TOPIC: Impact of Islamic Mode Finance on Economic development IN MOGADISHU

SOMALIA

NAME: Mohamed Ahmed Salad

Name: samiro abdirhma omar
Name: furqan mohamed ali

A PROPOSAL SUBMITTED IN PARTIAL FULFILLMENT FOR THE REQUIREMENT

OF THE AWARD OF BACHELOR DEGREE OF ISLAMIC BANK $ FINANCE AT
PLASMA UNIVERSITY, MOGADISHU, SOMALIA

March –June, 2020

 Chapter one

1.0 introduction

This chapter introduces the study in general. It consists of different units including the background
of the study, problem statement, and objectives of the study, research questions, and significance of
the study, scope of the study, operational definitions of key terms and conceptual framework of the
study.

1.1 Background of the study

The teachings of Islam are very comprehensive and cover the whole of life. One important `
aspect of life is the economic one. The approach of Islam towards this aspect is very balanced one.
It provides comprehensive guidelines for a sustainable Economic growth. It does not deprive a
person to take benefit of all good things that Allah has provided within the given framework. The
holy Quran says: O you who believe „forbid not the good things which God has made lawful for
you and exceed not the limits. Surely, God loves not those who exceed the limits. And eat of the
lawful and good that God has given, and keep your duty to God in whom you believe. (Dr. Rashid
Ahmad, 2013)

Islamic finance, despite its name, is not a religious product. It is however a growing series of
financial products developed to meet the requirements of a specific group of people. Conventional
finance includes elements (interest and risk) which are prohibited under Shari’ah law.
Developments in Islamic finance have taken place to allow Muslims to invest savings and raise
finance in a way which does not compromise their religious and ethical beliefs. It is estimated that
between 1.5 and 1.8 billion people (one quarter of the world’s population) are Muslim.
Geographically, most Muslims live in Asia (over 60%) or the Middle East and North Africa (about
20%). Despite these figures, Islamic finance is still very much a niche market, with the vast
majority of Muslims, who have access to finance, using conventional financial products.

While most think of Islam as being focused in the Middle East and South East Asia, the vast
majority of Muslims live outside of these two regions. While Islamic finance is a relatively small
player in global terms, most commentators agree that the current growth of between 15% and 20%
in this niche market shows no sign of reducing in the short to medium-term. It is estimated that
assets in the industry will reach $1 trillion by the end of 2010, This continued growth has been
spurred by the actions of many governments around the world keen to see Islamic finance develop,
Islamic finance in some countries is large enough to affect the quality of their national accounts,
monetary and financial statistics, and indicators of the structure and soundness of national financial
systems. (Russell Krueger,2017).

The economic growth and development have been debated for centuries. Industrialization had
brought forth permanent changes in the economic and human activity. After the Depression of the
1929-1933 span, the importance of these processes increases
Overcoming any economic difficulties, whether we speak about the decreasing of the
unemployment rate or about the external equilibrium, a correlation was made with the economic
growth and development. ( Alina Haller on 01 November 2016.)

Any decision made at a state or supra-state level aimed at reaching these two objectives. Today,
more than anytime, in a recessionary, liberalized economy, in a world marked by a strong
demographic increase, by the depletion of natural resources, by changes of climate and of
ecosystem destruction, we are more preoccupied than ever by the problems of economic growth
and development. Hereinafter will make, an epistemological analysis of these two processes.
( Alina Haller on 01 November 2016.)

Economic growth is obtained by an efficient use of the available resources and by increasing the
capacity of production of a country. It facilitates the redistribution of incomes between population
and society. The cumulative effects, the small differences of the increase rates, become big for
periods of one decade or more. It is easier to redistribute the income in a dynamic, growing society,
than in a static one. There are situations when economic growth is confounded with economic
fluctuations. The application of expansionist monetary and tax policies could lead to the
elimination of recessionary gaps and to increasing the GDP beyond its potential level. Economic
growth supposes the modification of the potential output, due to the modification of the offer of
factors (labour and capital) or of the increase of the productivity of factors (output per input unit).
When the rate of economic growth is big, the production of goods and services rises and,
consequently, unemployment rate decreases, the number of job opportunities rises, as well as the
population’s standard of life. Some economists state that a rate of the GDP growth of 3% a year
allows a rise of the potential GDP with 10% in three years and a doubling in 23 years. According to
the “rule of 70”, a rate of growth of 1% doubles the potential GDP over a period of seventy years

