ABSRRACT

This study, the role of small business in economic growth in Puntland, was undertaken to find
out the role of small business in Puntland and its impact on the economic growth of Puntland.
Small Enterprises are accepted globally as a tool for empowering the citizenry and economic
growth. It has been associated with rapid economic growth of the well developed countries
across the world.

In Somalia since the government was collapsing in 1992 efforts have been made by the citizens
of the country to establish their own small scale businesses and therefore step by step they
succeeded their dreams and established lot of small businesses, employed lots of people invented
new buildings and infrastructure and later on established companies.

A total of 90 small business owners were randomly selected from the cities; Bosaso, Galkaio and
Garowe. A questionnaire was constructed and distributed to the selected people. The responses
were collected and analyzed using Excel sheet 2013for analytical tool.

This study was divided into five chapters:

Chapter One: introduction, background of the study, thesis statement, problem statement, the
purpose of the study, research objectives, research questions, hypothesis, significance of this
study, scope of the study and definition of terms.
Chapter Two: provides a theoretical overview of the study and related studies.
Chapter Three: research methodology and design.
Chapter Four: analysis and interpretation of findings.
Chapter Five: Conclusions, recommendation, references and appendix.

ACKNOWLEDGEMENT

My complete gratitude goes to Allah Almighty, The Merciful and The Provider, who plentifully
gave me the strength, resilience, foresight and thoughtfulness to undertake this study and
complete it to satisfaction.

Without question, the biggest thank you goes out to my beloved Parents (Zianab & Hassan) for
always believing in me and being supportive of my growth and education, your unconditional
love and for your constant prayers. I am forever grateful of being your son.

I wish to especially thank Prof. Mohamed Samantar for giving me this opportunity to prove
myself and also for all his vital feedbacks and supports.

Also I am especially thanking and appreciating my lecturer Mr. Abdurrahman Sheikh don Ali for
his teachings of the course Research Methodology and his valuable suggestions and support.

I will also like to appreciate my beloved Aunt Muno Ahmed Warsame for showing me support
and motivating me all the time.

Lastly I wish to thank and acknowledge the contribution of the following members:
1. Abdulkadir Ahmed Warsame; a former graduate of PSU
2. Ahmed Abshir Surato; a lecturer at PSU
3. Abdullahi Abdurrahman Mahmoud; classmate

DEDICATION

I dedicate this work to my beloved brother Abdullahi Qacle and my uncle Awil Abdullahi
(May Allah have Mercy on them)
For my love to them.

DECLARATION

I, Mohamed Hassan Abdullahi, hereby declare that this thesis with the title: THE ROLE OF
SMALL BUSINESS IN ECONOMIC GRWOTH IN PUNTLAND is my original work and
not that of another author.

APPROVAL

This project/work has been done under my supervision as a University Supervisor and submitted
to the faculty of Business and Economics at Puntland State University with my approval.

Prof. Mohamed Samantar

TABLE OF CONTENTS
CHAPTER ONE ......................................................................................................................................... 1
INTRODUCTION ........................................................................................................................................ 1
1.1 Background of the study ..................................................................................................................... 1
1.2 Thesis Statement ................................................................................................................................. 2
1.3 Problem Statement .............................................................................................................................. 2
1.4 The Purpose of the Study .................................................................................................................... 3
1.5 Research Objectives ............................................................................................................................ 3
1.6 Research Questions ............................................................................................................................. 3
1.7 Hypothesis........................................................................................................................................... 4
1.8 Significance of this Study ................................................................................................................... 4
1.9 Scope of the Study .............................................................................................................................. 4
1.10 Definition of terms ............................................................................................................................ 4
CHAPTER TWO ........................................................................................................................................ 6
LITERATURE REVIEW ............................................................................................................................. 6
2.1 What is Small Business? ..................................................................................................................... 6
2.2 The Role and Importance of Small business ....................................................................................... 7
2.3 Diversity of Small business ................................................................................................................ 7
2.4 Major Contributions of Small business ............................................................................................... 7
2.5 Challenges of the SMEs ...................................................................................................................... 8
2.6 Economic growth ................................................................................................................................ 9
2.7 Economic growth versus the business cycle ..................................................................................... 10
2.8 Theories of economic growth ........................................................................................................... 10
2.8.1 Classical growth theory.............................................................................................................. 10
2.8.2 The neoclassical growth model .................................................................................................. 11
2.8.3 Salter cycle ................................................................................................................................. 11

2.8.4 The big push ............................................................................................................................... 11

2.8.5 Schumpeterian Growth .............................................................................................................. 12
2.9 The Contribution of small business to the economy ......................................................................... 12
CHAPTER THREE .................................................................................................................................. 13
RESEACH METHODOLOGY AND DESIGN ......................................................................................... 13
3.1 Introduction ....................................................................................................................................... 13
3.2 Research Design................................................................................................................................ 13
3.3 Population ......................................................................................................................................... 13
Categories of Respondents ...................................................................................................................... 14
3.4 Sampling Procedure .......................................................................................................................... 14
3.5 Research Instrument.......................................................................................................................... 15
3.6 Sources of Data ................................................................................................................................. 15
3.7 Research Procedure ........................................................................................................................... 15
3.8 Data Collection ................................................................................................................................. 15
3.9 Ethical Consideration ........................................................................................................................ 16
3.10 Limitation........................................................................................................................................ 16
CHAPTER FOUR..................................................................................................................................... 17
ANALYSIS AND INTERPRETATION OF RESULTS ............................................................................ 17
4.0 Overview ........................................................................................................................................... 17
4.1 Democratic Characteristics of the Respondents ............................................................................ 17
4.2 The degree of small business ........................................................................................................ 22
4.3 The degree of economic growth.................................................................................................... 27
4.4 Significant relationships between Small business & Economic growth ........................................... 32
CHAPTER FIVE ...................................................................................................................................... 33
FINDINGS, CONCULTION & RECOMMENDATIONS ........................................................................ 33

5.1 Summary of the Findings .................................................................................................................. 33

5.1.1 Democratic Characteristics of the Respondents ......................................................................... 33
5.1.2 The degree of small business ..................................................................................................... 34
5.1.3 The degree of economic growth ................................................................................................. 35
5.2 Conclusion ........................................................................................................................................ 36
5.3 Recommendations ............................................................................................................................. 37
References ................................................................................................................................................... 39
APPENDIX A: Research Questionnaire ..................................................................................................... 41
APPENDIX C: Correlation Table ............................................................................................................... 52

LIST OF CHARTS
Chart 4.1.Error! Bookmark not defined.Shows classification of respondents according to
gender... pg 17
Chart 4.1.2 shows the classification of respondents according to age.pg 18
Chart 4.1.3 shows the classification of respondents according to the level of education.pg 19
Chart 4.1.4 shows the classification of respondents according to the term of running the
business..pg 19
Chart 4.1.5 shows the classification of respondents according to their position...pg 20
Chart 4.1.6 shows the classification of respondents according to the working times...pg 21
Chart 4.1.7 shows the classification of respondents according to the type of businesspg 21
Chart 4.2.1 shows whether respondents attended seminars to grow their business..pg 22
Chart 4.2.2 shows whether respondents make business plans..pg 23
Chart 4.2.3 shows whether respondents employ other people..pg 24
Chart 4.2.4 shows whether respondents business profit is increasing.pg 24

Chart 4.2.5 shows respondents market share expects .pg 25

Chart 4.2.6 shows whether respondents net profit is higher....pg 26
Chart 4.2.7 shows whether the net profit of their business is satisfying their expectations..pg 26
Chart 4.2.8 shows whether the respondents current revenue is satisfactory .. pg 27
Chart 4.3.1 shows the source of business products .. pg 28
Chart 4.3.2 shows whether respondents find enough customers.. pg 28
Chart 4.3.3 shows the role of small business on employment generation ... pg 29
Chart 4.3.4 shows the role of small business in economic growth... pg 30
Chart 4.3.5 show weather business provides enough income for the needs .... Pg 30
Chart 4.3.6 shows whether the income of the respondents was growing time after time pg 31
Chart 4.3.7 shows the role of small scale business in the economic growth of the Puntland..Pg 32

