TELECOMMUNICATION COMPANIES AND SOCIO-ECONOMIC DEVELOPMENT IN

PUNTLAND STATE OF SOMALIA: CASE STUDY - GOLIS

TELECOMMUNICATION COMPANY

BY

KHALID ABDULKADIR JAMA

BEC/37301/122/DF

A RESEARCH REPORT SUBMITTED TO THE FACULTY OF ECONOMICS AND

APPLIED STATISTICS IN PARTIAL FULFILMENT FOR THE

REQUIREMENTS OF THE AWARD OF BACHELOR’S

DEGREE IN ECONOMICS OF KAMPALA

INTERNATIONAL UNIVERSITY

SEPTEMBER, 2015

DECLARATION

I Khal~d Abdulkadir Jama declare that this report on the “Telecommunication

Companies and Socio-Economic Development in Puntland State of Somalia” is

entirely my own effort and has never been submitted to any other academic

institution for any form of award.

Name: KHALID ABDULKADIR JAMA

BEC/1001O/81/DF

Date~

APPROVAL

This report on the “Telecommunication Companies and Socio-Economic

Development in Puntland State of Somalia” has been supervised by me and is

due for submission.

Supervisor: MADAM SAUDA NAKIBUULE

Signature: Date:.~1 ~

DEDICATION

I dedicate this piece of work, to my beloved parents Mrs Amina Yusuf Mohamed

and Mr Abdulkadir Jama Osman for their wonderful contribution in my academic

career.

111

ACKNOWLEDGEMENT

I owe my gratitude to all those who financially, academically and psychologically

contributed in the carrying out this research. My special gratitude goes to my

supervisor MADAM SAUDA NAKIBUULE who tirelessly corrected and guided me,

thanks for the good criticisms, patience and understanding. Special appreciation

goes to all the lecturers who imparted professionalism into this work. Thanks a

great deal.

I can not fail to acknowledge my dear parents My mum Amina Yusuf Mohamed.

And my dad Abdulkadir Jama Osman for their prayers and great contribution in

my academic career, I would like to thank the staff of Golis telecommunication

company and special thanks go to the chairman of Executive director who was

co-operative and provided me with all the necessary information and also

allowing me to access to their report files, Not forgetting my uncles Prof

Mohamud Yusuf Mohamed.

Special thanks owed to my dear friends Mr Abdikhadar Ahmed Yusuf, Ahmed

Mr Mohamud Said Hassan, And Also Mr Abdirisak Mohamud Hersi my young

brother Abdalla Abdulkadir Jama and my all class mates for their moral, spiritual

and academic support during my stay at the University. It was nice studying

together.

Finally, I greatly appreciate all my respondents for their great contribution

towards the accomplishment of this work, without which I would have managed

through.

May God Reward you abundantly.

iv

TABLE OF CONTENTS

DECLARATION.

APPROVAL ii

DEDICATION Iii

ACKNOWLEDGEMENT iv

TABLE OF CONTENTS V

LIST OF TABLES AND FIGURES \,,iii

LIST OF ACRONYMS ix

ABSTRACT

CHAPTER ONE:INTRODUCTION1.0 Introduction I

1.1 Background of the study

1.2 Statement of the Problem 3

1.3 Purpose of the Study 4

1.4 Specific objectives 4

1.5 Research question 4

1.6 ScopeoftheStudy 4

1.7 Significance of the study 5

CHAPTER TWO: LITERATURE REVIEW 62.0 Introduction 6

2.1 Theoretical Framework 6

2.1.1 Adam Smith’s Theory of Social Economic Development 6

2.1.2 DAVID RICARDO’S THEORY OF ECONOMIC DEVELOPMENT C)

2.1.3 Keynesian Theory of Social Economic Development 3

2.3 Revie of Related Literature 15

2.4 Telecommunication and improvement of standard of living 1 8

2.5 Telecommunication companies and employment creation 9

2. 6 Telecommunication on Health and Education 20

V

CHAPTERTHREE: METHODOLOGY .233.0 Introduction 23

3.1 Research design 23

3.2 Research area 23

3.3 Research population 24

3.4 Sample and Sampling Technique 24

3,5 Data Collection Methods 25

3.5.1 Documentary review 25

3.5.2 Questionnaires 25

3.5.3 Interviews 26

3.7 Data Analysis 27

3.8 Limitations of the Study 27

3.9 Ethical Consideration 27

CHAPTER FOUR:PRESENTATIONS, ANALYSIS AND DISCUSSIONS OF

THE FINDINGS 29

4.0 Introduction 29

4.1 Demographic Distribution of the Respondents 29

4.1.1 Distribution of the Respondents by Gender 29

~l.1.2 Distribution of the Respondents by Years of Linkage

4.1.3 Educational Level of the Respondents I

4.2 Telecommunication in Improving Standard of Living

4.3 The Role Telecommunication in Creating Job Opportunities

4.4 Telecommunication in Improving Health and Education 40

CHAPTER FIVE 44SUMMARY, CONCLUSIONS AND RECOMMENDATIONS 445.0 Introduction 44

5.1 Summary of the Findings 44

5.1.1 Telecommunication in Improving Standard of Living 44

5.1.2 The Role of Telecommunication in Creating Employment 45

\Ii

5.1.3 Telecommunication in Improving Health and Education .45

5.2 Conclusion 46

5.2.1 Telecommunication in Improving Standard of Living 46

5.2.2 Telecommunication Companies in the Creation of Jobs 46

5.2.3 Telecommunication in Improving Health and Education 46

5.3 Recommendations 47

5.4 Recommendations for Future Research 40

REFERENCES 50

APPENDICES 52

APPENDIX A: Questionnaire for Employees

APPENDIX B: Questionnaire for Clients

APPENDIX D: Interview Guide for Departmental Heads 61

vii

LIST OF TABLES AND FIGURES

List of Figures

Figure 2: Gender Distribution of the Respondents

Figure 3: Age Distribution of the Respondents

Figure 4: Distribution of Respondents by Education Level

List of Tables

Table 1: Gender Distribution of the Respondents 2~)

Table 2: No of Years of Linked to Telecommunication Company 30

Table 3: Distribution of the Respondents by Educational level ~ I

Table 4: Role of Telecommunication in Improving Standard of Living

Table 5: Telecommunication Company in Creation of Job Opportunities

Table 6: Telecommunication Companies in Improving Health and Education 40

viii

LIST OF ACRONYMS

CEO Chief Executive Officer

CSR Corporate Social Responsibility

GDP Gross Domestic Product

ICT Information Communication Technology

KIU Kampala International University

NGOs Non Government Organizations

PIDAM Puntland institute and development administration

STA Somali Telecom Association

UN United Nations

UNACTAD

UNDP United Nations Development Programmed

UNHCR United Nation high commissioner refugeeO

UNICEF United Nations s

ix

ABSTRACT

The study on the “Telecommunication Companies and Socio-Economic

Development” was carried out in Puntland State of Somalia, with specifc aims

of; examining the role of telecommunication company; in improving people’s

standard of living; creation of employment and in improvement of health and

education. A review of related literature was carried out on already existing

information on the specific aims of this study as a way of comprehending the

problem as well as enriching and supplementing the study findings. This was

through quantitative and qualitative research designs under which questionnaires

and interviews were administered to a sample of 40 respondents who were both

randomly and purposively selected.

It was established that, the telecommunication company has improved people’s

standards of living through; improving their business performances, getting

people closer to each other irrespective of distance, promoting enhancement of

research, improving market opportunities, creation of awareness, improved on

the use and application of science and improving the people’s ability to save. In

addition to this the telecommunication company has created jobs such as;

recruiting on merit, building capacities of the young people, direct and indirect

job creation and developing ICT while in the health and education sectors, the

company has paved way for; Corporate social responsibility; enabled on-line

courses; provided scholarships construction of schools and health centers,

donated computers as well as rehabilitated children. The study concluded that,

although the company has created employment avenues, it should avoid

duplication of roles and focus on economically sustaining jobs. In addition to this,

beside playing a corporate social responsibility role companies should take

initiative to raise awareness on the possible shortfalls of the systems and on top

of this, should develop a policy of raising awareness on crime detection to its

users.

x

The study recommends; opening more lines for telecommunication for wider

outreach; projects should be inclusive in nature; develop an implementation base

linked to local problems; demonstrate how telecommunication can transform the

education and health sectors; devise means to protect users against hackers;

Advising telecommunication users on possible shortfalls that may erupt; Conduct

facilitation and research for profile building; diversification of projects; identifying

rivals; need for company to know about the size of its potential market;

implementation of a guided participatory action research

xi

CHAPTER ONE

INTRODUCTION

10 Introduction

This chapter covers the background of the study, statement of the problem,

objectives, research questions, scope and study, significance of the study.

1.1 Background of the study

Somalia is one of the world’s poorest and least developed countries, Somalia has

few resources. Furthermore, much of the economy has been devastated by the

civil war. Somalia’s economic development has been mixed. Somalia continues to

be in a delicate state due to several civil war outbreaks and floods, which have

left thousands of people homeless (CIA fact book, 2005).

Relative poverty is the condition of having fewer resources or less income than

others within a society or country, or compared to worldwide averages. About

1.7 billion people live in below absolute poverty (CIA fact book, 2005).

The formal economy has largely ceased to function. Much o~ the informal

economy is based upon livestock, market stalls, and remittances which enter the

country through unofficial sources as the banking system is not well developed.