The Earliest Developments up to the year 1999 The UK welcomed Islamic banking and finance
since its early emergence in the late 1970s and early 1980s. The following activities, undertaking
and actions make the point:  In 1976, soon after the First International Conference on Islamic
Economics, organized by King Abdul Aziz University, Jeddah at Makkah AlMukarramah, Saudi
Arabia, the Islamic Foundation9 , Leicester, UK established its Islamic Economic Unit as the first
ever research Centre on the subject. This Research Centre was followed by the International Centre
for Research in Islamic Economics (CRIE) at the University of King Abdul Aziz University in
1977.
1.2 Problem statement

From the overall view on Islamic finance in Islamic countries, it is reported that the industry is
growing rapidly on 2013, as it has for the previous five years, despite global economic
uncertainties and market volatility.10 Global Islamic financial assets are estimated to have reached
US$1.8 trillion by the end of 2013, from US$1.5 trillion in 2012. This growth is contributed by the
industry initiative; there more funds continue to be established in Singapore to meet demand from
clients in Asia as well as from the Middle East. Also, several corporations have established sukuk
programmes in Singapore to tap the market over the next few years.12 However, narrowing down
to Islamic banking services in Singapore, the industry (retail Islamic banking) is reported to remain
underdeveloped. This is mainly due to the low percentage of Muslims in Singapore along with the
low awareness of the services. This results in low demand.13 There is a need to create a larger
awareness for Singapore Muslims towards the existing Islamic banking products and services
Even though there is relatively low percentage of Muslims in Singapore, it is still viable and fairly
important to gather support from the community as Islamic banking itself is derived from the
religion of Islam.

Therefore, this research is crucial as to explore Singaporean Muslims awareness and acceptance In
order to gain support from the Muslim community, it is important for them to have knowledge on
the Islamic banking services rendered by the participating banks. According to Gerrard, there is
only 31.7% among the Muslim community who truly understand the fundamental concept of
Islamic banking. However this research was done before the establishment of Islamic banking
services in Singapore and the statistic may seem outdated.

Over the years, there are many tertiary educational institutions offering Islamic banking and
finance related courses. In 2012, London School of Business and Finance has launched
professional short courses in Islamic finance. Currently, Singapore polytechnic is offering a
module on Islamic banking and finance. Local universities are also offering professional courses on
Islamic banking and finance on a postgraduate level.

Although many studies related to the problem under investigation have been conducted in many
parts of the world, however there is a literature gap in the study area. Therefore, this is intended to
Bridge This Literature Gap and Impact of Islamic Mode Finance on Economic Growth in
Mogadishu Somalia

1.3 Objectives of the study

1.3.1 General objective/purpose/main objective

To Determine Impact of Islamic Mode Finance On Economic Development In Mogadishu Somalia.

1.3.2 Specific objectives

  To describe the role of role of Islamic finance on real estate Development in Mogadishu,
Somalia.
 To identify The Role of Islamic Finance in Enhancing Financial Inclusion in Organization
of Islamic Cooperation (OIC) Countries in Mogadishu, Somalia.
 To find out the role Islamic finance increasing global economy development in Mogadishu,
Somalia.

1.4 Research questions

 What is the role of Islamic finance on real estate Development in Mogadishu, Somalia?
 What is the Role of Islamic Finance in Enhancing Financial Inclusion in Organization of
Islamic Cooperation (OIC) Countries in Mogadishu, Somalia?
 What is the role of role Islamic finance increasing global economy development in
Mogadishu, Somalia?