CHAPTER ONE
INTRODUCTION
This study examines the role of small business in economic growth in Puntland. Chapter
one outlines the background of the research, as well as detailing its problem statement,
explaining the purpose and objectives of the study and defining the key concepts of the variables.
1.1 Background of the study
The northeast region of Somalia has, since mid-1998, been referred to as the Puntland
State of Somalia. After a series of locally sponsored conferences, in which a traditional council
of elders (Isimada) played an important role, the SSDF leadership and community elders had at
last taken positive steps by calling an all-inclusive general conference in Garowe on May 5,
1998. As stipulated in Article 1 of the Transitional Constitution, Puntland is a part of an
anticipated Federal State of Somalia . It is striving for the unity of the Somali people and the
creation of a Somali government based on a federal system. The Puntland State consists of the
following seven regions: Bari, Nugal, Mudug, Sanaag, Sool, Ayn & Karkaar. A fast-growing
state, it has also evolved into different modes of business.
Since the 1960s to date, small and medium-sized enterprises (SMEs) have been given due
recognitions especially in the developed nations for playing very important roles towards
fostering accelerated economic growth, development and stability within several economies.
They make-up the largest proportion of businesses all over the world and play tremendous roles
in employment generation, provision of goods and services, creating a better standard of living,
as well as immensely contributing to the gross domestic products (GDPs) of many countries
(OECD 2000).
Unfortunately, according to the U.S. Small Business Administration, over 50% of small
businesses fail in the first year and 95% fail within the first five years "Businesses with fewer
than 20 employees have only a 37% chance of surviving four years (of business) and only a 9%
chance of surviving 10years", reports Dun &Bradstreet and of these failed businesses, only 10%
of them close involuntarily due to bankruptcy and the remaining 90% close because the business
was not successful, did not provide the level of income desired, or was too weak to continue.

For the past thirty years, a big change has faced to the respect and the value that people
give to Small Business. And most of these changes were that the small business became well
respected by the societies. Although in earlier times the big businesses were having a role and
respect among their societies, today most of the world civilized countries agreed that the
development of a country is depending on the number and the value of small businesses that they
have (Shire 2008).
According to Leon, Charles & William (1991), a small business is any business that is
independently owned and operated, is not dominant in its field, and does not engage in many
new or innovative practices. It may never grow large, and the owners may not want it to. These
small business people tend to enter business for reasons other than making a lot of money.
Thus these owners usually prefer a more relaxed and less aggressive approach to running the
business. In other words they manage the business in a normal way, expecting normal sales,
profit, and normal growth.
In Somalia, after the collapsed of the Somalia Government, the number of existing big
business and firms has closed or looted and as a result of that many small businesses were started
and created. At the same time the small business in Somalia has strong impact on the economy as
whole and specifically in the life style of the society living in Puntland. In this study we are
going to examine the role of small business in economic growth in Puntland as a whole and
especially in the largest three cities; Garowe, Bosaso & Galkaio.

1.2 Thesis Statement

The establishment and the creation of small business has an important role in the
economic growth of Puntland and also it can play tremendous roles in employment generation,
provision of goods and services, creating a better standard of living, as well as immensely
contributing to the gross domestic products (GDPs) of Puntland.

1.3 Problem Statement

The establishment and the staring of small business is very common in Puntland,
recently, there is a lot of people investing their money in order to start a small business. Despite

the risks that comes from the small business are uncertainties and yet many families are busy in
collecting of wealth to start up small business with the aim of generating profit.
Since, the starting of small business is rapidly increasing and common in the market, this study
identifies the role of small business in economic growth and provides recommendation in order
to rectify the gaps.

1.4 The Purpose of the Study

The main purpose of the present study was to examine the role of small business in
economic growth in Puntland markets. The secondary purpose was to investigate the impact of
small businesses on the economic development, by identifying and understanding the best ways
that small businesses can be successful.

1.5 Research Objectives

The general objective of the study is to find out the role of small business in economic growth in
Puntland markets. The special objectives of this study are to:
1. Determine the level of profile of respondents in terms of age, gender, qualification and
experience of small business owners in Puntland markets.
2. To assess the degree of small business at Puntland.
3. To find out the extent of economic growth at Puntland.
4. To establish a significant relationship between small businesses and the economic growth
at Puntland.

1.6 Research Questions

This research paper will answer the following questions.
1. What is the level of respondents in terms of age, gender, qualification and experience?
2. What is the degree of small businesses practiced in Puntland markets?
3. What is the extent of economic growth in Puntland?
5. Is there any significant relationship between the successful small businesses and the
economic growth in Puntland?

1.7 Hypothesis

There is a significant relationship between small business and economic growth in

Puntland markets.

The successful small business affects the economic development in Puntland cities.

1.8 Significance of this Study

This study is important for the people of Puntland as a whole and especially for the
entrepreneurs; those starting a new business and those have already started. This study is also
important for the government to decide the best ways to improve the development of small
businesses in order to contribute to the economic growth and the creation of employment
opportunities to avoid inflation and unemployment.
This study will provide strategies and procedures to establish successful small businesses
and the role of small business towards the economic growth, as much as this undertaking is
primarily for academic purposes, its findings and recommendations are important for both
practical use and future references.
1.9 Scope of the Study
This study will be limited in Puntland special in Garowe, Bosaso & Galkaio districts
within the context of business markets, it will primarily focus on the relationship between small
business and economic growth. This study will generally be conducted Oct-Dec 2013.

1.10 Definition of terms

Small Business: is any business that is independently owned and operated, is not dominant in its
field, and does not engage in many new or innovative practices. It may never grow large, and the
owners may not want it to.

Leon, Charles & William (1991)

Economic growth: Increase in a country's productive capacity, as measured by comparing gross

national product (GNP) in a year with the GNP in the previous year, an increase in the capital
stock, advances in technology, and improvement in the quality and level of literacy are
considered to be the principal causes of economic growth. Also a positive change in

the level of production of goods and services by a country over a certain period of time.
http://www.businessdictionary.com/definition/economic-growth.html#ixzz2R2mSNcOw

CHAPTER TWO
LITERATURE REVIEW
Although there are many researchers who have studied this field internationally yet there
is no academic researchers that has been written about this topic in the context of Puntland in
that case this research paper will study the role of the small business on the economic growth of
Puntland. In this chapter we will summarize some of the main ideas and definitions wrote about
this field.
2.1 What is Small Business?
Superficially, this appears essay to answer. A number of firms that you patronize-such as the fast
food restaurant, small shops, beauty salon, car washes/cleaners/repairs, Minimarkets and milk
sellers are all examples of small businesses. The Committee for Economic Development stated
that a small business has at least two of the following four features:

Management is independent, since the manager usually owns the firm.

Capital is supplied and ownership is held by an individual or few individuals.

The area of operation is primarily local, although the market isnt necessarily local.

The firm is small in comparison with the largest competitors in the industry.

Perhaps the best definition of small business is the one used by congress in the small business act
of 1953. Which states that a Small Business is once that is independently owned and operated
and not dominant in its field of operation1.
The Bolton Committees Report on Small Business (1971) is one of the most widely quoted
sources of definitions and understandings of the small business sector. Bolton (1971) attempted
to overcome the problem of small firm definition by formulating what it called an economic
definition and statistical definition.
The economic definition regarded firms as being small if they satisfied three criteria:
They had a relatively small share of their market place.
They were managed by owners or part-owners in a personalized way, and not through the
medium of a formalized management structure.
They were independent, in the sense of not forming part of a larger enterprise2.