The modest industrial sector, which was concentrated in food processing, has

been severely undermined by the lack of spare parts and looting. Many of the

markets are filled with smuggled goods (UNDP, 2007).

Agriculture is the most important sector, with livestock accounting for about 4O%

of GDP and about 65% of export earnings. Nomads and semi-nomads, who are

dependent upon livestock for their livelihood, make up a large portion of the

population. After livestock, bananas are the principal export; sugar, sorghum,

maize, and fish are products for the domestic market. The small industrial sector,

based on the processing of agricultural products, accounts for lO% of GDP; most

facilities have been shut down because of the civil strife. There is no reliable up

to date accurate data on unemployment nor for that matter they is reliable data

for any of the major economic indicators. The unemployment rate has been

estimated at 66% for urban areas and 41% for rural areas (UNCTAD, 2009).

The main problem affecting social economic development is the lack of economic

progress. Socio-economic development is the process of human change and

development in a society. It’s measured with indicators, such as income, life

expectancy, literacy and levels of employment. Changes in less-tangible factors

are also considered, such as personal dignity, freedom of association, personal

safety and freedom from fear of physical harm, and the extent of participation in

civil society (Todaro, 1994).

In this study, Social economic development is the increase in the standard of

living in a nation’s population with sustained growth from a simple, low-income

economy to a modern, high-income economy also, if the local quality of life could

be improved, economic development would be enhanced. Its scope included the

process and policies by which a nation improves the economic, political, and

social well-being of its people.

Golis telecom is the largest telecom operator in Puntland state of Somali, this is

effort at creating a cashless free society received a major boost from Golis, with

the introduction of a new service called Sahal Mobile Money. According to the

CEO of Golis, Adam sheikhdom the product will greatly facilitate payment across

the country it also Contributed from Golis Telecom that have assisted in the

implementation of many projects including construction of roads, airport

terminals, schools, health facilities sanitation and environmental projects and Job

opportunities offering direct and indirect to the communities has generated

income for over six thousand individuals. Many of those affected by such

initiatives are Golis telecom employees who developed boldness to raise big

families. Others include people who curve out satisfactory livelihoods from the

services that Golis provides. People from different walks of life including

telephone booth operators, airtime agents and many others earn their livelihood

from opportunities rendered to the public by the company hence leads economic

development in the country ( Golis report ,2009).

Telecommunication is the exchange of information over significant distances by

electronic means. Single telecommunications circuit consists of two stations, each

equipped with a transmitter and receiver. The transmitter and receiver at any

station may be combined into a single device called a transceiver. The medium

of signal transmission can be electrical wire or cable (also known as ~‘copper”),

optical fiber or electronic field. The free~space transmission and reception of data

by means of electromagnetic fields is called wireless, (Fuchs, 1997).

1.2 Statement of the Problem

It has been recognized that social economic development has been very low in

Puntland state of Somalia for the last two decades due to the lack of functional

government; the country has experienced civil war and political imbalance which

has caused many people to flee from their homes and later become refugees

The region is facing higher rate of unemployment, poor state of infrastructure,

Low level of financial institution development, low wages, Low level of saving

etc. Therefore, if these persist and continue may cause economic collapse and

break up socio-economic conditions, this low level of socio-economic

development is attributed to factors including, political stability, macroeconomic

policies, level of investment, etc. This study examined the role played by Golis

companies towards social economic development in Puntland state of Somalia.

(UNHCR, 1996).

3

1.3 Purpose of the Study

The purpose of the study was to examine the role of Golis telecommunication

Company in social economic development in Puntland Somalia.

1.4 Specific objectives

i) To examine the role of Golis Telecommunication Company in improving

people’s standard of living in Puntland.

ii) To establish the role of Golis Telecommunication Company in employment

creation in Puntland state of Somalia.

iii) To investigate the role of Golis Telecommunication Company in education

and health improvement in Puntland state of Somalia.

1.5 Research question

What is the role of Golis telecommunication Company in improving

people’s standard of living in Puntland state of Somalia?

ii. What is the role of Golis Telecommunication Company in employment

creation in Puntland state of Somali?

iii. What is the role of Golis Telecommunication Company in education and

health improvement in Puntland state of Somalia?

1.6 Scope of the Study

The study was restricted to Golis telecommunications in Puntland state of

Somalia. Golis telecom has its head office in Basaso, the commercial city of

Puntland state of Somalia. The researcher focused on the role of Golis

telecommunication in socio~economic development in Puntland. It focused on the

role of Golis Telecommunication Company in improving people’s standard of

living, creation of employment and its role in education and health improvement

for the eight years period it has been in existence.

4

1.7 Significance of the study

The Government of Puntland state of Somalia and the policy makers will be

guided by the findings. These will enable them to formulate more effective

national policies to encourage the telecommunications sector to improve the

livelihoods of the citizens.

The findings are also of great importance for the company itself to further

contribute the socio-economic development in the region.

It can be used by other researchers, organizations, KIU students, students of

other universities and administration for future reference.

The study will make the community to understand the role of Golis

telecommunication in creating job opportunity and improving the standard of

living in the entire region.

It will be important because it will contribute to the researcher, fulfillment of the

required for the award of Bachelor’s degree of Arts in Economics.

5

CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

This literature review introduces the theoretical framework, conceptual

framework and the related literature by the study specific variables. It presents

already existing literature and available research materials by other schools on

the same study to examine telecommunication company role in improving

people’s standard of living; establishing the role of Telecommunication Company

in employment creation; as well as its role in education and health improvement.

2.1 Theoretical Framework

Several economists have had theories put on ground explaining how social

economic development can be promoted. This study will be based on three

theories namely; Adam smith’s Theory by Adam smith, Ricardian theory by David

Ricardo, Keynesian theory by several economists

2.1.1 Adam Smith’s Theory of Social Economic Development

Regarded as the foremost classical economist Monumental work, An Enquiry into

the Nature and Causes of Wealth of Nations published in 1776, was primarily

concerned with problem of social economic development, Though he did not

expound any systematic growth theory, yet a coherent theory has been

constructed by (later day economist) which is explained below. According to

(Adam Smith)

Natural law. Adam Smith believed in the doctrine of ‘natural economic affairs’.

He regarded every person as the best judge of self-interest who should be left to

pursue it to his own advantage. In furthering his own self interest he would also

further the common pursuance of this, each individual was led by an ‘invisible

6

hand which guided market mechanism.” It is not to the benevolence of the baker

but to his self-interest that we owe our bread,” said Smith. Every individual, if

left free will seek to maximize his own wealthy therefore all individuals, if left

free, will maximize aggregate wealth. Smith was naturally opposed to any

government intervention in industry and commerce. He was a staunch free

trader and advocated the policy of laissez-faire in economic affairs. The invisible

hand” the automatic equilibrating mechanism of the perfectly competitive market

tended to maximize national wealth (economic development).

Division of Labour is the starting point of Smith’s theory of economic growth. It is

division of labour that results in the greatest improvement in the productive

powers of labour. He attributed this increase productivity:

(1) To the increase in the dexterity of every worker;

(2) The saving in time to produce goods; and

(3) To the invention to number of labour-saving machines.’

The last cause of increase in productivity stems not from labour but from capital.

It is improved technology that leads to division of labour and the expansion of

the market. But what leads to division of labour is a certain propensity in human

nature -the propensity to truck, barter and exchange one thing for another.

Division of labour, however, depends on the size of the market. One of his

famous sayings that “the division of labour is limited by the extent of the market”

implies that the division of labour increases with the extension of the market. For

this purpose, expansion of commerce and international trade is especially

beneficial. With the increase in population and transport facilities, there is bound

to be greater division of labour and increase in capital.

Process of capital Accumulation. Smith, emphasized that capital accumulation

must precede the introduction of division of labour. Like the modern economists,

Smith regarded capital accumulation necessary condition for social economic

development. So the problem of social economic development was largely the

7

ability of the people to save more and invest more in a country. The rate of

investment was by the rate of saving and savings were invested in full. But

almost all savings resulted from capital investments or the renting of only

capitalists and landlords were held to be capable of saving. The laboring classes

were considered to be incapable of saving. This was based on the ‘Iron Law of

Wages’. The classical economist also believed in the existence of a wages fund.

The idea is that wages tend to equal the amount necessary for the subsistence

of the labourers. If the total wages fund at any time becomes higher than the

subsistence level, the labour force will increase, competition for employment will

become keener and wages will come down to the subsistence level. In a

situation, some of the workers will find it difficult to pull on below an accustomed

normal living standard. They will, therefore, be unable to marry or bring up

children. The working force will be reduced and competition among the

capitalists for employing workers would tend to raise wages. Thus, Smith

believed that “under stationary conditions. Wage rates fall to the subsistence

level, whereas in periods of capital accumulation, they rise above this level. The

extent to which they rise depends both upon the rate of accumulation and upon

the rate of population growth. The wages fund was, however, built up of savings

and was utilized for hiring labour through investments. He believed that savngs

found their way into investment more or less automatically. Thus the wages fund

could be increased by increasing the rate of net investment.

Agents of Growth. According to Smith, farmers, producers and businessmen

are the agents of economic progress. It was free trade, enterprise and

competition that led farmers, producers and businessmen to expand the

market which, in turn, made social economic development possible. The

functions of these three are interrelated. To smith development of

agriculture leads to increase in construction works, and commerce. When

agricultural surplus arises as a result of social economic development, the

demand for commercial services and manufactured articles rises. This leads

8

to commercial progress and the establishment of manufacturing industries.