1.5 Significance
 This study will be useful for future researchers and academicians because it will act as a
source of literature for them in the subsequent studies related to the same problem at hand.
It will also act as a guideline for them to follow for future researches.
 The study will also be benefited by local authority because it informs those existing issues
for proper decision making and also for possible interventions toward a particular problem.
 The study will also be useful for local community because the study will create conscious
awareness of the existing problems which will facilitate community participation in the
future programs.

1.6 Scope of the study

1.6.1 Time scope

 This study will be conducted between MARCH TO JUNE, 2020.

1.6.2 Geographical scope

The study will be conducted in Mogadishu, Somalia.

1.6.3 Content scope

 The study will focus on the Impact of Islamic Mode Finance on Economic development. The study
will specifically concentrate on the role of murabahah, musharakah and ijrah in economic
development.

1.7 Operational definitions of key terms

Islamic financial system: Islamic banking, also known as non-interest banking, is a banking
system that is based on the principles of Islamic or Sharia law and guided by Islamic economics.
Two fundamental principles of Islamic banking are the sharing of profit and loss, and the
prohibition of the collection and payment of interest by lenders and investors. Islamic law prohibits
collecting interest or "riba."

Economic development:  is the growth of the standard of living of a nations people from a low-
income (poor) economy to a high-income (rich) economy. When the local quality of life is
improved, there is more economic development.

Murabahah: efers to a sale and purchase of an asset where the acquisition cost and the mark-up
are disclosed to the purchaser.

specific inherent nature of the contract of murabahah is the sale contract which is based on the
element of trust in disclosing the cost and mark-up

musharakah: usharakah is a joint enterprise or partnership structure in Islamic finance in which

partners share in the profits and losses of an enterprise
usharakah allows for the financier of a project or company to achieve a return in the form of a
portion of the actual profits according to a predetermined ratio. 

Ijarah: ijarah as a transfer of ownership of permitted usufruct for a known period in exchange for
compensation

1.8 Conceptual framework

IV DV
EV

Impact of Islamic Mode Finance on

Real estate
Economic development
islamic finance development

Enhancing financial
institution
CHAPTER TWO
LITERATURE REVIEW

2.0 Introduction

This chapter presents different literatures related to impact of islamic mode of finance in economic
development. These literatures have been retrieved from various books, articles, journals, and
studies related to the problem under investigation. The literature specifically focused on the role of
real estate Development, Enhancing Financial Inclusion in Organization, increasing global
economy in economic development.

2.1 role of Islamic finance of real estate development

Of recent, Islamic banking and finance has witnessed exponential growth, and it is regarded as the

fastest growing in the global finance industry. As at 2006, Shariah compliant products (excluding
Iran)
were valued at US$450 billion and is estimated to exceed US$1 trillion in 2010 with estimated
growth
rates of about 17% per annum (McKinsey, 2006). It has been estimated that the assets under
Islamic
management has grown from US$150 billion in the mid-1990s to US$700 billion in 2007
(HMTreasury, 2008).

In November 2005, the Shariah advisory council (SAC) of the Securities Commission in Malaysia
outlined guidelines to facilitate the establishment of an Islamic real estate investment trust. The
guidelines set by the securities commission are the first set of guidelines worldwide that provides

Shariah guidance on the operations and business activities of Islamic REITs. Malaysia has the
largest

number of REIT listed on the Malaysian stock exchange which conforms to Shariah law.
(IBRAHIM Muhammad Faishal)

Guidelines for Islamic Real Estate Investment Trusts

i) Properties to be acquired by an Islamic REIT must undergo a Shariah compliant

assessment, the assessment is to be carried out by an appointed Shariah committee or

adviser.

ii) Total non-permissible activities from rental income to total turnover of the subject property must
not exceed 20%, for any property purchased by the Islamic REITs.

iii) The Islamic REIT fund manger should not invest in any property in which nonpermissible
activities exceed 20%.

iv) An Islamic REIT is not permitted to own property in which all the tenants operate
nonpermissible activities; this guideline still holds if the percentage of rental of that building to the
total turnover of the Islamic REIT is below 20%.