2.2 The Role and Importance of Small business

It has long been recognized that small and micro businesses have a vital role to play in
the economy (Stanworth and Gray, 1991) with small business accounting for 99% of all
businesses in the UK, and an estimated 3.7 million active businesses in 1998. Collectively, small
and medium enterprises (SMEs) are responsible for 65% of employment and 57% of Gross
Domestic Product within the UK (Tange, 2001)4.
2.3 Diversity of Small business
Small firms come in many types and sizes, and defining and classifying them is difficult.
The Small Business Administration (SBA) the federal agency that gives advice, financial
assistance, and other services to small business classifies them as follows.
Manufacturing firm uses raw material and semi-finished parts to produce finished goods. Since
the initial investment-the plant, machines, and equipment- is large, and operating costs and risks
are high, relatively few such firms are true small. A small manufacturing business is one where
the maximum number of employees may range from 500 to 1500, depending on the industry on
which is primarily engaged.
General Construction firms build a residence (both private and rental) commercial and
industrial buildings, government offices and installations, and structures of other types. Small
businesses are those average annual receipts for the past three years do not exceed $9.5 to $17
million, depending on the industry.
Wholesalers buy finished products from manufacturers and other producers and resell them to
retailers for sale to the ultimate consumer. A small firm has a maximum of 100 employees.
Retailers obtain goods from manufacturers, wholesalers, broken and agents and sell them to the
customers for use. Small retailers have annual sales not exceeding $ 3.5, to $13.5 million.
Depending on the industry. Stores, drug stores, and food service establishments are examples.
Service businesses perform essential specialized, often technical service for customers,
businesses and institutions, such as schools, governments and hospitals. To be classified as
small. They must have annual not to exceed $3.5 million to $14.5.
2.4 Major Contributions of Small business
Small firms differ from their larger competitors. Lets look some of the major
contributions made by small businesses that set them apart from large firms.

Smaller firms tend to:

Encourage innovation and flexibility.
Maintain close relationship with customers and the community.
Keep large firms competitive.
Provide employees with comprehensive learning experiences.
Develop risk takers.
Generate employment.
2.5 Challenges of the SMEs
Most SMEs die within their first five years of existence. Another smaller percentage goes into
extinction between the sixth and tenth year thus only about five to ten percent of young
companies survive, thrive and grow to maturity (Patrick Onuorah 2009).
Many factors have been identified as to the possible causes or contributing factors to the
premature death. Key among this include insufficient capital, lack of focus, inadequate market
research, over-concentration on one or two markets for finished products, lack of succession
plan, inexperience, lack of proper book keeping, lack of proper records or lack of any records at
all, inability to separate business and family or personal finances, lack of business strategy,
inability to distinguish between revenue and profit, inability to procure the right plant and
machinery, inability to engage or employ the right calibre staff, plan-lessness, cut-throat
competition, lack of official patronage of locally produced goods and services, dumping of
foreign goods and over-concentration of decision making on one (key) person, usually the
owner, fuel crises or shortages, policy inconsistencies, reversals and shocks, uneasy access to
funding, poor policy implementation, restricted market access, raw materials sourcing problems,
competition with cheaper imported products, problems of inter-sectorial linkages given that most
large scale firms source some of their raw material outside instead of subcontracting to SMEs,
insecurity of people and property, fragile ownership base, lack of requisite skill and experience,
thin management, unfavourable monetary policies, lack of preservation, processing and storage
technology and facilities, lack of entrepreneurial spirit, poor capital structuring as well as poor
management of financial, human and other resources. The reason for this all-important sectors
dismal performance have been varied and convoluted depending on who is commenting or

whose view is being sought. For sure it has nothing to do with governments appreciation of the
vital central role of the sector as evidenced by how well SMEs have been acknowledged and
orchestrated in the various governments budget, with the imperativeness of SMEs as the
bulwark for employment generation, poverty reduction and technological development being
highlighted. While many attribute the relatively poor performance of SMEs in Puntland when
compared to the significant roles which SMEs have played in developed economies such as the
United Kingdom, Germany and the United States and even developing countries of the world
like India to the challenges outlined above, some others hinge the reasons on the fair share of
neglect on the sector by the government. The latter group argues that governments appreciation
of the SMEs in capacity building has always been restricted to the pages of the budget
presentations and submissions at various fora.
The theories explored herein is in line with my findings. Setting up viable SME businesses will
attract infrastructural developments and such infrastructures like road, electricity, water etc. Will
aid the operations of the SMEs in areas of production cost reduction, marketing and products'
accessibility which will in turn lead to increase in profit margins irrespective of the type of
businesses involved. While the SMEs maintains good profit margins and healthy balance sheets,
banks and other financial institutions will be disposed to granting financial assistance like loans
and grants to the SMEs. Government support is however required to ensure these loans are given
at affordable interest rates. Government support is also required in providing favorable and stable
policies to make SME businesses more conducive. With such conductive environments, SMEs
will continue to thrive and improve on their profit records and will readily embrace Information
Technologies (IT). With IT enough knowledge and information is accessible on the globe with
which SMEs can use to turn around and improve on their businesses.
2.6 Economic growth
Is the increase in the amount of the goods and services produced by an economy over time? It is
conventionally measured as the percent rate of increase in real gross domestic product, or real
GDP. Growth is usually calculated in real terms, i.e. Inflation-adjusted terms, in order to obviate
the distorting effect of inflation on the price of the goods produced. In economics, "economic

growth" or "economic growth theory" typically refers to growth of potential output, i.e.,
Production at "full employment"5.
As an area of study, economic growth is generally distinguished from development economics.
The former is primarily the study of how countries can advance their economies. The latter is the
study of the economic aspects of the development process in low-income countries.
Investopedia explains 'Economic Growth' Economic growth is usually associated with
technological changes. An example is the large growth in the U.S. economy during the
introduction of the Internet and the technology that it brought to U.S. industry as a whole. The
growth of an economy is thought of not only as an increase in productive capacity but also as an
improvement in the quality of life for the people of that economy6.
Economic growth is important because it provides a foundation for the future of society.
Economic growth can contribute to advancements in all fields, creating beneficial outcomes and
solutions to many economic problems.
2.7 Economic growth versus the business cycle
Economists distinguish between short-run economic changes in production and long-run
economic growth. Short-run variation in economic growth is termed the business cycle. The
business cycle is made up of booms and drops in production that occur over a period of months
or years. Generally, economists attribute the ups and downs in the business cycle to fluctuations
in aggregate demand.
In contrast, the topic of economic growth is concerned with the long-run trend in production due
to structural causes such as technological growth and factor accumulation. The business cycle
moves up and down, creating fluctuations around the long-run trend in economic growth.
2.8 Theories of economic growth
2.8.1 Classical growth theory
The modern conception of economic growth began with the critique of Mercantilism, especially
by the physiocrats and with the Scottish Enlightenment thinkers such as David Hume and Adam
Smith, and the foundation of the discipline of modern political economy.