On the other hand, their development leads to increase in agricultural

production when farmers use advanced production techniques. Thus capital

accumulation and social economic development take place due to the

emergence of the former, the producer and the businessman.

Process of Growth. Taking institutional, political and natural factors for

granted, Smith starts from the assumption that a social group-we may call it

a !~nationH, will experience a certain rate of economic growth that is

accounted for by increase in numbers and by saving. This induces a

“widening of market” which in turn increases division of labour and thus

increases productivity. In this theory the economy grows like a tree. This

process is no doubt exposed to disturbances by external factors, that are not

economic, but in itself it proceeds steadily, continuously. Each situation grows

out of the preceding one in a uniquely determined way, and the individuals

whose acts combine to each situation count individually for no more than the

individual cells of a tree.

2.1.2 DAVID RICARDO’S THEORY OF ECONOMIC DEVELOPMENT

Ricardo never propounded any theory of development. He simply discussed the

theory of distribution. Therefore, Ricardo’s analysis is a decor. The Ricardian

theory is based on the marginal and the surplus principles. The marginal

principle explains the share of rent in the national output, and the surplus

principle explains the division of the remaining share between wages and profits.

The total national output is distributed among the three rent, profits, and wages

respectively.

Division of Rent, Profits and Wage. Given the total output of corn the share of

each group can be determined. Rent per unit of labour is the difference between

9

the average product and marginal product. Or, total rent equals difference

between the average product and the marginal product of labour x (multiplied

by) the quantity of labour and capital applied on land. The wage rate is

determined by wage fund divided by the number of workers employed at the

subsistence level. Thus, out total corn produced and sold, rent has the first right

and the (residual minus rent) is distributed between wages and profits, while

interest is included in profits.

Process of Capital Accumulation. According to Ricardo, capital accumulation is

the outcome of profits because profits lead to saving of wealthy which is used for

capital formation. Capital accumulation depends on two factors: First, the

capacity to save; and second, the willing to save. The capacity to save is more

important in capital accumulation.

This depends upon the net income of society which is a surplus out of total

output after meeting the cost of workers subsistence. The larger is the surplus,

the larger will be the capacity to save. As Ricardo said. Out of two loaves I may

save one, out of four I may save three.” landlords and capitalists invest through

this surplus. The size of this surplus of net income depends on the rate of profit.

(i) The Profit Rate. The rate of profit= profits/wages i.e., the rate of profit is

equal to the ratio of profits to capital employed. But since capital consists only of

working capital, it is equal to the wage bill. So long as the rate of profit is

positive, capital accumulation will continue. The labour force will grow

proportionately and the total wage fund will also increase. In reality, profits

depend on wages; wages on the price of corn depends on the fertility of the

marginal land.

In this way, there is an inverse relation between profits and wages, and wage

rise or fall in keeping with the price of corn. When there are improvements in

10

agriculture, the productive power of land increases or by appiying better

machines fewer workers produce more output. This results in fall in the price of

corn, as a result, the subsistence wage also falls, but profits increase and there is

more capital accumulation. This will increase the demand for labour and the

wage rate will rise. This in turn increases population and the demand for corn

and its price. The wage will rise and the profits decline.

(ii) Increase in Wages. Ricardo tried to show that it is only under different

conditions that capital accumulation will reduce profits. In the Ricardian system

wages play an active role in determining income between capital and labour. The

wage rate increases when the prices of commodities forming the subsistence of

the workers increase. The commodities consumed by workers are primarily

agricultural products as the demand for food increases; less fertile and is

brought under the plough. For this purpose, to produce a unit of the product

more labourers are required. The demand for labour starts rising which raise,

wages. Moreover, to match the increasing cost of subsistence, money wages will

also continue to rise. Thus wages rise with the increase in the price of corn and

then profits decline. In such a situation, rent also increases which absorbs the

rise in the price of corn. Since wages also increase, profits decline. These

opposite tendencies ultimately retard capital accumulation.

(iii) Declining Profits in Other Industries: According to Ricardo ‘The profits of the

farmer regulate the profits of all other trades. Therefore, the money rate of profit

earned on capital must be equal in equilibrium both in agriculture and industry.

In manufacturing industry corn is used as an input and the equality in the rate of

profit come, through a definite relationship between the prices of industrial

goods and the price of corn. Thus, when the profit rate declines in the

agricultural sector, it also declines in the manufacturing industry. Following with

the rise in the price of corn, the industry will have to raise the wages of

labourers, thereby reducing profits. Thus the price of corn determines the rate of

11

profit in industry. When profits decline in the agricultural sector, profits of all

trades also decline.

Other Sources of Capital Accumulation. According to Ricardo social economic

development depends on the difference between production and consumption.

He therefore lays emphasis on increasing production and reducing unproductive

consumption. However, the productivity of labour may be increased t[~rough

technological changes and better organization. It is in this way that capital

accumulation can also be increased. But the use of more machines will employ

fewer workers. This; will lead to unemployment and reduced wages. Since the

economic condition of the workers worsens with the employment of more

machines, Ricardo regards technological conditions as given and constant.

Taxes are a source of capital accumulation in the hands of the government.

According to Ricardo, taxes are to be levied only to reduce Conspicuous

consumption; otherwise the imposition of taxes on capitalists, landlords, and

labourers will transfer resources from these groups to the government. But taxes

adversely affect investment. Therefore, Ricardo does not favour the imposition of

taxes because taxes reduce income, profits and capital accumulation.

Ricardo is in favour of free trade. Free trade is an important factor ~or the

economic development. The profit rate can be saved from declining by improving

the corn. The capital accumulation will, therefore, continue be high. In this vvay,

the resources of the world can be used more efficiently through foreign trade.

But the import of corn leads to fall in the demand for labour which deteriorates

the economic condition of laborers. On the other hand, landlords and capitalists

do not think it fit to import cheap corn from foreign countries a result their

declined.

12

2~1.3 KEYNESIAN THEORY OF SOCIAL ECONOMIC DEVELOPMENT

Total income is a function of total employment in a country. The greater the

national income, the greater the volume of employment resulting there from and

vice versa. The volume of employment depends on effective demand. Effective

demand determines the equilibrium level of employment and income. The

effective demand is determined the point where aggregate demand price equals

aggregate supply Effective demand consists of consumption demand and

investment demand. Consumption demand depends on the propensity to

consume. The latter does not increase to the same extent as the increase

income. The gap between income and consumption can be made investment. If

the requisite volume of investment is not forth the aggregate demand price will

fall short of aggregate supply price. As a result, income and employment will fall

till the gap is bridged. Thus, variations in employment and income largely

depend on marginal efficiency of capital and the rate of capital interest. The

marginal efficiency capital is the expected rate of return from new capital assets.

Profit expectations are high, businessmen invest more. The interest, the other

determinant of investment, depends on the quantity of money and the liquidity

preference. Now investment can be either by raising the marginal efficiency of

capital or by lowering rate of interest. Though a rise in investment usually leads

to an employment, this may not happen if the propensity to consume at the

same time. On the contrary, a rise in the propensity to consume can lead to a

rise in employment without an increase in investment leads to increase in

income, and out of the in income, there is more demand for consumption goods

which I further increase in income and employment. This process tends to

become cumulative. As a result, a given rise in investment causes a multiple

increase in income via the propensity to consume. This, relation between

increment of investment and of income is called by Keynes, the multiplier K. The

multiplier t~establishes a precise relationship, given the propensity to consume,

between aggregate investment and income and the rate of investment.... It tells

1)

us that where there is an increment of aggregate investment; income will

increase by an amount which is K times the increment of investment.

2.2 CONCEPTUAL FRAMEWORK

Conceptual framework provides a model for linking categories of possible

variables or concepts in the study as perceived by the researcher. It represents

the concepts or variables of the study and shows how they are connected (Amin,

2005). According to James (2009),

The independent variable in this study is the telecommunication which refers to

transmission of information, over significant distances, for the purpose of

communication, it also includes the use of electrical devices such as telegraphs,

telephones, and teletypes, the use of radio and microwave communications, as

well as fiber optics and their associated electronics, plus the use of the orbiting

satellites and the Internet, while the dependent variable is social economic

development, which is the increase or improvement of standard of living, which

the researcher has broken down into three aspects;

1) Improving people’s standard of living

2) Employment creation of,

3) And it role in education and health improvement that has been conceptualized

as illustrated below in figure 2.1

14

Dependent Variable

2~3 REVIEW OF RELATED LITERATURE

This reviews how early researchers understood the correlation of the two

variables in the study, by breaking down the dependent variable (social economic

development), standard of living, employment creation, education and health

then relating them to independent variable (telecommunication ).

Telecommunications, also called telecommunication, is the exchange of

information over significant distances by electronic means. A complete, single

telecommunications circuit consists of two stations, each equipped with a

transmitter and a receiver. The transmitter and receiver at any station may be

combined into a single device called a transceiver. The medium of signal

transmission can be electrical wire or cable (also known as copper), optical

Independent Variable

— ~, c~9~Sb~n~dar4 of ~Aving~

]~Ii~gh standard of livingLøw standard of living

TelecommunicationSector

1~fgIi &npJoyme~it14iW Employment

I

kejponsibiIity~

15

fiber or electromagnetic fields. The free-space transmission and reception of data

by means of electromagnetic fields is called wireless

Telecommunication a hugely important aspect, not only for people around the

world, but also for small and large businesses. Long distance communication has

been around for years with the oldest methods that can be remembered to date

being the use of smoke signals. With time, methods such as horns became a

means of communication. But with time there has been a lot of development and

with that came the more advanced technologies such as radio, phone, television

and the Internet. ( chopra ,2002)

Businesses would be lost without the current technological advancements and a

lot of companies would cease to exist. But this is not the only benefit that

telecommunications can bring. With these advancements also comes science.

