INTRODUCTION
This research investigates the impact of migration remittances in Somalia. The economic advantages of remittances to developing countries have been discussed in many literatures, especially United Nations literatures. Remittance is considered as an important and stable source of income for households in such countries because it is least affected by economic downturns and remains a stable source of income for a family. Studies show that it contributes to economic reduction that is why it is in the interest of most researchers to investigate its impact on developing countries.
The investigation of the economic impact of remittances is applicable to financially unstable countries such as Somalia. Being without a centralized government for almost a decade and reaching a GDP of only 0, it is no doubt that Somalia is to stranger to extreme financial crises. The country can be basically considered as the least productive country in the world. Without the aid of international civil societies, Somalia would have not survived the turmoil it faces. The distributions of income through various means such as remittances are seen as factors that somehow sustain the countries financial needs. However, this assumption is still without empirical support, which is the reason why this study is being proposed. Measuring the economic impact of remittances on poverty-stricken Somalia may help determine its strength and may influence to call for a more systematic development and promotion of remittances program in the country.
BACKGROUND OF THE STUDY
Somalia
Somalia was a former colony of three colonial powers in the 19th century – United Kingdom, France, and Italy. The country received its independence in 1960, when the British and former Italian protectorates united to form the Somali Republic. However, the independence was no reason for celebration as the country was handicapped by a lack of political legitimacy and a weak economic base. Worst, the country fell into the hands of a dictator known as Siad Barre – a dictator who forced the country to excessive militarization and aid dependency. However, despite the support of the former Soviet Union on Barre’s government, Somalia was defeated in the Ogaden war with Ethiopia in 1977-78 that ultimately led to the emergence of armed opposition groups in exile and brutal repression by the army of civilian populations in Somalia, particularly in north-western Somalia (Somaliland) and north-eastern Somalia. Armed opposition to Barre began in earnest in 1988 in north-west Somalia that eventually led to Barre’s fall in 1991. However, the overthrow of Barre was still not a reason for Somalia’s celebration as it only propelled Somalia into a prolonged period of civil war. It resulted in extreme humanitarian condition as people were devastated by famine, forcing 800,000 Somalis to become refugees in neighboring countries, and 2 million internally displaced. A Transitional National Government was established in 2000 but it did not help ease the conflict in the troubled country. Civil wars are still at large and flood and famine are still troubling the citizens. Up to now, urban migration is seen as an inevitable consequence of the conflict and of the impoverishment of large sections of the pastoralist population.
The Economic Situation in Somalia
The geography of Somalia is principally desert, dominated by savannah scrubland. Paradoxically, Somalia depends on agriculture as its main source of economic income. In 1990 agriculture accounted for about 65 per cent of the gross domestic product (GDP), of which livestock was responsible for over 50 per cent, crops 38 per cent, and forestry and fisheries about 1 per cent each. The main agricultural activities are pastoralism (the herding of ruminant animals on bush land), agro-pastoralism (farming with pastoralism) and farming (cereal production and horticulture).
However, such potential economy has been damaged by the destruction of physical infrastructure during the years of civil war and clan conflict. Clans war at each other only to take control of several productions such as bananas. Today, Somalia is one of the Least Developed Countries that desperately need all the help it can get from international concerned civil societies. It once had a per capita income of US$ 290. It was further estimated that 40 percent of the urban population and 70 percent of the rural population lived below what is considered as the “poverty line”.
In 2005, Somalia slightly increased its GDP per capita to 0. Somalia has also a potential industry growth in telecommunications, with 100,000 connections and 35,000 cellular phone users grew in 2002. Although the public communications system was somewhat devastated by recent civil wars, there has been an increase in private wireless companies that offer service in most major cities and charge the lowest international rates on the continent. Furthermore, local cellular telephone systems have been established in Mogadishu and in several other population centres. On the contrary, all banking systems in Somalia have been seriously impaled as the United States forced a closure on Somali-owned Al-Barakaat banking and telecommunications systems in 2001, after charges of aiding terrorism. That has had a damaging economic impact on the transfer of remittances to Somalia.
The Importance of Remittances in Somalia
Remittances are defined as the sum of selected balance of payments flows. It aims at measuring the economic impact of migration mostly on the home economy. It involves the net receipt of transactions between the migrant and the related household in the home country, independently from the source of income and the use this money is put to in the home country. It is the portion of migrant workers’ earnings sent back to their country of origin during their working life or upon retirement.