10

David Ricardo argued that the trade was a benefit in a country, because if one could buy a good
more cheaply from abroad, it meant that there was more profitable work to be done here. This
theory of "comparative advantage" would be the central basis for arguments in favor of free
trade as an essential component of growth.
2.8.2 The neoclassical growth model
The notion of growth as increased stocks of capital goods was codified as the Solow-Swan
Growth Model, which involved a series of equations which showed the relationship between
labor-time, capital goods, output, and investment. According to this view, the role
of technological change became crucial, even more important than the accumulation of capital.
This model, developed by Robert Solow and Trevor Swan in the 1950s, was the first attempt to
model long-run growth analytically. This model assumes that countries use their
resources efficiently and that there are diminishing returns to capital and labor increases. From
these two premises, the neoclassical model makes three important predictions. First, increasing
capital relative to labor creates economic growth, since people can be more productive given
more capital. Second, poor countries with less capital per person will grow faster because each
investment in capital will produce a higher return than rich countries with ample capital. Third,
because of diminishing returns to capital, economies will eventually reach a point at which any
increase in capital will no longer create economic growth. This point is called a "steady state".
2.8.3 Salter cycle
According to the Salter cycle, economic growth is enabled by increases in productivity, which
lowers the inputs (labor, capital, material, energy, etc.) For a given amount of product
(output). Lowered cost increases demand for goods and services, which also results in capital
investment to increase capacity. New capacity is more efficient because of new technology,
improved methods and economies of scale. This leads to further price reductions, which further
increases demand, until markets become saturated due to diminishing marginal utility.
2.8.4 The big push
In theories of economic growth, the mechanisms that let it take place and its main determinants
are abundant. One popular theory in the 1940s, for example, was that of the "Big Push" which
suggested that countries needed to jump from one stage of development to another through
a virtuous cycle, in which large investments in infrastructure and education coupled with private

11

investments would move the economy to a more productive stage, breaking free from economic
paradigms appropriate to a lower productivity stage
2.8.5 Schumpeterian Growth
Schumpeterian growth is an economic theory named after the 20th
century Austrian economist Joseph Schumpeter. Unlike other economic growth theories, his
approach explains growth by innovation as a process of creative destruction, which captures the
dual nature of technological progress: in terms of creation, entrepreneurs introduce new products
or processes in the hope that they will enjoy temporary monopoly-like profits as they capture
markets5.
2.9 The Contribution of small business to the economy
In the US, small business (less than 500 employees) accounts for more than half the
nonfarm, private GDP and around half the private sector employment. Regarding small business,
the top job provider is those with less than 10 employees, and those with 10 or more but fewer
than 20 employees comes in as the second, and those with 20 or more but fewer than
100 employees comes in as the third (interpolation of data from the following references). The
most recent data shows firms with less than 20 employees account for slightly more than 18% of
the employment. According to The Family Business Review, There are approximately 17
million sole-proprietorships in the US. It can be argued that a sole-proprietorship (an
unincorporated business owned by a single person) is a type of family business and there are
22 million small businesses (less than 500 employees) in the US and approximately 14,000 big
businesses. Also, it has been found that small businesses created the most new jobs in
communities, In 1979, David Birch published the first empirical evidence that small firms
(fewer than 100 employees) created the most new jobs and Edmiston claimed that perhaps the
greatest generator of interest in entrepreneurship and small business is the widely held belief that
small businesses in the United States create most new jobs. The evidence suggests that small
businesses indeed create a substantial majority of net new jobs in an average year. Local
businesses provide competition to each other and also challenge corporate giants.

12

CHAPTER THREE
RESEACH METHODOLOGY AND DESIGN
3.1 Introduction
The previous two chapters we're dealing with the orientation and the literature of previous
studies. In this chapter it will a detailed description of all the procedures to be followed in order
to achieve the research objectives. Before we step forward lets define what research
methodology is? According to S. Rajasekar & P. Philominathan & V. Chinnathambi (2013). A
research methodology is a systematic way to solve a problem. It is a science of studying how
research is to be carried out. Essentially, the procedures by which researchers go about their
work of describing, explaining and predicting phenomena are called research methodology. It is
also defined as the study of methods by which knowledge is gained. Its aim is to give the work
plan of research.
3.2 Research Design
Burns and Grove (2003:195) define a research design as a blueprint for conducting a study with
maximum control over factors that may interfere with the validity of the findings. This study
will employ Correlation research design; tests for statistical relationships between variables.
The researcher begins with the idea that there might be a relationship small business and
economic growth, In order to investigate the relationship between small business and economic
growth at Puntland. The researcher employed both quantitative and qualitative research methods.
3.3 Population
According to Parahoo (1997:218) defines population as the total number of units from which
data can be collected, such as individuals, artifacts, events or organizations.

This study will be limited in Puntland special in Garowe, Bosaso & Galkaio districts within the
context of business markets, and it will target the small business owners; Restaurant, Shops, Car
washes/cleaners/repairs, Minimarkets, Milk sellers, Cosmetics, Taxi drivers & Grocer

13

In this study we will cover 90 respondents; Garowe (30), Bosaso (30) and Galkaio (30). These
respondents will represent all the small business owners in Puntland to establish the role of small
business in economic growth.
Categories of Respondents
Category

Sample

Restaurant

Shops

Car washes

Mini markets

Milk sellers

Cosmetics

Taxi drivers

Grocers

3
Total

30

3.4 Sampling Procedure

The researcher will use Stratified sampling & Purposive sampling to select the respondents of
this study.
In stratified Sampling; the population will be divided into groups, each group will be selected
randomly, and the researcher first divides the population into groups based on a relevant
characteristic and then selects participants within those groups. Stratified random sampling is
typically used by the researcher to ensure that specific subgroups of people are adequately
represented within the sample.
In purposive sampling also commonly called a judgmental sample, is one that is selected based
on the knowledge of a population and the purpose of the study. The subjects are selected because
of some characteristic. In purposive sampling, the researcher uses their expert judgment to select
participants that are representative of the population.

14

3.5 Research Instrument

The instrument is the generic term that researchers use for a measurement device (survey, test,
questionnaire, etc.). In this study researcher will use Questionnaires & Interviews to collect the
information from the respondents. The questionnaire is a research instrument consisting of a
series of questions and other prompts for the purpose of gathering information from respondents.
Questionnaires are popular with researchers because information can obtained fairly, easily and
the questionnaire responses are easily coded. The questionnaires are popular because the
respondents fill them at their own convenience and are appropriate for large samples.
Also in this study the researcher will use interviews to collect the information from the
respondents. Interviews is a conversation between two or more people where questions are asked
by the interviewer to elicit facts or statements from the interviewee. Interviews are a standard
part of journalism and media reporting, but are also employed in many other situations,
including qualitative research.
3.6 Sources of Data
Generally the researcher will use primary data to draw the role of small business in economic
growth.
3.7 Research Procedure
These are all the procedures to be followed to carry out the study, it involves three processes;
1. Before: in this stage the researcher collects all the data related to the study.
2. During: in this stage the researchers will use questionnaires and interviews to collect the
information from the participants.
3. After: this is the final stage where the researcher checks and overseas all the procedures
of the study.
3.8 Data Collection
This is the systematic gathering of data for a particular purpose from various sources, including
questionnaires, interviews and observations. This involves three stages:
1. Before data collection: the researcher is developing all the data collection tools and
making communications with research stakeholders in advance, on top of that the
researcher is organizing all the needed facilities in advance.

15

2. During data collection: the researcher is meeting with the respondents, giving them an
introduction and instructions for responding to the researcher, also in this stage the
researcher is giving to responds all the needed guidance to the respondents.
3. After data collection: the researcher is checking and reviewing all the processes of data
collection.
3.9 Ethical Consideration
Here are some specific points that the researcher is considering when conducting the study, these
include:
1. Asking the permission to the respondents of the study.
2. Focusing on confidentiality.
3. Asking respondents not to write their names in the questionnaires.
4. Not harming or forcing the respondents to take part of the study.
5. Freedom of response.
3.10 Limitation
These are any constraints that the research my face while conducting the study. These include:
1. Traveling, printing expenses.
2. Difficulties with the respondents.
3. Security issues when traveling-.
4. Extraneous variables.

16

CHAPTER FOUR
ANALYSIS AND INTERPRETATION OF RESULTS
4.0 Overview
This chapter outlines the findings of the data collected from 90 respondents of Bosaso,
Garowe & Galkaio. The main purpose of this study was to find out the relationship between
small business and economic growth. The results will be presented as it was listed in the
questionnaire. Therefore, the research was divided into three sections (I) Democratic
Characteristics of the Respondents, (2) Small business & (3) Economic growth.