Without telecommunications, we would be unable to fly on planes and

helicopters or effectively navigate in the seas. Besides this, space travel would be

nearly impossible.

Telecommunications can lead to social economic development through different

ways. Firstly, investing in the telecommunication sector itself leads to growth.

The increased demand in telecommunication service related goods and services

e.g. producing cables, machines, extra workload. Already contributes to growth.

Dick (2000), said more importantly, as telephone service and internet improves,

people communicate more regularly over bigger distances. Also having more

advanced telephone systems reduce individual firm’s costs of doing business. It

lowers their costs of search, increases the ability to arbitrage, and increases

information availability. All these transaction cost savings created by

telecommunication services lower transactions costs and lead to more efficient

operations in different economic sectors. All these effects caused by

telecommunication benefit the economy in a positive way According to Ndukwe

(2004),

16

Socio-economic development in its simplest form is the creation of economic

wealth for all citizens within the diverse layers of society so that all people have

access to potential increased quality of life. Job creation, economic output, Labor

force; infrastructure such as accessibility, capacity, and service of basic utilities,

as well as transportation and telecommunications; business and community

facilities; colleges/universities, sports/tourist facilities; environment, and increase

in taxable basis are the most common measurement tools (Malcolm, 1996).

Social impact of telecommunication

Telecommunication has played a significant role in social relationships.

Nevertheless devices like the telephone system were originally advertised with an

emphasis on the practical dimensions of the device such as the ability to conduct

business or order home services as opposed to the social dimensions. It was not

until the late 1920s and 1930s that the social dimensions of the device became a

prominent theme in telephone advertisements. New promotions started

appealing to consumers’ emotions, stressing the importance of social

conversations and staying connected to family and friends (Garnet, 2001).

Since then the role that telecommunication plays in social relations has become

increasingly important. In recent years, the popularity of social networking sites

has increased dramatically. These sites allow users to communicate with each

other as well as post photographs, events and profiles for others to see. The

profiles can list a person’s age, interests, sexual preference and relationship

status. In this way, these sites can play important role in everything from

organizing social engagements to courtship.

17

2.4 Telecommunication Companies and improvement of people’s

standard of living

Golis telecom is the largest operator in Puntland state of Somali which has been

employed over 1000 directly and is estimated to employ another 3500 vvorkers

across the country with different tasks and it is the highest paying private

company in the whole region. It has different salary paying policies compared to

other telecommunication companies across the country, this leads to increase

the level of income and saving hence enable the economy of the country to

reach the highest point of development. Another significant contribution that

Golis has afforded to its’ employees is that of a discount rate such as electric bill,

telephone bill and all other expenses. In fact, the average standard of living was

so low that Somalia had one of the lowest per capita food intakes during the

1980s (Farzin 1988).

Somali is currently in the midst of a telecommunications boom driven by private

investors, who have created a mass market with the cheapest calling rates in

Africa. Private investors have put an estimated $194 million into Somalia’s

telecommunications sector over the last ten years. Figures obtained through ICT

Labs International in 2010 indicate that there are over 1.5 Million mobile phone

lines in Somalia, where six telecommunication companies thrive amid Internet

users who number more than 2 million. Fierce competitions among a handful of

companies have allowed calling rates to fall to less than one cent per minute.

Statistics compiled by the World Bank say that Somalia has about 100,000

landline telephones in Use, but about 734,800 people were using mobile phones

as of 2007. Out of 74 towns in Somalia, 47 have had telephone coverage over

the past eight years, according to the UN-funded Somali Telecom Association

(STA). These are impressive phone use statistics compared to other more

peaceful countries across Africa (World Bank, 2007). The telephone companies

that provide much of the service across the war-torn country include Golis

18

Telecom Somalia which is the market leader of the telecommunication sector in

all country.

2~5 Telecommunication companies and employment creation

The telecommunications industry employment rapidly grew in the late 1990s into

early 2001; ever changing technology, advances in wireless technology, and

declining unemployment resulted in the telecommunications progress

(Muellbauer, 1980).

Telecommunication investments affect social economic development in the same

general way as other infrastructure investment. It can reduce the cost of

production. It can increase revenues. Finally, it can increase employment

through both direct and indirect effects (simuel, 2007).

Telecommunications, however, will affect revenues and cost in more indirect

ways than many other types of infrastructure investment. The reason is that

much of the benefits of increased telephone service are derived from increase in

information and knowledge. Telecommunication increase the available

information thereby increases the efficiency of commercial activity.

However, Golis telecommunication has improved the rate of employment in

puntland, almost over 1000 employee are currently working with Golis

Telecommunication Company.

Most of the telecommunication companies have failed to play to improve

employment in the country because of the lack of policy adjustment but Golis

has many policies to improve the employment of the country this can be done by

many introducing various new branch with different areas and regions , easy

policies to help workers to fulfill to register their dealers, set up a comprehensive

19

telecommunication programmes to provide part time employment, providing

information about job opportunities and available workers, unemployment is a

situation where people fail to get job despite abilities and willingness to work at

the ruling wage rate.

2. 6 TELECOMMUNCATION COMPANIES ON HEALTH AND EDUCATION

On health Golis alone spent exorbitantly on their health flagship project. They

used part of the funds in refurbishing the General hospital Garoowe, General

hospital Galkacyo, (Golis report, 2009).

All telecommunication companies have helped in various ways on the health

sector of the country like sponsoring Aids Campaign programmes, health walk,

and contributed assistances powerfully schools offers science subjects.

Entertainment and Sport in puntland has greatly benefited from

telecommunication service providers. Golis, telecom, have all been supporting

various entertainment and sports programmes. Currently Golis is the main title

sponsors of the Somali regional league cup.

They also help to send widely the warning against drought and disease which

may occur in the country for future period.

Telecommunication is playing an increasingly important role is social life of many

Somalia’s. It is estimated that telecommunication service providers in somali

have had very important social impact on the economy of the country.

Telecommunication companies have established various social intervention

programmes designed to better the life of many less privileged people and

communities.

Golis Telecommunication service providers in Puntland state of Somalia, over the

past years have invested lot of money into corporate social responsibilities (CSR)

projects.

20

Most of the amount of the funds is invested in education, health and other social

need of the people and communities. On education, there are scholarships for

brilliant but needy students, building new schools, contribution to a number of

educational funds set up by traditional councils across the country such as

Ramadan competition, puntland orphans center, and other have all benefited

from these funds set up by the Telecommunication service providers. Tertiary

education has also benefited from the social responsibilities of

telecommunications companies. (Somali telecom association report, 2007).

Corporate responsibilities towards education in Puntland, donated 6 computers

by khadija institute and 5 computers to alwaha secondary school, it has also

donated mini bus to Puntland institute and development administration (PIDAM).

Researchers have examined the links between education and the motivations

and determinants of telecommunication. Some studies suggest that by Golis has

made a significant of improving the structural education in Puntland state of

Somalia , which is includes contraction schools , denoting some money to

operate day to day activity , they also help some schools to assist to access ICT

computer and laptops (Golis report ,2009).

According to Ivala (2000), a Telecommunication companies provides access to

education through distance learning. The telecommunication service’s

educational opportunities are great. Many residents live at great distances from

classroom-based educational resources. Even for those who reside in our arger

cities, access to critical programs is often out of reach. For low-income groups

seeking to advance, the opportunity to access distance learning from their living

rooms after the kids are in bed can be a significant opportunity. Individuals and

organizations can use distance learning programs to effectively meet their

education and workforce training needs. Through use of distance education,

efficiencies in the costs of program development can be achieved (e.g., a

program developed in one area can be shared across the state).

21

Telecommunications can provide the opportunity to access these online

programs as well as programs offered throughout the world.

Since the state collapsed, Puntland primary and secondary schools and colleges

have been funded and run by a variety of actors: local communities and parents,

private individuals, religious organizations, international and local NGOs and local

authorities, or the government in parts of puntland, and as we shall see,

telecommunication companies . There has been substantial progress in many

communities in rebuilding schools and getting children back into school. There

were around 2500 children in primary school in 1994, compared with 39450 in

2004. There were nearly as many primary schools (178) and teachers (1650) in

Puntland in 2002. However, the story so far is one of only partial recovery,

compared with pre-war standards—overall primary school enrolment rate is

similar to the 1980s, at just under 20 percent, and for those in school, student

teacher ratios have increased by 65 percent. The contemporary educational

situation varies across puntland areas, with primary school enrolment much

higher in Ban region (37 percent), less Mudug region (18 percent), Nugal region

(15 percent) and lowest in the Sool/Sanaag region (13 percent) (UNICEF 2004).

CHAPTER THREE

METHODOLOGY

3~O INTRODUCTION

This chapter will present the overall procedure and methodology, which will be

followed during the process of carrying out the research. It will further describe

the manner, in which data will be collected, analyzed, presented and interpreted.

It will show the research design, population, research area, data collection, and

data analysis.