Remittances are obviously linked with migration. People migrate to get a decent job and earn money, to be able to sustain the family they left behind at their home country. Remittances can have many effects on the home country of the migrant workers, specifically in the financial aspect. For instance, the actual flows sent by a nonresident worker from the host country to his home country (country of residence) are not recorded as such in the BOP. Remittances can basically contribute to the worker’s home country’s Gross National Disposable Income.
Remittances are beneficial for income because it circulates on the economy of the home country of the migrant worker. Remittances are used for family-oriented and collective purposes. It is used for basic consumptions, food, healthcare, education, recreational and community development. Because of this in-flow, it is the developing countries that usually benefit from it. For instance, it was reported that remittances were about 39 percent as large as foreign direct investment (FDI) for developing countries as a whole in 2002 (The Congress of United States, 2005). In general, remittances provide a country’s economy with foreign currency, help finance imports, contribute to the balance of payments, and increase national income (The Congress of United States, 2005). Remittances can be considered as the second largest capital flow to developing countries (UNDP, 2005).
It has been reported that Somalia also benefits from remittances. Many Somalis, since the 1960s, migrated into various neighboring countries, such as oil-rich Gulf countries like Saudi Arabia. Some refugees migrated into Ethiopia, Kenya, Yemen and Djibouti, Canada, Denmark, Egypt, Italy, The Netherlands, Norway, South Africa, Sweden, the UK and the USA. The financial help being sent by those migrants to their families at Somalia help avert humanitarian crises. The advantages of remittances to Somalia, according to UNDP include: enables the country to purchase staple food imports and have a “multiplier” effect on the local economy; contribute to Somalia’s foreign exchange reserves; effectively assist in wealth distribution and achieving the MDGs; may provide a key role for private sector development efforts by enabling families to receive needed capital for housing and small business start ups and expansion; can serves as insurance to alleviate risks associated with new enterprises or be used to build schools and clinics; and may stimulate development as it can be used for investment purpose.
Emphasized the help that remittances contribute to the education sector of Somalia. Explained that the cost of education is alleviated when remittances were sent to families. Because of remittances, children have opportunities to go to school and to be useful citizens in the future.
The different transfer channels for sending remittances across borders include: banks; non-bank money transfer operators; post offices; cash and commodities carries; and informal money transfer services. The fastest among those are banks and non-banks money transfer. Because Somalia does not have a banking system, it can be assumed that the country receives remittances slower than other developing countries. Furthermore, not all Somalis are familiar with Internet money transfers. The country has only 89,000 internet users, only a small fraction of the country’s total population. Somalia should encourage financial service innovation and development to promote faster transfer of remittances.
Remittances have also some perceived disadvantages to the receiving country. This includes reducing the labor force of the country of origin, and remittances may reduce the remaining family members’ incentive to work. Another problem with remittances is its complexity for research. It is difficult to identify which migrant sends remittance and which do not. In Somalia, this problem is even worse because most remittances are only hand-delivered due to lack of banking system. Furthermore, factors affecting remittance transfer are still poorly as there is no systematic research evidence on the incidence of remittance sending in the Somali diaspora or on comparative incidences of remitting among different migration cohorts and in the first and second generation. This also comes with the difficulty of telling how many Somalians live outside Somalia
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PROBLEM STATEMENT
The concept of remittances in Somalia is still a complex unexplored issue in a sense that its specific impact has not yet been fully captured or explained empirically. There are many factors that contribute to this complexity, which include the lack of systematic means to record the remittances transactions in Somalia and the lack of details about the number of Somalis living outside the country. However, what can be explored are the different help remittances contribute to the families who receive it. By carefully investigating their consumption and how those consumptions affect their lives, the impact of remittances can be well explored in the micro-perspective.
RESEARCH QUESTIONS
The following research questions will be addressed in the study:
1. What are the micro-economic and financial impacts of remittances on Somalis?
This first question will be explored, because as mentioned, the effects of remittances can be easily measured from the micro-perspective. Micro-economic variables can be the day-to-day transactions involving the remittance money, and what worth can it contribute to a typical Somali community. Micro-economic impact can be the improvement of a family’s business because of the remittances money they accept, or it can be the contribution of remittances money to the purchase of a particular product or service.