4.1 Democratic Characteristics of the Respondents

In this section I, the study focuses on the respondents' profile, the purpose of analyzing this was
to get a full information from the respondents in terms of; gender, age, Level of Education
duration, Position? Working hours, type of business.
4.1.1 Gender
Chart 4.1. Shows classification of respondents according to gender

Chart 4.1.1 shows that 67% of the respondents were Male, while 33% were Female. In this chart
the study clearly defines that the majority people running the small business are male.
4.1.2 Age of the respondents

17

In order to categorize the respondents and find out their age distribution the researcher grouped
the age from 18 to 50+ the following table shows the result:
Chart 4.1.2 shows the classification of respondents according to age

Chart 4.1.2 shows that the majority of the respondents 34% were in between the range of 25-30
age, because most of the small business are directed by young men and women. 26% were 36-40
years old, 14% were 31-35 years old, 11% were 46-50 years old, 9% were 18-24 years old, 2%
were 41-45 and finally 3% of the respondents were more than 50 years old. Furthermore the
study has proven that the majority people that are running businesses their age is in between 2540.
4.1.3 Level of Education
The researcher listed four categories to determine the respondents level of education, the
following table shows:

18

Chart 4.1.3 shows the classification of respondents according to the level of education

As shown in chart 4.1.3 the respondents hold different education qualifications literate to
college level. As this table shows the majority of the respondents 44% have primary or informal
education certificates, 24% were secondary graduates, 21% were literate (those who can write
and read) and 10% were college/university level. Therefore as the study proves it can be inferred
that small businesses are dominated by people with relatively low level of education.
4.1.4 How long were you running this business?
According to this table the respondents were categorized into four groups to determine how long
they were running the business:
Chart 4.1.4 shows the classification of respondents according to the term of running the business

19

As shown in Chart 4.1.4, the majority of the respondents 43% were running the business 1-5
years, 34% were running the business 6-10 years, 12% were running the business less than a year
and 10% were running the business for more 10 years and this was last scored. This study has
proven that the majority of small businesses run within 1-5 years; in other words the life of a
small business may face challenges after this time frame.
4.1.5 The position of the respondents
The researcher categorizes the respondents into four categories to determine their position in the
business:
Chart 4.1.5 shows the classification of respondents according to their position

Chart 4.1.5 shows that the majority of the respondents 56% were running a business of their
own, 26% of them were running a business as staff for someone, 10% of them partners of the
business while 9% of them were managers of the business. In a good majority this study has
proven that most of the small businesses 56% are run by the owners of the business.
4.1.6 Working times
The researcher categorized the respondents into two groups to determine working times:

20

Chart 4.1.6 shows the classification of respondents according to the working times

Chart 4.1.6 shows that the majority of the respondents 67% were running the business full time
while 33% were part time. Thus this can draw that small businesses are working full time on
running the business.
4.1.7 Type of small business
The researcher defined two types of small business to know the type of business that respondents
were running, this table saw:
Chart 4.1.7 shows the classification of respondents according to the type of business

As shown in chart 4.1.7 the majority of the respondents 74% were running a sole proprietorship
type of business while 26% were running partnership type of business. Therefore this study has
proven with a good majority 74% that small business are solely owned by one individual and in
the most cases he is the one who runs his business as shown in table 4.1.5.

21

4.2 The degree of small business

4.2.1 Have ever attended any trade shows or seminars designed to grow your business within
the past 5 years?
Chart 4.2.1 shows whether respondents attended seminars to grow their business

This chart indicates that 47% of the respondents replied with strongly disagree, 23% of the
respondents answered agree, 20% of the respondents replied disagree and 10% of the
respondents answered strongly disagree, therefore this research shows that the majority of the
business owners are not receiving any trainings and seminars to grow their businesses. This
study confirmed with a great percentage 47% that the owners of small business have never
attended any training/seminars to advance their business.
4.2.2 I make a plan for my business

22

Chart 4.2.2 shows whether respondents make business plans

This chart illustrates that 37% of the respondents strongly disagree to make plans for their
business, 30% agree that they make business plans, 17% disagreed to make business plans and
also 17 % strongly disagreed to make business plans. Therefore the majority owners of small
business fail to make business plans. As the graph may show the study determined that 37% of
the small business owners fail to make a business plan in advance, this is not strange cause as the
4.1.3 shows most of the small business are running under someone who is not well educated or
qualified in his field they are in between primary and informal education. While 30% agree that
they do business plans. According to a study made by Ijeoma Ekwem (2011) in NIGERIA 67%
of the small business owners have no any business plan.
4.2.3 My business employs other people

23

Chart 4.2.3 shows whether respondents employ other people

This chart indicates that 37% of the respondents agree that their business employ other people,
33% strongly disagree that they employ other people, 10% of the respondents disagree that they
employ other people while 20% strongly agreed that they employ other people. As the study
shows most of the small business 37% employ other people so this can support the thesis
statement of this study.
4.2.4 The Profit in your business is increasing compared to other players in the market
Chart 4.2.4 shows whether respondents business profit is increasing

This chart is pointing that 43% of the respondents agree that their business profit was increasing,
27% of the respondents disagreed that their business profit was increasing, 10% strongly

24

disagreed that their business profit was increasing and finally 20% of the respondents strongly
agreed that the profit of their business was increasing. As this study shows 43% of small
businesss profit is increasing compared to other players of market while 27% disagree that they
were earning a profit more than the other players of the market.
4.2.5 The Market share of your business is as big as you expected expects
Chart 4.2.5 shows respondents market share expects

This chart demonstrates that the majority of the respondents 57% agree that the market share of
their business is as big as they expected, 20% disagree, and 10% strongly disagree and 13%
strongly agree that the market share of their business is as big as they expected. This study shows
that the majority 57% of small business owners market share is big as they expected.

4.2.6 The Net profit in your business is high compared to others of the same size

25

Chart 4.2.6 shows whether respondents net profit is higher

This chart is telling that 36% of the respondents disagree that they earn higher profit compared to
other of the same size, 32% agree, 20 % strongly disagree and 12% strongly agree that they earn
higher profit compared to other of the same size. Therefore this study proved that the same size
businesses are earning the same profit as shown in the graph 37% of the respondents disagreed
they were earning a higher percentage of profit while 32% of them agreed that they were earning
a higher percentage of profit compared to the same size.

4.2.7 The Net profit in your business satisfies your expectation

Chart 4.2.7 shows whether the net profit of their business is satisfying their expectations

26

This chart illustrates that 63% of the respondents agree that the net profit of their business is
satisfying their expectation, 24% strongly agree, 7% disagree and 6% strongly disagree that the
profit they earn is satisfactory. For this study 63% of the small business owners were satisfied
with the net profit of their businesses, thus we may know that the net profit produced from the
small business was satisfying the expectations of their owners.

4.2.8 Your current revenue is satisfactory

Chart 4.2.8 shows whether the respondents current revenue is satisfactory

This chart is presented that 61% of the respondents current revenue are satisfactory, 27%
strongly agree, 9% disagree and finally 3% of the respondents current revenue is satisfactory.
As a result of this study 61% of small business owners revenue were satisfactory and they were
happy with it, while 27% of them strongly agreed that they're earning revenue was satisfactory.
4.3 The degree of economic growth
4.3.1 Where do you bring your business product?

27

Chart 4.3.1 shows the source of business products

As shown the above chart 59% of the business products are brought from abroad while 41% are
from the local areas of the country. This is study proved that the majority of the small business
products 59% were brought from outside the country as imports, and as a result of these the
profits goes back to the abroad.

4.2.9 Do you find enough customers for your goods and services?
5
Chart 4.3.2 shows whether respondents find enough customers

28

As shown in the above chart 60% of the respondents agreed that they get enough customers for
their goods and services, 17% of them strongly agreed that they get enough customers, 13% of
the respondents disagree and finally 10% of the respondents strongly disagreed that they get
enough customers. As a result of this study it has proven that 60% of small businesses find
enough customers for their goods and services.

