population of 240 respondents. Closed ended researched devised questionnaires was used as a data collection tool. The collected data was analyzed using Pearson correlation coefficiency to determine the relationship between economic development and employment generation.The study findings revealed a high level of economic development and employment generation in the private sector. This is the reason there was a significant correlation between economic development and employment generation. The study recommended that there is need for the government to design policies that favor the participation of the private sector in promoting government programmes such as building modern road networks and • improvement of communication with Somalia and that there is need for the private sector to increase the level of employee training through seminars, workshops, conferences, in services etc so as to create the necessary skills expected of employees for better work • quality and general organizational performance. XI I CHAPTER ONE INTRODUCTION Li Background of the Study 1.1.1 Historical Background Economic development originated in the post war period of reconstruction initiated by the US. in 1949, during his inaugural speech, President Harry Truman identified the development of undeveloped areas as a priority for the west: “More than half the people of the world are living in conditions approaching misery. Their food is inadequate, they are victims of disease. Their economic life is primitive and stagnant. Their poverty is a handicap and a threat both to them and to more prosperous areas. For the first time in history humanity possesses the knowledge and the skill to relieve the suffering of these people ... I believe that we should make available to peace-loving peoples the benefits of our store of technical knowledge in order to help them realize their aspirations for a better life... What we envisage is a program of development based on the concepts of democratic fair dealing ... Greater production is the key to prosperity and peace. And the key to greater production is a wider and more vigorous application of modem scientific and technical knowledge (Vásquez, 2008, p. 120).” In economics, the study of economic development was borne out of an extension to traditional economics that focused entirely on national product, or the aggregate output of goods and services. Economic development was concerned in the expansion of people’s entitlements and their corresponding capabilities, morbidity, nourishment, literacy, education, and other socio-economic indicators (Todaro and Smith, 2011). Borne out of the backdrop of Keynesian, advocating government intervention, and neoclassical economics, stressing reduced intervention, with rise of high-growth countries (Singapore, South Korea, Hong Kong) and planned governments (Argentina, Chile, Sudan, Uganda), economic development, more generally development economics, emerged amidst these mid-2Oth century theoretical interpretations of how economies prosper (Sen, 2012). Also, economist Albert 0. Hirschman, a major contributor to development economics, asserted 1 that economic development grew to concentrate on the poor regions of the world, primarily in Africa, Asia and Latin America yet on the outpouring of fundamental ideas and models (Hirschman, 2011).