2. What are the specific consumptions with which remittances are spent by a Somali family?
This second question is important as it will guide the researcher to identify the basic consumptions improved by remittances money. These may include the following sub-questions:
2.1. How much remittances money is being spent on basic commodities such as rental pay, food, clothes, water, etc.?
2.2. How much remittances money is being spent on healthcare?
2.3. How much remittances money is being spent on education?
2.4. How much remittance money is being spent on leisure or recreational activities?
2.5. How much remittances money is being spent on building infrastructure?
3. What are the benefits of remittances to a Somali community?
This third question is important because it will help identify the different benefits that a Somali community achieved from remittances. The following sub-questions will be considered:
3.1. Do remittances contribute to the development of infrastructures within the community?
3.2. Do remittances contribute to the improvement of sales of several products within the community?
3.3. Do remittances increase the number of students going to school within the community?
3.4. Do remittances contribute in the health and safety of the community, especially in the development of community health services and the capability of the families to provide finances for health check-ups and needed drugs for common and major ailments?
3.5. Does remittances increase improve the lifestyle of the people within the community?
4. Do remittances maintain the financial stability of the family receiving it?
This question is needed to be explored separately because it will determine the effects of remittances in terms on financial stability not on the community but on the specific families that will be explored. The following sub-questions can be explored here:
4.1. Do remittances sustain the family’s basic common necessities such as food and other needed hygienic products?
4.2. Are there other means that the family acquires money?
4.3. In the opinion of the family, can they survive everyday endeavors without the financial support of their family member from other countries?
4.4. Are their financial earnings higher than the support given them from abroad?
5. How do remittances contribute in the economy of the community?
This question, although complex, is important to determine the economic impact of remittances to the community. However, because it is difficult to acquire records of price increase or price decrease, this will be done by interviewing merchants and organizations within the community. It will be determined if a particular product had an increase in sales per year. Although it will not directly trace if remittances have a link with those price changes, we will have an idea on the basic economic changes taking place within a community receiving remittances money.
6. What are the problems being experienced by Somalis in acquiring remittances money?
This question is important to explore because it will lead to discovery of the limitations of money transfer in Somalia. As a country without a solid banking system that the citizens and their relatives from abroad can rely into, there may be great barriers in transferring money to the country. The following sub-questions will be explored:
6.1. What is the medium being used by the migrant Somali to send money to his or her family in Somalia?
6.2. Are there any available banks for money transfer?
6.3. How long does it take for a family to receive the money from their relative abroad?
6.4. Do they experience incidents such as failure to receive a particular delivery?
6.5. Are they satisfied with the money transfer options available in Somalia?
Questions will be addressed with quantitative and qualitative research strategies. The research will be based on the explanatory and descriptive method.
AIMS AND OBJECTIVES
The aim of the study is to determine the impact of remittances to Somalis in micro-economic and finance terms. Another aim of the study is to be able to help the United Nations know more about the impact of remittances in Somalia.
The following objectives will be addressed in the study:
1. To conduct a literature review of previous studies about the impact of remittances in Somalia.
2. To trace Somalis receiving remittances from family members abroad.
3. To conduct interviews on chosen Somalis who receive remittances from abroad.
4. To analyze the collated data.
5. To draw conclusion based on the result and promote insightful recommendations.
IMPORTANCE OF THE STUDY
The study can be an important contribution to civil societies, specifically for the Somalis, as it may help determine the impact of remittances even on the micro-perspective. Although there are perceive disadvantages, remittances might be important to thousands of Somalis for their survival. By investigating how remittances help a family, an idea about the impact of remittances can be structured and may help influence the development of programs that will promote it to the rest of the Somalis or to its current transitional national government.
It can also be argued that the study is important because it will greatly help the task of the United Nations in helping Somalia to its recovery. The findings of this study may vary, and may slightly or greatly contribute to the understanding of remittances’ role in Somalia. Nonetheless, it will overall help the growth of studies about the issue and will contribute to building the necessary steps to prove the need for more remittances for Somalia.
METHODS AND PROCEDURES
Research Strategy
The research process of the study can be best illustrated with the use of the ‘Research Process Onion’. The Onion refers that in order to come to the central issue of how to collect the data needed to answer ones research questions, there are important layers of the onion that need to be peeled away: the first layer raises the question of the research philosophy to adopt, the second considers the subject of research approach that flows from the research philosophy, the third examines the research strategy most applicable, the fourth layer refers to the time horizon a researcher applies to his research, and the fifth layer is the data collection methods to be used.