4.3.3 The establishment and starting of small businesses can contribute the employment
generation.
Chart 4.3.3 shows the role of small business on employment generation

As shown in the above chart the majority of the respondents strongly agreed 61% that small
business contributes employment generation, 33% of the respondents agreed, 3% disagreed and
finally 2% of the respondents strongly disagree that small business contributes employment
generation. The majority of the respondents 61% strongly agreed that small business contributes
employment generation, thus, this statement is supporting the thesis statement of my research
paper.

4.3.4 The establishment and creation of small business has a vital role in the economic growth
and improving social life.

29

Chart 4.3.4 shows the role of small business in economic growth

This chart illustrates that the majority of the respondents 56% strongly agreed that small business
has a vital role in the economic growth and at the same time improves the social life of the
community as a whole, thus this finding is supporting the thesis statement of this research paper,
42% agreed, 1% disagree and also 1% strongly disagreed.

4.3.5 Your business provides enough income for your needs.

Chart 4.3.5 show weather business provides enough income for the needs

As shown in this chart the majority of the respondents 54% agreed that their business provides
enough income for their needs, 33% of the respondents strongly agreed, 9% of them disagreed
and 3% of the respondents strongly disagreed that their business provides enough income for

30

their needs. 54% of the respondents agreed that the their running on small business was proving
enough income for their needs.

4.3.6 You feel that your income is growing time after time?

Chart 4.3.6 shows whether the income of the respondents was growing time after time

The above chart illustrates that 44% of the respondents strongly agreed that the income they
were earning was growing time after time, 33% of the respondents said agreed, 17% of them
disagreed and 6% of the respondents strongly disagreed that their earning income was growing
time after time. The majority of the respondents 44% strongly agreed that they're earning from
the small business was increasing time after time and at the same time they were very happy
practicing this kind of business.

4.3.7 Small scale business contributes economic growth of Puntland

31

Chart 4.3.7 shows the role of small scale business in the economic growth of the Puntland

This chart illustrates that the majority of the respondents 74% strongly agreed that small business
contributes to the economic growth of Puntland, 22% of the respondents agree that small
business contributes the economic growth, 2% disagree while 1% of the respondents strongly
disagreed. This study has proven that small business contributes to the economic growth of
Puntland with a majority of 74%, therefore for sure we can say that small business has can and
have contributed the economic growth if this region of the country.

4.4 Significant relationships between Small business & Economic growth

As we have discussed in chapter three (Research Methodology) this research was supposed to
employ Correlation Research Design (tests for statistical relationships between variables), and
as shown in this below, there is a strong relationship between small business & economic growth
(%75).
Variable correlation
Small business & Economic

R-Value
-

0.75

Interpretation
Negative Strong Correlation

growth
Check the Correlation table in the appendix

32

CHAPTER FIVE
FINDINGS, CONCULTION & RECOMMENDATIONS
This chapter presents the summary of the findings of this study, conclusion and finally provides
recommendations based on the research findings.
5.1 Summary of the Findings
5.1.1 Democratic Characteristics of the Respondents
Regarding the gender classification, this study found that the majority of the small business
owners 67% are male while 33% are female. Therefore because of the Islamic laws and the
Somali culture Men have to serve for Women and thats why in the market you will find lot men
running the businesses.
According to the age of the business owners this study found that the majority of the people 34%
are in between the 25-30 years old. 31-35 are 14%, 46-50 are 11% and 3% of the respondents are
more than 50 years old. This can be concluded that most of the businesses run under adult
persons.
This study shows that 21% of the respondents were literate, 24% are secondary graduates while
10% of them are graduated from colleges/universities thus, the majority 44% of the people
running small businesses their level of education is not higher than primary or other informal
educations and the reason is that most of the businesses are started by people who have faced
challenges with the continuation of their education or may not got the chance to step forward for
higher educations.
Regarding the time, this study found that most of the businesses 43% were running 1-5 years
also as this study shows 34% of the business run 6-10 years, 10% of them were running the
business more than 10 years while 12% were running the business less than a year.
With a good majority 56% this study proved that most of the small businesses are practiced and
directed by their owners, 10% are partners, 9% of them are managers while 26% of the small
businesses are run by the staff members.
This study demonstrated that 67% of the small business owners work full time in running their
businesses, while 33% of them were working part time.

33

Regarding the type of the business, this study found that 74% of the small businesses are solely
owned by one individual and as the chart 4.1.5 shows most of these businesses are practiced by
their owners, while 26% of the businesses are owned by more than one person.
5.1.2 The degree of small business
In line with this study, the majority of the business owners 47% said they have never attended or
received any trainings or seminars to manage and develop their businesses, while 23% of them
agreed that they received and gained trainings on how to run and manage a small business.
Regarding to this study the respondents were asked if they make business plans for their
businesses, 37% of them said that they have never made any plan for their business w, 30%
agreed that they make plans in advance and 17% strongly agreed that they have business plans.
In other words most of the businesses they have plans indicating when to purchase and what
quantity to purchase but, mostly they dont have any strategies indicating where their business
will be in the next years or what development they are intending to reach.
As this study is indicating, 33% of the respondents strongly disagreed that they employ other
people while, 37% of the respondents strongly agreed that employ other people, this can be
divided into two; some of the businesses the owner and some other people are working together
and some them the owners assign some other people to run for their business. This can be
concluded that small businesses are a source of employment and this statement supports the
thesis statement.
The majority of the small businesses 43% confirmed that their profit was increased compared to
others in the market. Also this study presented in a good majority 57% that the owners of small
business their share is as big as they expected.
According to the net profit, this study proved that same sized business owners earn same profit,
which means that they get equal customers for their goods and services. 20% strongly disagreed
that they were earning same profit as the others while, 12%strongly agreed that their earning
profit was same like the others.
In line with this study, it has confirmed in a good percentage 63% that the net profit earned from
the small business satisfies the expectation of its owners. Also the study revealed in a good
majority 61% the revenue earned from the small business is satisfactory and the owners of small
businesses confirmed that they are happy with their earning revenue.

34

5.1.3 The degree of economic growth

Regarding the business products, this study stated that 59% of the business products are brought
from the outside world while 41% of them are locally produced products. Therefore as a result of
these the majority of the business products imports from the outside countries.
Also this study revealed that 60% of the small businesses finds enough customers for their
goods and services. Therefore, we can conclude by saying that small business has enough
market.
As the respondents of this study confirmed 61% strongly agreed that the starting and the
establishment of small business contributes employment generation, while 33% agreed and 2%
strongly disagreed thus, this result supports the thesis statement of this research paper.
As this study proved 56% of the respondents strongly agreed that the establishment and creation
of small business has a vital role in the economic growth and improves social life, 42% agreed
and 1% strongly disagreed. Therefore this result strongly supports the thesis statement of this
research paper.
According to this study it has confirmed with a good majority 54% that small business was
providing enough income for their needs as well as their income was growing time after time.
Finally this study proved with a good percentage 74% that small business contributes to the
economic growth of Puntland as a whole. 22% agreed and 1% strongly disagreed, In other words
this finding strongly supports the thesis statement of this research paper.
Therefore,
The main purpose of this study was to examine the role of small business in the economic
growth of Puntland, the correlation of the variables (Small business & Economic growth) is
shown that they are correlated 75%, which means that small businesses has a great role in the
economic growth of this region.
As this study revealed that 42% of the respondents agreed and 56% of the respondents strongly
agreed that the establishment and the creation of small business has an important role in the
economic growth of Puntland. Likewise, this study strongly confirmed 61% that small business
plays a tremendous role in the employment generation. Also this study shows that 59% of the
business products are brought from the outside world in other words this means that small
business provides goods and services that the community needs. Regarding the respondents of
this study 44% strongly agreed that their income was growing time after time, 54% of them