v) The Shariah committee must advise the Islamic REITs not to accept a new tenant whose
activities are fully non-permissible

vi) It is possible to calculate the rental of non-permissible activities from a tenant (s) operating
mixed activities based on the ratio of area occupied by non-permissible activities to total area
occupied. The percentage would determine the ratio of rental of non-permissible activities to total
rent paid by the tenant (s)

vii) For service-based activities or other forms of investment which do not require the use of space,
the calculation method will be based on the ijtihad3 of the Shariah Committee or Shariah adviser of
the Islamic REIT.

viii) An Islamic REIT must ensure that all investment, deposit and financing instruments comply
with the principles of Shariah

ix) Islamic REITs must use the takaful4 schemes to insure its real estate. If the takaful schemes are
unable to offer insurance coverage, only then, are Islamic REITs are permitted to use conventional
insurance. (IBRAHIM Muhammad Faishal)

Islamic REITs are permitted to participate in forward sales or the purchase of currency, and
encouraged to transact with Islamic financial institutions. If the Islamic REITs transacts with
financial institution, then Islamic REITs are bound by the concept of wa’d5. However Islamic
REITs are permitted to

participate in conventional forward sales and purchase of currency with conventional financing

institutions. (IBRAHIM Muhammad Faishal)

Real Estate Development and Investment in the GCC

The Gulf Cooperation Council in the last decade has seen a sharp increase in real estate
developments and investments, however due to the recent global economic crisis there has been a
deceleration in investments in the real estate sector. Prior to the global credit crisis, several factors
have led to the growth of real estate development and investments in the Gulf States including:

The oil boom period (2002 to mid 2008) – The Gulf region has witnessed an oil boom in recent
years; oil revenues have increased exponentially over the years. With increase in gross domestic
product (GDP), investors have more cash to invest in assets including real estate. During the period
2002 to 2006, the GCC states recorded an annual average of $US327 billion from oil revenues; this

figure is double the oil revenue five years prior to the oil boom years (Saif, 2009). This has led to a
strong economic growth in the region.

Improved Investment Environments – The GCC states in recent years have introduced several

measures and policies to improve as well as make attractive their investment environments. For

example 100% foreign ownership of projects in most sectors are allowed in the GCC and in all

countries except Kuwait, foreign ownership in residential as well as other real estate markets are

allowed (NBK, 2008). Table 2 below highlights changes in policies in the GCC region (less stricter

laws for ownership and reduction in corporate taxes), which has significantly improved the
investment environment. (IBRAHIM Muhammad Faishal)

Real estate sectors to investment in

Respondents are asked to choose real estate sectors to invest in, at present and in the future
the residential sector is the most popular amongst respondents, 93% of respondents would invest in
the

residential sector at present whilst 64% intend to invest in sector in the future. The retail sector was
the least favourite by respondents, 14% would invest in the retail sector at present and 29% in the
future Residential, industrial and logistics and distribution were more favoured by respondents as
these sectors are permissible and easily implemented under Islamic laws. Commercial office and
retail sectors are generally percieved as having more non-Shariah compliant attributes and require
more expertise such as screening to ensure they are compliant to Islamic laws at all times this may
infer why they are less favored. (IBRAHIM Muhammad Faishal)

2.2 The Role of Islamic Finance in Enhancing Financial Inclusion in Organization of Islamic
Cooperation (OIC) Countries
There is voluminous literature in economics and finance on the contributions of finance

to economic growth and development. The main reason why finance matters is that financial

development and intermediation has been shown empirically to be a key driver of economic

growth and development. Finance (financial intermediation) motivates savers to save by offering

them a range of instruments to fit their financial needs, channels savings to investors and in the

process broadens investment opportunities, increases investment, ameliorates risk sharing,

increases growth of the real sector, enables individuals and business entities to smooth income

and consumption profiles over time, and there is some evidence that through this process it not

only leads to economic development but it may play a positive role in reducing poverty and

income inequality.( Mahmoud MohieldinZamir Iqbal,2011)

Although the linkage of financial development with economic development is

established, a high degree of the financial development in a country is not necessarily any

indication of alleviation of poverty in the country. There is growing realization that in addition

to financial development, the emphasis should be to expand the accessibility to finance which

can play a more positive role in eradicating poverty. Development economists are convinced that

improving access and making basic financial services available to all members of the society in

order to build an inclusive financial system should be the goal. Enhancing the access to and the

quality of basic financial services such as availability of credit, mobilization of savings,

insurance and risk management can facilitate sustainable growth and productivity, especially for

small and medium scale enterprises. Although the research in this area is at its early stages it is

already making promising progress. For example, Demirguc-Kunt, Beck and Honohan (2007)

argue that finance is not only pro-growth, but also pro-poor.