Figure 1 shows how the researcher conceptualized the research approach to be applied in this study in order to come up with the pertinent data needed to answer the research questions stated in the first chapter, as well as to arrive to the fulfilment of this research undertaking’s objectives.
The first layer of the onion refers to the research philosophy of the study, which is interpretivism. As mentioned, the aim of this study is to investigate new situations and not to prove a hypothesis. Interpretivism will be helpful in addressing this study subjectively. Interpretivism is the necessary research philosophy for this study because it allows the search the ‘details of the situation to understand the reality or perhaps a reality working behind them’. For the interpretivist, it is necessary to explore the subjective meanings motivating people’s actions in order to understand these. In other words, the aim of the interpretivist is to understand situations and give plausible and acceptable accounts of them. Furthermore, as mentioned earlier, phenomenological analysis will be used in the paper
On the other hand, the second layer of the onion refers to the research approach of the study. Because it will be based on intepretivism, it is proper that the research approach will be induction rather than deduction. The deduction approach is dedicated to deducing hypothesis or expressing and testing hypothesis in operational term. On the contrary, induction is different from deduction. The purpose of induction is to get a feel of what was going on, so as to understand better the nature of the problem. The task of the inductive researcher is to make sense of the interview data to be collected by analyzing those data. In other words, interpretation of raw data will be observed in the study.
The third layer refers to the research strategies that will be used in the study. Three research strategies will be used to accommodate the issues to be explored. They are: survey; case studies; and grounded theory.
Surveys will be useful to acquire basic information important in the development of the study. One of its purpose is to describe, e.g., to count the frequency of some event or to assess the distribution of some variables such as proportion of the population of different age groups, sex, religion, castes and languages, knowledge, attitude and adoption of practices about particular issues, and other information of similar nature about the population. They may also be done to measure the extent and nature of effect and impact of a project to the population exposed to it for a reasonable length of time. Accordingly, the survey strategy gives a researcher more control over the research process; however, the data collected by this strategy may not be as wide ranging as those collected by other research strategies. Aside from the questionnaire method, other data collection methods belonging to the survey strategy include structured observation and structured interviews, which will both be utilized in this study.
The case study will also be used as a research strategy because it will enable the researcher to look deeper into several selected cases and understand better the phenomenon in the light of those cases. A case study is defined as a strategy for doing research that involves an empirical investigation of a particular contemporary phenomenon within its real life context with the utilisation of various sources of evidence, and in this strategy, one has the considerable ability to generate answers for the questions “why?”, “what?” and “how?”, where data collection methods applicable with such approach include questionnaires, interviews, observation, and documentary analysis.
The strategies will be based on explanatory and descriptive method. Explanatory studies are studies that establish causal relationships between variables that are explanatory. It will seek to determine the relationships between remittances money and different variables within the community such as economic, health, and educational variables. Explanations will be aided with different categories of data, as well as information from different related literatures.
This study will also be descriptive as it will try to know the basic impact of remittances into a Somali family by investigating where they spent the money and to which industry the money circulates. A descriptive research intends to present facts concerning the nature and status of a situation, as it exists at the time of the study. It is also concerned with relationships and practices that exist, beliefs and processes that are ongoing, effects that are being felt, or trends that are developing. In addition, such approach tries to describe present conditions, events or systems based on the impressions or reactions of the respondents of the research.
The fourth layer of the onion presents the time horizons of the study, which is cross-sectional. Obviously, cross-sectional time horizon is most applicable in the study as it will not seek to investigate for a long period of time because of time constraint. Basically, longitudinal study would be time consuming. Cross-sectional, however, fits well for the study as it only investigate a particular phenomenon at a particular time. Furthermore, case studies are usually based on interviews conducted over a short period of time. The study will not exceed a period of 1 year.
Data Collection
The fifth layer of the research process onion refers to the data collection techniques that will be used in the study. This will be done with human as well as with document sample. Samples for the study should be genuine Somali families who receive money regularly from one or more of their family members abroad. Convenience sampling will be used to choose which family to explore. The plan is to focus on one Somalia community where most citizens receive cash from relatives working abroad. A number of 10 Somali families will be chosen for investigation. Important documents such as community receipts and other formal legal documents to determine improvement within the community will be collected.
