This chapter focuses on the background of the study, problems of the statement, objective of the study, research questions, the scope of the study, and significant of the study.
1.1. Background of the study
In many regions-including Europe, North America China and Brazil humanity has also became adept at raising yield through using inputs like fertilizers and pesticides. Yet in many poorer countries with low productivity rates and growing population, agriculture continues to expand into marginal and fragile lands. The agriculture is therefore the farther of all others economics activities if it is well maintained there is progress of these activities but if it is neglected these activities are decline on the world as if they are oceans (Diouf, 1994). In most developed countries of the economic world, the agriculture has been the main pillar stone of social economic development through their people’s strong commitment. It has launched the industrialization due to its abundant outputs. It has also contributed much in national economic growth of these countries. In the area of the Eastern African economies like Kenya, Tanzania and Uganda the agriculture revolution is needed for the poverty alleviation program as the households depend on it for their daily diet and income through the export made of agriculture products to the external markets.
The land has been therefore exploited with their new modern technologies in order to export for aboard (Ghulam, 1965) In the same way to Somalia, for the agriculture sector to realize its full potential, credit availability is the nexus with banking sector with their strong present in rural areas and microfinance institutions which have strong vocation to lend to very small businesses without security (Daud, 1985). However despite the success of the agriculture towards an adequate economy in some countries of the world, the country of Somalia is still small as indicates by World Bank. Its agriculture accounted for 35% of GDP (Gross Domestic Product) in 2006. The challenges currently facing the country are building up its infrastructure provision of the agriculture extension services and development of its labor force (World Bank, 2004). Economic growth has traditionally been attributed to the accumulation of human and physical capital, and increased productivity arising from technological innovation. Economic growth was also the result of developing new products and services, which have been described as demand creating. 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”(Robert M. Solow (1956). Professor Kuzneths (1973) argues rather forcefully that economic growth is essentially a quantitative concept and hence if we are to make substantial progress in the empirical and theoretical analysis of the growth phenomenon we must consider the quantitative aspect as basic. The economy of Africa consists of the trade, industry, agriculture, and human resources.
As of 2012, approximately 1.07 billion people were living in 54 different countries. Africa is a resource-rich continent but many African people are poor. Recent growth has been due to growth in sales in commodities, services, and manufacturing. Africa is the world’s poorest inhabited continent, as measured by GDP per capita. However, parts of the continent have made significant gains over the last few years. In recent years, African countries consist of the fastest growing economies in the world (Lund, Susan and Arend Van Wamelen September 7, 2012). According to the CIA and the Central Bank of Somalia, despite experiencing civil unrest, Somalia has maintained a healthy informal economy, based mainly on livestock, remittance/money transfer companies and telecommunications. Due to a dearth of formal government statistics and the recent civil war, it is difficult to gauge the size or growth of the economy. For 1994, the CIA estimated the GDP at $3.3 billion. In 2001, it was estimated to be $4.1 billion. By 2009, the CIA estimated that the GDP had grown to $5.731 billion, with a projected real growth rate of 2.6%.
1.2. Statement of the problem
Although agriculture sector suffers from insuffienct access to finance and insufficient investment capital for farming, agro-processing and export development. Low productivity and high vulnerability of the agriculture sector make bank reluctant to offer financial services to rural farmers largely due to lack of information on profitability of value chain activities( World Bank, 2011). Based on consideration of these activity and of the continuing constrain facing the economy in general and the agriculture sector in particular, the prevailing problem which this study intended to investigate is to find out whether the availability of the agriculture credit as a source of financing can allow people, to produce more agriculture products as their main commercial and professional activity in order to increase their ways of earning income for their homes and for the economic growth of their country.
1.3. Purpose of the study
The purpose of this study is to investigate the role of agriculture and economic growth in Beledwein District –Somalia. It also tried to validate the theory that this study was based on Agriculture and economic in Beledwein District –Somalia.
1.4. Objective of the study
This study is to determine the correlation between the role agriculture and economic growth in Beledwein District. Specific Objective
To identify areas in which Agriculture has developed
To find out the problems faced by economic growth of Somali. To suggest possible solutions and recommendations of agriculture and economic growth in Somalia.
1.5. Research Question
Which areas has agriculture Developed?
What are the problems facing economic growth of Somalia?
What are the possible solutions and recommendations of agriculture and economic growth in Somalia?
1.6. Scope of the study
The study described the role of agriculture and economic growth in Beledwein District. The research will be conducted Beledwein district as a case study because Beledwein district is the major source of agriculture production of Somalia.
Significances of the study
The findings of this study may vary and may slightly or greatly contribute to the understanding of the role of agriculture and economic growth 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 role agriculture and economic growth of Somalia. Also the finding of the study could be a basis for the further research in other areas in Somalia on the subject. It will at the same time provide literature for business people and other readers. The research findings and recommendations are also useful to the policy makers in Somalia.