Despite of its essential role in the progress of efficiency and equality in a society, 2.7

billion people (70% of the adult population) in emerging markets still have no access to basic

financial services,2 and a great part of the them come from countries with predominantly Muslim

population. With growing interest in developing a financial system compliant with the Shariah

(Islamic Law), it would be worthwhile to explore what is Islam’s perspective on financial

inclusion and economic development. Islamic finance is growing at a fast pace all over the globe

as the demand for financial products and services compliant with Shariah keeps growing.

However, the focus of such financial products and services is on financial intermediation through

banking and capital markets activities but the availability of financial vehicles catering to the

poor is either non-existent or still at very early stages.

2.3 role Islamic finance increasing global economy

Islamic finance can no longer be dismissed as a passing fad or as an epiphenomenon of Islamic

revivalism. Islamic financial institutions now operate in over 70 countries. Their assets have
increased more than fortyfold since 1982 to exceed $200 billion. In 1996 and 1997, they have
grown at respective annual rates of 24 and 26 per cent.

By certain (probably overly optimistic) estimates, up to half of the savings of the Islamic world
may in the near future end up being managed by Islamic financial institutions.

The first Islamic banks were created in the 1970s, at the time when the aggiornamento of Islamic
doctrine on banking matters was taking shape. At the time, Islamic banks were typically
commercial banks operating on an interest-free basis. Today, as a consequence of broad changes in
the political–economic environment, a new generation of Islamic financial institutions, more
diverse and innovative, is emerging as the doctrine is undergoing a new aggiornamento. Perhaps
the most important development has been the growing integration of Islamic finance into the global
economy.

There is now a Dow Jones Islamic Market Index, which tracks 600 companies (from inside and
outside the Muslim world) whose products and services do not violate Islamic law. Foreign
institutions such as Citibank have established Islamic banking subsidiaries, and many conventional
banks – in the Muslim world but also in the United States and Europe – are now offering ‘Islamic
products’ that are sometimes aimed at non-Muslims. Islamic finance is thus in many ways well
suited to the global economy. This is all the more striking and paradoxical in that it is often said
that Islam is incompatible with the ‘new world order’ that emerged with the end of the cold war.

CHAPTER THREE
METHODOLOGY

3.0 Introduction

This chapter relates to the methodology of the study. It consists of the research design, study area,
target population, sample size, sampling procedure, research tool, data analysis, ethical
considerations, and limitations of the study.

3.1 Research design

This study will be descriptive in design which means to describe a particular problem at hand. In
this study, the researcher intends to describe Impact of Islamic Mode Finance on Economic
development.

The study will also be cross sectional in design. In this type of design, the researcher aims to
collect research data at one point in time.

The study will also be quantitative in design which means to determine a particular problem
numerically. In this type of design, the researcher doesn’t want to go into details of the problem
because in quantitative research, there is no need to go into the details.

3.2 Study area

Mogaidshu is the capital city of Somalia. Mogadishu located in Banadir region. It borders with
Middle shabelle region in the east and north. It also borders with lower Shebelle region in the west
and finally with Indian Ocean in the south. Mogadishu consists of seventeen districts including
yashshid, deynile, hodan, howlwadaag and so on

There are a lot of famous places within Mogadishu, including Villa Somalia, Adan Adde
International airport, and Mogadishu sea port.

3.3 Target population

During data collection process, the research will target Islamic financial institution in Mogadishu
as the target population. During data collection, Islamic financial institution will represent the
target population.