Data collection methods will be semi-structured interviews, observations, surveys, and documentation of important legal papers.
In semi-structured interviews, the researcher had a list of themes and questions to be covered, although these may vary from interview to interview, meaning, some questions may be omitted in particular interviews, given the specific organisational context that is encouraged in relation to the research topic, and the order of questions, as well, may also be varied depending on the flow of conversation. Meanwhile, additional questions may be required to explore the research questions and objectives given the nature of events within particular organisations, and the nature of the questions and the ensuing discussion mean that the data will be recorded, perhaps by note-taking or by tape-recording the conversation. This approach will provide the researcher the opportunity to ‘probe’ answers, which can be done in instances where there is a need or want for the interviewees to explain further or build on their responses, and gives the interviews give interviewees the chance to hear themselves “thinking aloud” about things they might not have previously thought about, which in turn, may lead a to collect rich and detailed set of data.
Interviews with the family will be conducted informally as the situation arises or as the researcher sees the need for it. An interpreter will be hired throughout the research process so as the sharing of knowledge and information will be fluent and free from misunderstandings. The researcher will keep a researcher’s journal. This will be where important answers from interviews will be put into place. Dates when the interviews were conducted as well as the time of the day will be included. The use of self-memos will also be utilized so as to have a record on ideas that may arise from the events. This will make analysis of interviews easier. As mentioned, 10 Somali families that have a relative abroad supporting them will be part of the case study. Interviews will be most utilized in these case studies.
Interviews with any citizens will also be conducted. The names of the interviewed citizen will be put in the journal as well the relevance of their interview to the study.
On the other hand, observations within the community will also be made. Things that will be observed includes the progress of the community in terms of several community factors such as healthcare, transportation, water supply, food supply, retail sales, etc. Observation notes will be taken and will be put on the research journal.
Surveys will also be conducted to have a statistical representation on the study. Structured questionnaires will be used for survey interviews. Community members, except for the families that will be chosen for the case study, are the ones to be surveyed. Questionnaires collect data by asking people to respond to exactly the same set of questions, and they are often used as part of survey strategy to collect descriptive data about opinions, behaviours and attributes, where data collected are normally coded and analysed by computer. Accordingly, the choice of questionnaire is influenced by the research questions and objectives, as well as the resources, available, therefore, a researcher must know precisely, prior to designing a questionnaire, what data is needed to be collected in order to come up with answers that will address the research questions and objectives. In addition, in designing a questionnaire, one should consider the wording of individual questions prior to order in which they appear, and the order and flow of questions should be logical to the respondents.
The structured questionnaire will be designed with a 5-Point Likert Scale. This will help determine the level of agreement of the respondents for each question.
Documentation of important documents will also be conducted to have legal evidences about the transactions taking place within the community. Local governments will be approached and will be asked to provide basic yearly reports about the community.
Data Analysis
Qualitative data analysis will be used to analyze the data in the study. The four steps of analytical process will be followed: categorization; ‘unitising’ data; recognizing relationships and developing categories; and developing and testing hypothesis to reach conclusion.
In categorization of data, similar data from each case and from the information collated from the government departments will be categorized. Categories include the following: the economic impact of remittances; the social impact of remittances; and the impact of remittances on individual families. Other sub-categories can also be added during the research process if the research sees it fit.
On the other hand, ‘unitising’ of data means to unite data that are similar. This part of the project will arrange the data and combine those that are similar in nature. Data that have similar essence from both the qualitative and quantitative research will be unitize to form a coherent conclusion on that particular finding.
In recognising relationships and developing categories, the initial categories made will be reviewed so as to consider uniting or dividing information. The initial categories will provide the researcher an overview of existing relationships within the data. Relationships between different categories of data will be looked at in this part of the research.
Finally, as patterns are revealed among the data and relationships where identified, a hypothesis and conclusion to that hypothesis will be developed.
Results of the study will be documented and presented based on their subject categories.
Quantitative data analysis will also be provided in the study. Results from the surveys will be analyzed statistically. The general viewpoint of the society in the issues presented here may help in developing a coherent conclusion for the study. The latest SPSS software will be used to determine the weighted mean and percentage of the results.
Qualitative and quantitative results will be unitized to form a conclusion and to form recommendations and relevant frameworks.
Credit:ivythesis.typepad.com
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