3~1 Research design

This is the master plan or map by which the researcher will be able to provide to

research questions and by which he/she will be able to control variance, (School

of economics and applied statistics, KIU. Research Guidelines, 2009) The study

will be carried out using the cross-sectional survey design to attain the

relationship between the telecommunication and social economic development.

However, according to a cross sectional research design is the most commonly

used research method in social research. This design is selected on the ground

that it aims at providing a systematic description that is as accurate as possible

(Amin, 2005),

3.2 Research area

The study will be restricted to Puntland state of Somalia which is one of the

regions that has benefited or greatly impacted by telecommunication companies.

3.3 Research population

The target population of this study was 150 respondents who involved 12

departmental heads, 10 head teachers, 10 medical personnel, 40 employees and

78 clients. The departmental heads were purposely selected because they head

the different departments at the telecommunication company and are aware of

any developments and contributions that company makes towards the

community, thus were found to be equipped with information necessary for

building the research. The head teachers and were selected because they were

they head the different schools whereas the medical personnel were purposely

selected because they work within the health institutions and therefore are

aware the company role in the improvement of the health sector. Whereas

employees were purposely selected because they work with the telecom

company and are versed with company policy, as for the clients, these live in the

community within which the telecommunication company operates. These were

randomly selected to give each an equal chance of representation.

3.4 Sample and Sampling Technique

It is often impossible to study the whole of the target population, and therefore,

the study will use a sample of one hundred and ten employees out of the one

fifty staff members of Golis telecommunication company in puntland regions

The sampling technique or method will be simple random sampling, which

involves giving a number to every subject or member of the accessible

population, putting these numbers in a list and then picking any number

randomly. The subject corresponding to the numbers picked are inciuded in the

sample. (Mugenda 2003)

24

33 Data Collection Methods

To achieve the objectives of this study, the researcher used the following methods

of data collection to gather information on Telecommunication companies and

socio-economic development. The methods generated enough information which

enabled the researcher to draw conclusions on the findings.

33.1 Documentary review

This involved review of literature on the topic under study from reports,

magazines, newspapers, journals books, and newsletters since these sources may

easily be accessible in public libraries, and telecommunication company offices as

well as supplement reports from other telecommunication companies. The method

provided accurate information since it was based on already existing literature

which has made the data qualitative in nature.

35.2 Questionnaires

The questionnaire is a carefully designed instrument for data collecting in

accordance with the specifications of the research questions, which consists a set

of questions to which the subject respondent responds in writing,( Oso With,

2003).

The researcher short-listed and prepared questions, all of which were organized

and structured properly for use during the whole time of research. These helped

the researcher to get data in a simple way. Open ended and close ended

questionnaires were developed for employees of the telecom company as well as

clients purposely because they sought personal views of the respondents and thus

were in position to use their knowledge in providing a wide range of data as the

element of shyness was done away with. This method was purposely used to avoid

repletion of questions and basically to provide guidelines to the research

objectives. A pre-test was made to make them free from ambiguity and Leading

questions in order to give quality to the data.

25

3.5.3 Interviews

The interview method was purposely used in a face-to-face conversation and

discussion with the respondents who enriched the study findings. This was

directly carried out by the researcher who ensured that interviews were

impressionistic in nature and free from suspicion. This was through a directive of

an interview guide to directly ask the respondents questions which were

answered as the researcher took note of the responses from the respondents.

Structured and non - structured interview techniques were applied on the topical

issues. The method was purposely chosen because it would allow for the flow of

systematic information due to the order of questions. Interviews were also vital

in getting information from the members who were illiterate particularly clients.

3.6 Data Processing

The processing of data was done for verification of the information gathered in

order to attain accuracy and uniformity where editing of data involved checking

the information for errors which was of an advantage to the researcher since

gave him chance to delete and eliminate possible errors traced that could have

had possible influences on the results of the study. All this was guided by the

research objectivities, qualitative and theoretical framework was realized through

careful segmentation of data in a thematic order. Data was analyzed

concurrently to avoid duplication and this guided the entire aspect for a balanced

and critical analysis. The researcher relied on the questionnaire and for other

items, tabulation pie-charts and simple statistical percentages were used in the

presentation, analysis and qualification of data.

26

3.7 Data Analysis

The researcher discussed and presented the study findings through guidance of

the specific objectives and research questions where data analysis was done

through sketchy and generalized summaries of the study findings such as

observation and conclusions in the process of data collection. Data was

summarized and concluded and thereafter qualitative data was statistically

presented in pie charts and bar graphs. During the analysis, the real ideas

generated for the field were ultimately arranged and grouped into sub-themes

reflecting the whole theme for the study.

3.8 Limitations of the Study

In the course of conducting the study, the researcher experienced the following

challenges;

Some interviews were rescheduled and the next appointments were also not

successful. However, the researcher managed to overcome this by conducting

them through phone calls.

Not all questionnaires were returned of the 150 issued only 100 were returned,

however, the researcher relied on the 100 in the analysis of data since 30 is the

minimum for a standard research, the researcher still found it convenient to use

the 100 questionnaires.

3.9 Ethical Consideration

The researcher carried out the study with full knowledge and authority of the

management of Golis Telecom. The researcher first of all acquired an introductory

letter from the university, introducing and assigning him to the field. This was for

27

purposes of erasing doubt and suspcious tendencies of the respndents. The

researcher then went on to book respondents prior to date of administering

questionnaires and interviews and assurance of the confidentiality was realised in

the critical process of collecting and coding data, better still objectivity as principle

of research was held paramount in controling bias and distortion of the findings.

28

CHAPTER FOUR

PRESENTATIONS, ANALYSIS AND DISCUSSIONS OF THE FINDINGS

o Introduction

This chapter covers the presentation, analysis and discussion of the findings

which were centered on three specific variables that is; the role of

telecommunication company in improving standard of living; creation of

employment and in the improvement of the education and health sectors.

.1 Demographic Distribution of the Respondents

The study sought about the differences in different characteristics of the

respondents and the findings were as represented in Table 1 to Table 3.

.L1 Distribution of the Respondents by Gender

The study sought about the gender differences of the respondents and the

findings were as represented in Table 1.

Table 1: Gender Distribution of the Respondents ____

Sex No of respondents Percentage

Male 40 40%

Female 60 j 60%

Total 100 100

Source: Field Research Findings (2011)

According to the study findings in Table 1, there was an unequal representation

of the respondents in terms of gender. The males dominated the sample with

6O% of responses whereas the females constituted of 40% of the total

responses. This implies that males have benefited more from the

telecommunication companies than females, thus company has promoted

29

livelihoods of males more than it has, for females thus the inequality in the

representative sample.

The study findings were also presented in figure 2.

Figure 1: Gender Distribution of the Respondents

Source: Field Research Findings (2011)

.1.2 Distribution of the Respondents by Number of Years of Linkage

The study sought information about the age distribution of the respondents and

the findings were as presented in table 2

Table 2: No of Years of Linked to Telecommunication ComijanyNo of Years Total Percentage (%)1One year and below 35 - 35%

2 4 years 43 43%

5 years + 22 22%

Total 100 100%

Source: Field Research Findings (2011)

In the study findings in Table 2, as per the findings from the respondents, it was

established that those who were linked to the telecommunication company for

one and below were 3S%, the 2-4 years group comprised of 43% while those

that had been linked to the company for 5 years and above were 22 of the total

0- r~.iaie

DFernales

sample, thus constituted of the minority. The 2-4 years comprised of the

majority indicating that there is an ongoing awareness on the application and

usage of the telecommunication services, thus the increasing participation and

application by the respondents. This reflects that the company is playing a

positive role in the livelihoods of the people.

Graphically this was represented in the Figure 3;

Figure 2: Age Distribution of the Respondents

Source: Field Research Findings (2011)

4.1.3 Educational Level of the Respondents

The study further sought for information pertaining to the educational levels of

the respondents and their qualifications were identified and presented in table 3.

Table 3: Distribution of the Respondents by Educational level

Education level Total Percentage (%)

Never been to school 12 12%

Primary 19 19%

Secondary Level 20 20%

Diploma 29 29%

Degree plus 20 20%

Total 100 100%

Source: Field Research Findings (2011)

IA /

~A year & below

1fl2-4

~5 years +

3

According to table 3, 12% of the respondents had never been to school, l9%

had acquired primary level, 2O% had acquired secondary education, those that

attained Diplomas were 29% whereas the remaining 20% had reached

University level. The sample was dominated by respondents who had attained

diplomas and degrees and thus telecommunication users according to the

researcher were mainly the more educated group particularly because they have

more insight on the usefulness of telecommunication services.

Figure 3: Distribution of Respondents by Education Level

Source: Field Research Findings (2011)

.2 Role of Telecommunication in Improving Standard of Living

The study aimed at examining the different roles that telecommunication

companies play in the improvement of people’s standard of living and the study

findings were as presented in table 4;

30

25

20

~: ~.

I)(’Cfl 10 ~riIn;II~ %i.conii~i~ I)iI)Ic)In~I ( uk trsit\‘CI)00I

r~ not been to school

D Primary

InSeconclary

~ Diploma

~ University

Table 4: Role of Telecommunication in Improving Standard of Living

Role played Agree ~Disagree Total

Getting people closer to each other 69 (69%) 31(31%) 100

regardless of distance

Strengthening social relationships 62(62%) 48(48%) 100

Promotes enhancement of research 66 (66%) 34 (34%) i00~

Improving abilities to save 42 (42%) 58(58%) 100

Improving market opportunities 65(65%) 35(35%) 100

Improvement of business performances 71 (71%) 29 (29%) 100

Creating awareness 58(58%) 42(42%) 100

Improving the use and application of 52(52%) 48(48%) 100

science

Source: Field Research Findings (2011)

According to table 4, it was established from the respondents that, there were

different roles which the telecommunication company plays in the improvement

of the standard of living of the people and these were determ~ned to be;

improvement of business performances with (7l%) of the total responses

followed by getting people closer to each other irrespective of distance (69%),

promoting enhancement of research (66%), improving market opportunities

(65%), creation of awareness (S8%), improved on the use and application of

science (52 %), and improving the people’s ability to save was the least

significant as represented by ( 42%) of the total responses.