35

agreed that their business was providing enough income for their needs and 56% of them
confirmed that small business has an important role on improving the social life. According to
this study small business owners confirmed strongly 44% that their income was increasing time
after time, thus the increase in the income of these people immensely contributing to the gross
domestic products (GDPs) of Puntland. In addition to this, when judging whether the economy is
doing well or poorly, it is natural to look at the total income of everyone in the economy is
earning. That is the task of gross domestic product (GDP).
Therefore,
Now we can draw a general conclusion by saying small business has an important role in the
economic growth, employment generation, provision of goods and services, creating a better
standard of living and immensely contributing to the GDP of Puntland.
5.2 Conclusion
Small business have been fully recognized by governments and development experts as the main
engine of economic growth and a major factor in promoting private sector development and
partnership.
The main achievements of this study was that: most of the business owners are men 67% and
most of the business owners are aged in between 25-40, also as this study indicated most of the
businesses are owned or run by not qualified person (primary/informal education graduates) also
their experience in business was almost in between 1-10 years, also mostly small businesses are
practiced by its owners 59% and most of these owners they work full time in running their
business and most of the businesses are solely owned by an individual 74%.
This study also proved that most 47% of the small business owners are not equipped with the
knowledge relating how they manage and run their businesses. Likewise 37% of the business fail
to make plans in advance. As shown in this study 37% of businesses employ other people and the
net profit they earn is satisfying their expectations 63% as well as their current revenue was
satisfactory 61%.
Regarding to the findings of this study it reveals that 59% of the products sold by the small
businesses are brought from the outside countries (imports) while 41% are locally produced
products. Also this study demonstrates that 60% of the small businesses get customers for their
goods and services. Likewise 61% of the small business owners strongly agreed that small
business contributes employment generation, also 56% of them said small business has a vital

36

role in the economic growth and improves social life. Furthermore the small business owners
confirmed that they earn enough income and their income was growing time after time. Finally
this study proved with a good percentage that small business contributes to the economic growth
of Puntland.
Therefore, the development of the small business sector represents an essential element in the
growth strategy of most economies and holds particular significance in the case of Puntland.
Small businesses contribute to the improvement of living standards, employment generation and
reduction of poverty. The profitability of small businesses could be the reason why respondents
generally support the establishment of small businesses as an element which contributes to the
economic growth of the region as a whole.
Therefore,
Now we can draw a general conclusion by saying small business has an important role in the
economic growth, employment generation, provision of goods and services, creating a better
standard of living and immensely contributing to the GDP of Puntland.
5.3 Recommendations
Based on the research findings, I will recommend the following points:
a) Universities/higher institutions of education should organize and design seminars and
trainings for the small business owners and teach them how they run and manage their
business as well they should teach them how to allocate their profit and make a business
plan in advance.
b) Though its difficult for one person to establish and start/investing new business; the
owners of small businesses should come together and instead of running a personal
business they should form a partnership business.
c) For small business owners if they can avoid it is better they work half time and employ
other people to for the other half to contribute employment generation.
d) The government should establish investments in order to reduce the imports from the
outside world, because, then ever the imports of the country increases the profit goes out
of the country.
e) Since this study proved that small business contributes the employment generation,
government and the investment banks should give loans to the people to start businesses

37

and also the government should help and give guidance to the existing businesses as not
to fail.
f) There is also need to introduce entrepreneurial studies in our Universities in Puntland
g) Finally the government should set polices and principles to the small businesses and also
encourages the big companies and the investment banks to invest on the starting of small
businesses.

38

References

Bolton. J. F (1971). Report of the Committee of Inquiry on small firms. Bolton report Cmnd.
4811. London: HMSO.
Burns and Grove (2003:195). Research design and methodology, (2003). Gobookee.org
(Electronic). from www:
http://www.gobookee.org/get_book.php?u=aHR0cDovL3Vpci51bmlzYS5hYy56YS9iaXRzdHJl
YW0vaGFuZGxlLzEwNTAwLzE3OTYvMDRjaGFwdGVyMy5wZGYKQ0hBUFRFUiAzIFJlc
2VhcmNoIGRlc2lnbiBhbmQgbWV0aG9kb2xvZ3kgLSBVbmlzYUlSIEhvbWU= Retrieved on
(Oct.20.2013).

http://www.thomhartmann.com/users/natural-lefty/blog/2012/01/what-economic-growth,
Retrieved on (Oct.20.2013)

Ijeoma Ekwem. (2011). SMALL AND MEDIUM SCALE ENTERPRISE DEVELOPMENT IN

NIGERIA. Thesis for MDF, University of Stellenbosch.
Investopedia. (2013) Definition of economic growth, (2013). Investopedia (Electronic). From
WWW: http://www.investopedia.com/terms/e/economicgrowth.asp. Retrieved on (Oct.09.2013)

Jane Tange. (2001). A review of small business literature. Manchester Metropolitan University.

Leon c. & Charles R. & William L, (1991). Defining Small Business. Successful Small Business
Management (6th) (pp. 11-17). Boston: Domnelley & Sons Company.

Patrick Onuorah. (2009). THE ROLE OF SMALL AND MEDIUM SIZED ENTERPRISES
FOR ECONOMIC GROWTH. Thesis for MBA School of Management, Blekinge Institute of
Technology.

39

S. Rajasekar & P. Philominathan & V. Chinnathambi (2013). Research methodology. Research

methodology, (5) pdf.
Stanworth, J. And Gray, C. (1991). Bolton 20 years on: the small firm in the 1990s. London:
Paul Chapman.
Thom Hartmann. (2011). Economic Growth, (2011), Wikipedia (Electronic). From WWW:
http://en.wikipedia.org/wiki/Economic_growth#Historical_sources_of_economic_growth.
Retrieved on (Oct 09. 2013)

40

APPENDIX A: Research Questionnaire

QUESTIONNAIRES ON THE ROLE OF SMALL BUSINESS ON ECONOMIC

GROWTH IN PUNTLAND
INSTRUCTION
Dear Sir/ Madam,
Greetings!
I am a Bachelor of Business Administration candidate of Puntland State University. Part of the
requirements for the award is a thesis. My study is entitled, THE ROLE OF SMALL
BUSINESS ON ECONOMIC GROWTH IN PUNTLAND. Under the approval of PSU,
within this context, may I request you to participate in this study by answering the
questionnaires? Kindly do not leave any option unanswered. Any data you will provide shall be
for academic purposes only and no information of such kind shall be disclosed to others.

SECTION I: FACE SHEET: DEMOGRAPHIC CHARACTERISTICS OF THE

RESPONDENTS
Please place () in the space that most accurately reflects you
1. Gender: Male

Female

2. Age group:
18-24

25-30

31-35

36-40

41-45

46-50

50 +

3. Level of Education
Literate

Primary/informal education

Secondary

Collage/University

4. How long time where you run this business?

Less than 1 year

1-5 years

6-10 years

more than 10 years

5. What is your position in the business?

Owner

Partner

Manager

Staff

41

6. Do you work full time or part time in running the business?

Full-time

Part-time

7. What type of small business do you run?

Sole proprietorship

Partnership

SECTION II: questionnaire to determine the degree of small business

Direction: please describe the degree of small business by using the scoring guide below. Kindly
write your best choice in the box. Be honest about your option as there are no right or wrong
answers.
Scores

Responses

Description

Strongly agree

you agree with no doubt at all

Agree

you agree with some doubt

Disagree

you disagree with some doubt

strongly disagree

you disagree with no doubt

1) Have you ever attended any trade shows, seminars designed to grow your business within
the past 5 years?

2) I make a plan for my business

3) My business employs other people

4) The Profit in your business is increasing compared to other players in the market
1

5) The Market share of your business is as big as you expected expects

1

42

6) The Net profit in your business is high compared to others of the same size
1

7) The Net profit in your business satisfies your expectation

1

8) Your current revenue is satisfactory

SECTION III: Questionnaire to determine the Degree of economic growth

Direction: please describe the degree of economic growth by using the scoring guide below.
Kindly write your best choice in the box. Be honest about your option as there are no right or
wrong answers.
Scores

Responses

Description

Strongly agree

you agree with no doubt at all

Agree

you agree with some doubt

Disagree

you disagree with some doubt

strongly disagree

you disagree with no doubt

1) Where do you bring your business product? Abroad

Local

2) Do you find enough customers for your goods and services?