3.4 Sample size

In order to determine the required sample size, the researcher will use Slovens formula for sample
size determination.

n=

1 + N(e)2

n = required sample size

N = target population

e = error 5%(0.05)

100

n=

1 + 100(0.05)2

n = 80

3.5 Sampling procedure/technique

During sampling, the researcher will use non probability/purposive sampling which means to select
the respondents intentionally. In this type of sampling, the researcher is the one to decide who will
participate the study and who will not. The target population will not have an equal chance to be
included into the sample.
3.6 Data collection methods

Questionnaire will be used in order to collect research data from the target population. Study
participants will be briefed about the study and its objectives. They will also be requested to answer
the questions as honest as possible.

3.7 Data analysis

Data will be analyzed using statistical package for social science – SPSS. Descriptive analysis will
be done and then frequency tables and charts will be used in order to present study results.

3.8 Limitations of the study

During the study, here are some of the challenges that the researcher may encounter:

1. Lack of enough time and fund to make the research study.

2. Some respondents may refuse answering the questionnaire.
3. Security problems
4. Facing language barriers since some of the respondents may not know English
language and this needs to be translated in to their mother language
5. Financial problems

3.9 Ethical considerations

Respect: The researcher will respect respondent’s privacy when entering their private sphere and
when asking questions.

Confidentiality: the researcher will guarantee maximum confidentiality for the participants. Their
information will only be used for the purpose of the study.

Freedom to participate: participants will be informed that they are free to participate. They will
also be informed that they have the right to withdrawal.

Informed consent: consent will be secured from the participants after fully informing the nature,
potential risks and benefits of the study.
CHAPTER FOUR

DATA PRESENTATION, ANALYSIS AND INTERPRETATION

4.1 INTRODUCTION

This chapter presented the Results of the Analysis. This Study of the Effect Of Impact Of Islamic
Mode Finance On Economic Development In Mogadishu Somalia, The Researcher Used
Statistical Package Of Social Sciences (SPSS) To Analyses Data That Has Been Collected from
the respondents.

4.2 DEMOGRAPHIC DATA

This part presents the background information of the respondents who participated in this Study;
the purpose of this background information is to find out the characteristics of the respondents.
Furthermore, the respondents have also given the promise that all the data they provided is used
only for academic purpose research and the identities of the respondents was confidentially. In
total, 80 respondents filled in the questionnaire selected from intuitions in Mogadishu Somalia.
The shape of the questionnaire in the demographic section is looked upon in terms of Gender,
Age, and Marital status, level of education and work experience.

4.2.1 GENDER OF THE RESPONDENTS

In general, the respondents include the employee of telecommunication companies which 48 of

them were male respondents and 32 were female respondents.
 Table 4.1.1 Gender of the respondents

Gender of the respondents

Frequency Percent Valid Cumulative

Percent Percent

male 48 59.3 60.0 60.0

Valid female 32 39.5 40.0 100.0

Total 80 98.8 100.0

Missing System 1 1.2

Total 81 100.0
Source: Primary Data, 202

figure 4.1.1 Shows that the most respondents 48 (59.26) were male and 32 (39.51) were female.
The researcher indicates that majority of the respondents were male.
 4.1.2 AGE OF THE RESPONDENTS

Age of the respondents

Frequency Percent Valid Cumulative

Percent Percent

18-25 22 27.2 27.5 27.5

26-35 28 34.6 35.0 62.5

Valid 36-40 25 30.9 31.3 93.8

above 40 5 6.2 6.3 100.0

Total 80 98.8 100.0

Missing System 1 1.2

Total 81 100.0

49
figure 4.1.2 the above table illustrates that the respondents of 27.2% of the respondents age
between 18-25 years, while 34.6% of the respondents between 26-35 years, on the other hand
30.9% of the respondents 36-40 years, w h i l e the r e s p o n d e n t s age was Above-41 years
was 6.2.

Most of the respondents and almost 34.6% were 18-25 years.