According to the study findings, it is submitted that the telecommunication

company has helped in improving the performance of businesses. The

respondents attested that, in the face of the endured hardships which

culminated from the war that blazed the country, the area would still be far from

_) _,

socio-economic achievement if it was not for Golis. It was established that, the

telecommunication company has enabled businesses to communicate and

successfully carryon across and within the borders without much strain or pain.

According to the study, Golis Telecom efforts have glowed and restored hope in

the previously dying businesses. Just as Chopra (2002) foresaw that,

telecommunication is a hugely important aspect, not only for people around the

world, but also for small and large businesses and that business would be lost

without the current technological advancements and a lot of companies would

cease to exist. Yet according to Wilkins (1997), having more advanced telephone

system reduces individual firm’s costs of doing business.

This implies that with an advancing telecommunication company like Golis, the

businesses are in position limit as well as reduce on their transport costs and yet

at the same time ensure fast and timely delivery of information, this promotes

efficiency in the businesses thereby leading to socio-economic development of

the community of Puntland.

Additionally, the study findings established from the respondents that, the

telecommunication company has helped to bring people closer irrespective of the

distances that exist between them. According to the respondents, families

previously torn apart by war have been reunited through telecom services. That

is to say, many family members have managed to get contact with their missing

relatives at an arm’s reach, through Golis telecom services. In additon many of

the found missing relatives have assisted their kins with money remittances as

facilitated by Golis telecom through Hawala company (mobile money agent).

The finding further suggests that, communities and firms far away from each

other, have been able to link up, communicate and coordinate as well as clear

business transactions as if they were next door neighbors. This same situation

was earlier envisaged by Dick (2000), who noted that, telephone service and

internet enables people to communicate more regularly over bigger distances, it

34

is for this reason that explained telecommunication to be the mean of exchange

of information over significant distances by electronic means.

In the researcher’s opinion, this implies that telecommunication closes off the

gap or distance between people, communities, organisations among others. In

other words telecommunication makes it possible for people to relate and

communicate with each other within a split of a second, without having to spend

exorbitantly on transport.

This is significant of reduced operational costs and increased disposable incomes.

That is to say, the money that would be spent on traveling is spared for some

other use. Thus contributing to the socio-economic development of Puntland

Chopra (2002)

It was also pointed out by the respondents that the telecommunication company

has promoted growth through propagating and disseminating research

information. According to the respondents, a number of concerns have been

unveiled and addressed. For instance Golis Telecom has pioneered a project of

Road Traffic Signs from Bosaso to Galkaio and also from Garowe to Tukaraq as a

way of keeping in mind a Corporate Social Responsibility. According to the study

respondents, this sensitiveness to public concerns has generated for Golis a big

clientele base which has helped in increasing it is profitability, in retaliation to

which Golis has given back to the public, an almost next to free decreased cost

of calls. For instance Ilahadal service (by Golis) was mentioned as contributing to

bringing the diaspora closer to their families at cheapest possible costs in

addition to gaining access to media. was not different, when he held that, having

more advanced telephone systems reduces individual firm costs of doing

business; cost of research; as well as increase information availability.

According to the researcher, this implies that, the more advanced the telecom

company gets the cheaper it becomes, for the communities and individual firms

to gain access to cheap services and products, thus company contributing to the

3)

socio-economic development of the community, when everybody is able to

access information Wilkins (1997)

It was further established in the study that the telecommunication company has

improved the abilities of the people to save. This has been reported as possible

in the study by way of, high pay that Golis offers. According to the respondents,

the company was noted to be offering reasonable pay to its employees and high

discounting rates to its clients. This makes it possible for employees and clients

to save as a result of the surpluses created in incomes. Thu~ gives both a better

opportunity to save, yet at the same time meeting their basic requirements.

This is contention with Farzin (1988) who held a similar view on how, Golis

telecom being the highest paying private company in the whole region of

Puntaland has led to increased income and saving. In the researcher’s opinion, it

can be submitted that, the higher the incomes, the better the saving levels of

individuals. In other words, high incomes reduce the possibility of scarcity,

leading to improved standard of living.

It was further submitted by the respondents that, the telecommunication

company has created awareness among the community members. The

community has gained access to information necessary for their survival. For

instance as nomads, they are fully dependent on rain because it grows pastures

for their livestock. However with Golis the tedious long journeys in search of

pasture have come to an end. The pastoralists are no longer living on guesswork

but merely call Golis to find out which areas are dry and which ones are receiving

rain. Thus aimless and arbitrary wandering in search for pasture is reduced and

time is managed more effectively thereby increasing productivity and improving

standard of living from the benefits reaped.

This same view was earlier envisaged by Wilkins (1997), who realized that

telecommunication lowers costs of search and increases information availability.

In the researcher’s opinion therefore, this implies that when information is

3

available, communities become knowledgeable which reduces wastage of time

and resources when less mistakes are committed, thus socio-econornic

development is experienced.

It was further established from the respondents that the telecommunication

company has helped in building and strengthening social relationships. That the

individuals have gone as far as finding partners through telecommunication for

instance by help of web. In addition individual firms have also been able to

identify their trade partners, suppliers, distributors through the company’s help.

In addition to this it was pointed out that Golis has through such initiatives like

the Ilahadal service managed to bring diasporas closer to their fam;lies to

strengthen family ties without actually meeting a burden of telephone bills.

According to the respondents, this possibility is a result of improved access to

information over the internet whereby individuals and individual firms have been

able to communicate and build their relationship with others. This is similarly

held by Garnet (2001) who realized the importance of telecommunication in

social conversations and social relationships and how it has allowed users to

communicate with each other.

In the researcher’s opinion this implies that, telecommunication is helpful in

understanding, cementing and building of relationships, whether socal, business

or otherwise. Thus as a binding factor, it leads to togetherness and buildings

teams which are key factors to development.

In addition the study also establishes that the telecommunication company has

been in position to cause a socio-economic change in terms of making

Information Communication Technology accessible and promoting its use.

According to the respondents, different people learned or unlearned are now

able to operate within the scope of advancing technology. Just as the Golis

(2009) report indicates that, people from different walks o~ life are earning their

livelihood from opportunities rendered such as operating phone booths.

37

In the researcher’s opinion, this is indicative of the fact that, the

telecommunication company has promoted usage and application of scientific

knowledge, thus with an advancing world, technological advancement is the way

forward to development.

3 The Role Telecommunication in Creating Job Opportunities

The study sought to examine the role played by the telecommunication company

in creating jobs for the community of Puntaland and the study findings were as

shown in table 5.

Table 5: Telecommunication Company in Creation of Job Opportunities

Creation of Jobs Agree Disagree Total

Recruitment is on merit 73(73%) 27 (27%) 100

Developing ICT 52(52%) 28 (28%) 100

Building capacities of the young people 70 (70%) H0(30%) 100

Indirect and Direct job creation 67(67%) 33(33%) 100

Source: Field Research Findings (2011)

According to the respondents, it was submitted that telecommunication

companies help in job creation in the following forms; by recruiting on merit

(73%), building capacities of the young people (70%), direct job creation (67%)

and developing ICT (52%).

According to the study findings, it was established that, the telecommunication

company has helped in creation of jobs by providing and enhancing measures of

recruiting on merit. This has made it possible for individuals to attain jobs

without discrimination. According to the respondents Golis telecom is playing a

model role in the recruiting of staff by observing the universally accepted

procedures of recruitment with sound recruitment policies independent of

partiality and kinship.

In the researcher’s opinion, this implies that, Golis has promoted socio-economic

development by exercising equal employment opportunities, putting the right

man in the right position. Those that are able are the ones that assume

positions, thus by putting their abilities into practice, development is attained.

In relation to the above it was also pointed out that the telecommunication

company has improved ICT and provided avenues for employment. For instance

the operators of phone booths and technical equipments have been in position to

receive orientation and training which has improved their abilities to apply and

use information communication technologies. Thus individuals have used their

developed abilities to earn a living for instance operating a phone booth, and

machines. This corresponds with Muellbauer (1980) envisage that, the

telecommunication industry employment rapidly grew in the 1990s following

advancing technology.

In the researcher’s opinion this implies that as the telecommunication company

technologically advances, more avenues for employments come up. This

reducing on the unemployment levels in the community, leading to low

dependency ratios and improved standard of living.

In addition it was noted from the respondents that the telecommunication

company has provided for direct and indirect job opportunities to the

communities and that it is generating income for over 15000 individuals.

Indirectly it was revealed that the company has provided for avenues for

individuals and individual organizations to carve out of the satisfactory livelihoods

from the services provided for instance mobile money agents who subscribe to

use Golis network in sending and receiving money.

It was also established that company directly employs over 500 people excluding

booth operators and airtime agents. Thus Simuel (2007) contends that

telecommunication investment affects socio-economic development by increasing

employment directly and indirectly.