1

3) The establishment and starting of small businesses can contribute the employment
generation.

43

4) The establishment and creation of small business has a vital role in the economic growth
and improving social life.

5) Your business provides enough income for your needs.

1

6) You feel that your income is growing time after time?

1

7) Small scale business contribute economic growth of the country

1

We are kindly informing you that the purpose for this questionnaire is only for academic
purposes. Thanks for your time and consideration

44

APPENDIX B: Frequency tables

Table4.1.Error! Bookmark not defined. shows classification of respondents according to
gender
Category

Frequency

Percentage

Gender:
Male

60

67%

Female

30

33%

Total

90

100%

Table 4.1.2 shows the classification of respondents according to age

Category

Frequency

Percentage

Age group:
18-24

9%

25-30

31

34%

31-35

13

14%

36-40

23

26%

41-45

2%

46-50

10

11%

3%

90

100%

50+
Total

Table 4.1.3 shows the classification of respondents according to the level of education
Category

Frequency

Percentage

Literate

19

21%

Primary/Informal Educ.

40

44%

Secondary

22

24%

10%

90

100%

Level of Education:

Collage/University
Total

45

Table 4.1.4 shows the classification of respondents according to the term of running the business
Category

Frequency

Percentage

How long were you running this business?

Less than 1 year

11

12%

1-5 years

39

43%

6-10 years

31

34%

10%

90

100%

More than 10 years

Total

Table 4.1.5 shows the classification of respondents according to their position

Category

Frequency

Percentage

What is your position in the business?

Owner

50

56%

Partner

10%

Manager

9%

Staff

23

26%

Total

90

100%

Table 4.1.6 shows the classification of respondents according to the working times
Category

Frequency

Percentage

Do you work full/part time in running a

business?
Full time

60

67%

Part time

30

33%

Total

90

100%

Table 4.1.7 shows the classification of respondents according to the type of business
Category

Frequency

Percentage

What type of small business do wrong?

Sole proprietorship

67

74%

46

Partnership

23

26%

Total

90

100%

Table 4.2.1 shows whether respondents attended seminars to grow their business
Category

Code

Frequency

Strongly disagree

42

47%

Disagree

18

20%

Agree

21

23%

Strongly agree

10%

Total

Percentage

90

100%

Table 4.2.2 shows whether respondents make business plans

Category

Code

Frequency

Strongly disagree

33

37%

Disagree

15

17%

Agree

27

30%

Strongly agree

15

17%

90

100%

Total

Percentage

Table 4.2.3 shows whether respondents employ other people

Category

Code

Frequency

Strongly disagree

30

33%

Disagree

10%

Agree

33

37%

Strongly agree

18

20%

90

100%

Total

Percentage

Table 4.2.4 shows whether respondents business profit is increasing

Category

Code

Frequency

Strongly disagree

Percentage
10%

47

Disagree

24

27%

Agree

39

43%

Strongly agree

18

20%

90

100%

Total

Table 4.2.5 shows respondents market share expects

Category

Code

Frequency

Strongly disagree

10%

Disagree

18

20%

Agree

51

57%

Strongly agree

12

13%

90

100%

Total

Percentage

Table 4.2.6 shows whether respondents net profit is higher

Category

Code

Frequency

Strongly disagree

18

20%

Disagree

32

36%

Agree

29

32%

Strongly agree

11

12%

90

100%

Total

Percentage

Table 4.2.7 shows whether the net profit of their business is satisfying their expectations
Category

Code

Frequency

Strongly disagree

6%

Disagree

7%

Agree

57

63%

Strongly agree

22

24%

90

100%

Total

Percentage

48

Table 4.2.8 shows whether the respondents current revenue is satisfactory

Category

Code

Frequency

Strongly disagree

3%

Disagree

9%

Agree

55

61%

Strongly agree

24

27%

90

100%

Total

Percentage

Table 4.3.1 shows the source of business products

Category

Frequency

Percentage

Abroad

53

59%

Local

37

41%

Total

90

100%

Table 4.3.2 shows whether respondents find enough customers

Category

Code

Frequency

Strongly disagree

10%

Disagree

12

13%

Agree

54

60%

Strongly agree

15

17%

90

100%

Total

Percentage

Table 4.3.3 shows the role of small business on employment generation

Category

Code

Frequency

Strongly disagree

2%

Disagree

3%

Agree

30

33%

Strongly agree

55

61%

90

100%

Total

Percentage

49

Table 4.3.4 shows the role of small business in economic growth

Category

Code

Frequency

Strongly disagree

1%

Disagree

1%

Agree

38

42%

Strongly agree

50

56%

90

100%

Total

Percentage

Table 4.3.5 show weather business provides enough income for the needs
Category

Code

Frequency

Strongly disagree

3%

Disagree

9%

Agree

49

54%

Strongly agree

30

33%

90

100%

Total

Percentage

Table 4.3.6 shows whether the income of the respondents was growing time after time
Category

Code

Frequency

Strongly disagree

6%

Disagree

15

17%

Agree

30

33%

Strongly agree

40

44%

90

100%

Total

Percentage

Table 4.3.7 shows the role of small scale business in the economic growth of the Puntland
Category

Code

Frequency

Percentage

Strongly disagree

1%

Disagree

2%

Agree

20

22%

50

Strongly agree
Total

67

74%

90

100%

51

APPENDIX C: Correlation Table

Section I
Level of
agree
Q1

Agree x
Frequency Frequency

42

42

18

36

21

63

36

90

177

total
RA

1.96666667

Level of

Agree x

agree
Q2

Frequency Frequency
1

33

33

15

30

27

81

15

60

90

204

total
RA

2.26666667

Level of

Agree x

agree
Q3

177/90

Frequency Frequency
1

30

30

18

33

99

18

72

90

219

Total
RA
Level of

2.43333333
Frequency Agree x

52

agree
Q4

Frequency
1

24

48

39

117

18

72

90

246

Total
RA

2.73333333

Level of

Agree x

agree
Q5

Frequency Frequency
1

18

36

51

153

12

48

90

246

Total
RA

2.73333333

Level of

Agree x

agree
Q6

Frequency Frequency
1

18

18

32

64

29

87

11

44

90

213

Total
RA

2.36666667

Level of

Agree x

agree
Q7

Frequency Frequency
1

12

57

171

53

4
Total

22

88

90

276

RA

3.06666667

Level of

Agree x

agree
Q8

Frequency Frequency
1

16

55

165

24

96

90

280

Total
RA

3.11111111

Level of

Agree x

Section
II

agree
Q2

Frequency Frequency
1

12

24

54

162

15

60

90

255

Total
RA

2.83333333

Level of

Agree x

agree
Q3

Frequency Frequency
1

30

90

55

220

54

Total

90

318

RA

3.53333333

Level of

Agree x

agree
Q4

Frequency Frequency
1

38

114

50

200

90

317

Total
RA

3.52222222

Level of

Agree x

agree
Q5

Frequency Frequency
1

16

49

147

30

120

90

286

Total
RA

3.17777778

Level of

Agree x

agree
Q6

Frequency Frequency
1

15

30

30

90

40

160

90

285

Total
RA
Level of

3.16666667
Frequency Agree x

55

agree
Q7

Frequency
1

20

60

67

268

90

333

Total
RA

3.7

Therefore,

Small

Economic

business

growth

1 1.966667

2 2.833333

2 2.266667

3 3.533333

3 2.433333

4 3.522222

4 2.733333

5 3.177778

5 2.733333

6 3.166667

6 2.366667

3.7

7 3.066667

8 3.111111

= Correl (Small business, Economic

growth)

-0.75275

56

Email: [email protected]

57

58