In the researcher’s opinion, this implies that as the telecommunication company

grows, more job opportunities are generated in the company because its

expansion calls for more people to accomplish tasks. On the other side if it grows

other firms indirectly affiliated to it also grow resulting n indirect creation of

more job opportunities.

Additionally it was also established that in creating jobs the telecommunication

company has tried to enhance the capacities of the young people through skill

building. This was explained from the point of the Shaqodoon project, according

to the respondents, this is a jointly implemented project by Golis telecom and

EDC which has modernized job seeking methods in the light of technological

advances made in telecommunications; helped young people in developing their

careers; bridged gaps between employers and potential employees through

information sharing and built self confidence among new generations.

.4 Telecommunication Companies in Improving Health and Education

The study aimed at investing the contribution of telecommunication companies in

the health and education sectors and the study findings were established as

represented in table 6;

Table 6: Telecommunication Companies in Improving Health and Education

Improving health and education Agree — Disagree I Total

Building schools and hospitals 47(47%) 53(53%) 100

Playing a CRS role 75(75%) 25(25%) 100

I Scholarships provided 39(39%) 61(61%) 100

40

Online courses

[Recovering from effects of war

Source: Field Research Findings (2011)

Table 6 represents the roles that telecommunication companies play in the

health and education sectors. Among the roles identified was the; that of a

corporate social responsibility (75%), on-line courses (55%) building schools

and hospitals (47%), providing scholarships (39%) and helping schools and

hospitals recover from the effects of war (34%).

According to the respondents it was established that telecommunication

company is participating in the building of school and hospitals. According to the

respondents, Golis Telecom is assisting in the implementation of many projects

including construction of schools, health facilities sanitation and environmental

projects. In supporting infrastructural developments Golis aims at returning part

of what it has reaped to the benefit of the community. This corresponds with

Golis (2009) report on how the company exorbitantly spent on health fiagship

project in refurbishing the general hospitals of Garoowe and Galkacyo,

In the researcher’s opinion, this implies that much as the company is reaping

profits it is socially obliged to the community under which it operates thus,

returning part of the benefits to grow together with the community.

It was further established that the telecommunication company is also playing a

Corporate Social Responsibility Role (CSR) to work with community as a way of

promoting community understanding and building the company profile. In this

way the company has supported sports and entertainment in interschool

competitions. According to the respondents the company has also issued

computers free of charge in schools and hospitals. This is in contention with the

Somalia Telecom Association Report (2007) which pointed out that most

telecommunication funds are invested in education and health as well as other

social needs of people and communities.

41

This implies that by building the Corporation Social Responsibility status o~ the

company, the telecommunication company continues to profit because it will

have gained more support for being supportive to communities, thus improved

development through mutual acceptance. In addition to the education and health

resources (financial) that would be used for are somehow spared for other

specific fields that may fall short of the budget.

In addition, the respondents also established that the company has promoted E

learning. Opportunities have been opened for students to study on-line, other’s

have even managed to take international correspondence course in all spheres

including medical and education, trade and industry among others. According to

the respondents, this has been made possible by the web services offered at

very cheap and affordable prices. This according to the respondents, is

promoting an international perspective in the field of enrolment as it widens the

scope of the subject to the students and on top of this it has brought the

classroom to a closer range. In addition to which, the health and education

sectors have also been in position to utilize the web for consultancy purposes.

This is in line with Ivala (2000), who foresaw that, telecommunication companies

provide access to education through distance learning regardless of the great

distances from classroom-based educational resources.

In the researcher’s perspective, this findings implies that, through e-learning, a

possibility of exploring what would otherwise have been unavailable, is

experienced. Thus international, national and regional exchanges of programmes

is made possible thereby improving the performance of school and health

sectors.

Lastly, it was also found that the company is working hard to have schools and

health centers recover from the effects of the long outstanding war. According to

the respondents the persistent war saw many schools and health centers down

the road to collapsing because of the failure of teachers and medical personnel

42

to operate in these institutions due to the fear of insecurities. The schools and

health centers were abandoned when the state collapsed of which a variety of

local actors, parents, individuals and NGOs took over. However, the respondents

pointed out that the telecommunication company has since then been playing a

great role in supporting the stay of schools and health centers. According to a

UNICEF report (20004) the situation is not different from the findings,

telecommunication companies have participated in the substantial progress of

rebuilding schools and getting children back to school.

This implies that, just like any other development oriented companies Golis has

also substantially committed part of its resources to rebuilding schools and

rehabilitating children.

CHAPTER FIVE

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

5.0 Introduction

This chapter covers the summary, conclusions and recommendations of the

study findings on the four major variables.

5~1 Summary of the Findings

According to the findings it was revealed that telecommunication companies play

a role in improving the standard of living of the people; creates job opportunities

as well as improving the health and education sectors, this however, is not

without challenges.

.L1 Telecommunication companies in Improving Standard of Living

The study findings revealed that the telecommunication company has brought

about an improved standard of living in the community by; improving the

performance of business through improved communication which makes it

possible for business partners to coordinate with other swiftly as they cut costs.

In addition it has also contributed to building connections of people that is parent

and business connections. In other words it is ensuring that individual families

and business are in position to connect and communicate with other whenever

need arises. Market opportunities have also been improved upon because

individual teams or families are able to explore their business demands through

e-commerce thus experiencing low cost of goods.

Beyond this the telecommunication company was established to create

awareness by promoting people’s access to information through internet and

connecting them to their required sources of information. Not only this, the

company has enabled people of all walks of life to learn some ICT application

44

thus even the illiterate are in position to load their own airtime, operate phone

booth and many others in other words it has also led to increased savings by

paying the employees adequately, thus the opportunity of the community to

save, is increased.

1.2 The Role of Telecommunication in Creating Employment

The study revealed the telecommunication company has created jobs such as

operating of phone booths by putting many of them at different centers in the

community and getting different, but willing people to operate them. The

company has also been revealed in the previous chapter to create opportunities

for job recruitment by offering vacancies to those that can better serve with the

required job specifications indiscriminately.

Additionally, the company has also enhanced the capacities of youth to train,

develop and empower them with skills fit to compete in the advancing

technological world, being the leaders of tomorrow. On the other hand the

company has also gone ahead to create both indirect and direct jobs for instance

airtime selling, mobile phone selling and phone booth and indirectly for road

construction companies. On top of this the company is also participating in

training and equipping the youth with information communication technology for

active participation in the technological world.

.1.3 Telecommunication Companies in Improving Health and Education

The study further revealed that the telecommunication company has helped in

improving performances of the health and education sector in that it has played

a Corporate Social Responsibility Role whereby it comes in time of need to

support education and health initiatives through donations for instance

computers for computer labs. In addition to this the company has also enabled

e-learning to take place, thus the health and education institutions are able to

consider with experiences elsewhere on an international and regional basis.

45

The company has further participated in the building schools and hospitals for

instance in rehabilitation and rebuilding of schools which collapsed during the

war which left Puntaland schools and health institutions without teachers and

doctors. In other words the company has worked towards improving the

education and health status as a way of boosting sôcio-economic development in

Puntaland.

5.2 Conclusion

2.1 Telecommunication Companies in Improving Standard of Living

The study concludes that, although Golis telecommunication company is

providing opportunities and avenues for improving the standard of iving of the

people through simplifying their communication it should also ensure that, it

develops a policy helpful of controlling possible crime detection in the usage of

his services. This call for widening the individual scope in the usage and

application of ICT to anticipate likely shortfalls.

.2.2 Telecommunication Companies in the Creation of Jobs

The study concluded that Golis through its expansion policy has opened and is

still creating job opportunities which have aided socio-economic development

because of their indiscriminate nature, however, the company needs to focus on

creating jobs which are economically sustaining than duplicating jobs because in

end the competition may become stiff in the face of a few customers available

for instance duplicating airtime selling.

.2,3 Telecommunication Company in Improving Health and Education

The study concludes that, when a company plays a corporate social responsibility

role, it reaps benefits of a high profile and the institutions also become active in

the world of technology, however it should not only be the case companies need

to take initiative to warn against the likely effects for instance in usage of

46

internet for education. It should as well provide remedies for control of usage to

protect from any form of abuses that may come up through consumption of such

material.

5.3 Recommendations

On summarizing the findings and drawing conclusions of the findings, the

researcher made the following recommendations;

There is need to open more lines for the telecommunication companies to

support a wider outreach given the nature of the good work the

telecommunication company is playing to the community.

While developing Information Communication Technology the concerned actors

should seek not only to develop the capacities of the youth but should involve

young and old because the old are also living in the same technologically

advancing world.

Telecommunication companies should develop an implementation base linked to

local problems, specifically to poverty alleviation not merely browsing the internet

and finding producers and suppliers. This linkage must be direct, showing

stakeholders the benefits of using telecommunication for economic growth.

Implementation of telecommunication programmes in the health and school

practices should show how telecommunication can transform education, making it

far more interactive and empowering for students and professors/teachers and

doctors thus implementation should be result driven.

There is need to find a way of protecting individual enterprises and institutions

on the possible loopholes of hackers who may pretend and dig into their

47

accounts to fraudulently obtain money or those that may obtain money through

a u nde ring.

While teaching the youth to carry out businesses as well as socializing through

internet, there is need to advise them on the possible challenges that they may

encounter because not all internet dealers may be the right kinds o~ persons to

deal with, be it academically or businesswise.

There is need for the telecommunication company to extensively do and facilitate

research programmes for the improvement of the company performance other

than relying on the Corporate Social Responsibility role to build profile.

There is need for telecommunication company to diversify its projects to cover all

including the children and the aged, because the youth alone don’t compromise

of the whole community thus to fulfill its prospect of non discrimination it should

cover all in its projects outside telecom services.

There is need for the telecommunication company to find out about its rivals to

better place them by solving the rival identified weaknesses.

There is need for company to know about the size of its potential market in order

to clearly identify how it can lay future prospects depending on target group

identified. Other wise a company needs not undermine the potential of another

company however small it may be.

Implementation must occur within a policy context guided by participatory action

research, where all stakeholders in an interactive manner define their needs, goals

and concerns.

48

5A Recommendations for Future Research

This study looked at the role of telecommunication companies in socio-economic

development. The researcher therefore suggests more study to be conducted on

specific subjects especially on how to boost telecommunication companies to

build their Corporate Social Responsibility profile.

49

REFERENCES

CIA fact book, 2005, Somali annual report.

UNDP, 2005, Somali annual report, in Washington .DC, l3’~ edition, Westview

press.

UNCTAD, (2009) World Investment Report - Country Fact Sheet: Somalia.

[Electronic].Retrieved on [August 2, 2010] from the World Wide Web:

Tadaro, 1994, informal education in latin America, 5th edition, Collins

publishers limited London.

Golis report, 2009, Golis annual report, in Bosaso.

Funchs, 1997, world telecommunication report, 4th edition, Goldon Press.

Amin M. A. (2005). Social science research: concepts, methods & analysis,

Makerere University Printery, Kampala, Uganda.

Chopra ,2002 , social economic development, London, Jon press.

Ndukwa, 2004, International Telecommunications Infrastructure and Policy. New

York: John Wiley

Wilkins ,1997, Telecommunications and economic growth New York: John Wiley

Malcolm, 1996, long distance and networking / , south western publishing

company, United States of America

50

Carner, 2001, telecommunication and employment creation China, yal published.

Frazin, 1998, telecommunication and social economic development , London

euer press.

Meulbauer, 1980, investment telecommunication ,south western Publishing

company, United States of America.

Golis report, 2007, Golis annual report, published in Bosaso

UNICEF, 2004, the state of woldest refugee, Oxford University, press Oxford

School of economics and applied statistics KIU (2009). Guidelines for

writing research proposal 2009 edition

Oso W. Y. (2007). General guidelines for writing research proposal and report,

kampala international university.

51

APPEN DICES

APPENDIX A: QUESTIONNAIRE FOR EMPLOYEES

Dear Respondent

My names are Khalid Abdulkadir Jama pursuing a Bachelor of Arts degree in

Economics of Kampala International University. I am conducting a research on

“telecommunication companies and social economic development in Puntland

state of Somalia: A case study of Golis telecommunication company.

INSTRUCTIONS

Please answer the following questions to the best of your knowledge. The

information given will be treated with utmost confidentiality.

PART A: Background Information, Please tick where appropriate

1) Sex:

a) Female [ ] a) male [ ]

2) How long have u worked with Golis telecommunication company?

a) Less than one year [ ] b) 1-4 years [ ] c) 5 years plus [ ]

3) Level of education:

a) Not been to school [ ] b) Primary [ ] c) Secondary [

d) Diploma [ ] e) Degree + [. ]

PART B: Telecommunication Company in Improving Standard of Living

4) In your own opinion, how would you explain the te~m telecommunication?

5) Telecommunication has improved the standard of living of the people

a) Agree [ I b) Disagree [ ]

52

If you agree/disagree please state your opinion

6) We are paid regularly on a monthly/weekly basis.

a) Agree [ ] b) Disagree [ ]

If you agree/disagree, why do you think you are paid regularly/irregularly,

justify your opinion

7) We are paid adequate salary.

a) Agree [ I b) Disagree [ ]

If not adequate how much do you feel is equitable pay?

1) Below 100 $ 2) 100 — 250 $ 3) 250 — 400 $

4) 400 — 600 $ 5) 600 and above $ L~J

8) Do your receive any form of rewards from the company?

a)Yes b)No

If yes/no Which methods of rewarding employees does the company use/why do

you think there are no rewards?

PART C: Role of Telecommunication Company in Creation of Jobs

9) Is the company’s_policy providing avenues for creating job opportunities?

a)Yes ___ ___ b)No

--,

If yes, what are the different forms of jobs that it has created?

If no, being a big company why is it failing to secure job opportunities for the

community?

10) What do advise the company on its criteria for job creation?

Part D: Telecommunication and the Promotion of Education and Health

11) Telecommunication companies are improving~the performance of the

education sector?

a) Yes __ b)No __

If yes, how has it contributed to the betterment of the education sector?

If no, why has it failed to contribute to the growth of the education sector?

9) The telecommunication company is improving the health sector performance

a)Yes b)No ____

54

If yes, how has it developed the health sector?

If no, why has it failed to promote the health sector?

Thanks for you cooperation~

D)

APPENDIX B: QUESTIONNAIRE FOR CLIENTS

Dear Respondent

My names are Khalid Abdulkadir Jama pursuing a Bachelor of Arts degree in

Economics of Kampala International University. I am conducting a research on

“telecommunication companies and social economic development in Puntland

state of Somalia: A case study of Golis telecommunication company.

INSTRUCTIONS

Please answer the following questions to the best of your knowledge. The

information given will be treated with utmost confidentiality.

PART A: Background Information, Please tick where appropriate

1) Sex:

a) Female [ ] a) male [ ]

2) Level of education:

a) Secondary [ ] b) diploma [ ] c) Bachelors degre~ & higher [ ]

3) How long have u been linked to Golis telecommunication company?

a) Less than one year [ ] b) 1-4 years [ ] c) 5 years plus E I

4) Designation /position

PART B: Telecommunication Company in Improving Standarciof Living

5) In your own opinion, explain what you understand by telecommunication?

6) Telecommunication has improved the community’s standard of living

a) Agree [ ] b) Disagree [ ]

56

If you agree/disagree please state your opinion

7) We receive bonuses and promotional benefits regularly.

a) Agree [ ] b) Disagree [ ]

If you agree/disagree, why do you think you are given/not given bonuses or

promotional benefits? Please explain.

8) The telecommunication charges are fair.

a) Agree [ I b) Disagree [ ]

If not fair how much do you feel is an equitable charge?

9) Do you think you have attained benefits in form of socio-economic from the

company’s operation?

a)Yes b) No

If yes which are these benefits?

PART C: Rote of Telecommunication Company in Creation of Jobs

10) Is the company’s_policy providing avenues for creating job opportunities?

a)Yes ___ b)No

57

If yes, what are the different forms of jobs that it has created in this community?

If no, being a big company why is it failing to secure job opportunities for the

community7

12) What do advise the company on its criteria for job creation?

Part D: Telecommunication and the Promotion of Education and Health

13) Telecommunication companies are improving the performance of the

education sector?

a) Yes ___ . b)No ___

If yes, how has it contributed to the betterr~ent of the education sector?

If no, why has it failed to contribute to the growth of the education sector?

10) The telecommunication company is improving the health sector performance

a)Yes ___ b)No ___

If yes, how has it developed the health sector?

58

If no, why has it failed to promote the health sector?

Thanks for you cooperation.

59

APPENDIX C: Interview Guide for Head teachers and Medical Personnel

IDENTIFYING IN FORMATION

A) Khafld Abdulkadirjama. Interviewing Date

B) Interview number 1 - 30

C) Survey Interview

D) Telecommunication companies contribute to the socio-economic

improvement of communities, they create jobs and improve on health

and education institution performance. however, despite th~se positive

contributions the companies are faced with a number of challenges.

This therefore a realized need to revisit the operation of the

telecommunication company for better results.

Guiding areas;

1) Have you got any donation from Golis telecommunication company?

2) Which form of grant have you received from the Telecommunication Company?

3) Has Golis played any Corporate Social Responsibility ~ole in this institution?

4) How has this been of benefit to the institution?

5) Explain circumstances under which, Golis is contributing to the improvement of

the state of affairs at the institution?

6) How Golis created job opportunities in the community?

7) What challenges do you think it is encountering by doing so?

8) What advice would you give to Golis to overcome these challenges?

9) How has the staff benefited from Golis?

10)How have the students/clients benefited from the services offered by the

telecommunication company?

11) Comment on the overall contribution of Golis to this institution.

60

APPENDIX D: Interview Guide for Departmenta’ Heads

IDENTIFYING IN FORMATION

E) Khafld Abdulkadir Jama. Interviewing Date’

F) Interview number 1 - 30

G) Survey Interview

H) Telecommunication companies contribute to the socio-economic

improvement of communities, they create jobs and improve on health

and education institution performance. however, despite these positive

contributions the companies are faced with a number of challenges.

This therefore a realized need to revisit the operation of the

telecommunication company for better results.

Guiding areas;

1) Have you given any donation to any institutions or community?

2) Which form of grant have you given?

3) Has Golis played any Corporate Social Responsibility Role in any institution or

community?

4) How has this been of benefit?

5) Explain circumstances under which, Golis is contributing to the improvement of

the state of affairs in institutions and the community at large.

6) How has Golis created job opportunities in the community?

7) What challenges do you think it is encountering by doing so?

8) What advice would you give to Golis to overcome these challenges?

9) Comment on the overall contribution of Golis to institutions and the community

at large.

61