4.1.2 MARITAL STATUS OF THE RESPONDENTS

Marital status of the respondents

Frequency Percent Valid Cumulative

Percent Percent

single 24 29.6 30.0 30.0

married 23 28.4 28.8 58.8

Valid divorce 19 23.5 23.8 82.5

widow 14 17.3 17.5 100.0

Total 80 98.8 100.0

Missing System 1 1.2

Total 81 100.0

59
figure 4.1.3 the above table is illustrating the marital status of the respondents of the study.
24(29.6%) of the respondents were single while 23(28.3%) of the respondents of the study were
married, while 19(23.5%) of the respondents of the study were divorce, while14(17.3%) of the
respondents where widow. The researcher indicates that majority of the respondents were single.

4.1.4 EDUCATIONAL LEVEL OF THE RESPONDENTS

EDUCATIONAL LEVEL OF THE RESPONDENTS

Frequency Percent Valid Cumulative

Percent Percent

Valid secondary 19 23.5 23.8 23.8

69
 diploma 24 29.6 30.0 53.8

bachelor 32 39.5 40.0 93.8

master 5 6.2 6.3 100.0

Total 80 98.8 100.0

Missing System 1 1.2

Total 81 100.0

the above shows or specifies the qualifications or education attained of the respondents of the
study, the listed of the qualifications provided in questionnaire were secondary, diploma,
bachelor and master degrea. majority of the respondents 32(39.51%) of the respondents were
holding bachelor only 24(29.63%) of the respondents were diploma. While 19(23.46%) were
attained secondary. and were the last respondents 5(6.2%) were holding master degree.

The researcher indicates that majority of the respondents were holding bachelor degrea
79
 4.2 role of role of Islamic finance on real estate Development in Mogadishu,
Somalia.

We believe that the Islamic finance on real estate development

contribute the economic development

Frequency Percent Valid Cumulative

Percent Percent

strong disagree 22 27.2 27.5 27.5

disagree 15 18.5 18.8 46.3

Valid agree 19 23.5 23.8 70.0

strong agree 24 29.6 30.0 100.0

Total 80 98.8 100.0

Missing System 1 1.2

Total 81 100.0

89
The above table shows that the most of the respondents 24(29.63%) were strong agree
22(27.16%) strong disagree 19(23.46%) were agree and last 1 5(18.52%) were disagree for the
above statement, in this situation the researcher reveal that the most of the respondents were strong
agree.

4.2.2 One of the most important role of Islamic finance is to enhance standard people living

One of the most important role of Islamic finance is to enhance standard

people living

Frequency Percent Valid Cumulative

Percent Percent

Valid strong disagree 15 18.5 18.8 18.8

disagree 13 16.0 16.3 35.0

agree 31 38.3 38.8 73.8

99
 strong agree 21 25.9 26.3 100.0

Total 80 98.8 100.0

Missing System 1 1.2

Total 81 100.0

The above table shows that the most of the respondents 31(38.27%) were agree 21(25.93%)
strong agree 15(18.52%) were strong disagree and last 1 3(16.05%) were disagree for the above
statement, in this situation the researcher reveal that the most of the respondents were agree.

4.2.3 We use Islamic finance by practicing our Islamic region

10
9
We use Islamic finance by practicing our Islamic region

Frequency Percent Valid Cumulative

Percent Percent

strong disagree 6 7.4 7.5 7.5

disagree 13 16.0 16.3 23.8

Valid agree 30 37.0 37.5 61.3

strong agree 31 38.3 38.8 100.0

Total 80 98.8 100.0

Missing System 1 1.2

Total 81 100.0

11
9
The above table shows that the most of the respondents 31(38.27%) were strong agree
30(37.04%) agree 13(16.05%) were disagree and last 6(7.41%) were strong d i s a g r e e for the
above statement, in this situation the researcher reveal that the most of the respondents were
strong agree.

12
9
  4.3.1 identify The Role of Islamic Finance in Enhancing Financial Inclusion in Organization
of Islamic Cooperation (OIC) Countries in Mogadishu, Somalia.

We believe the Islamic financial is enhancing financial institution

Frequency Percent Valid Cumulative

Percent Percent

strong disagree 21 25.9 26.3 26.3

disagree 16 19.8 20.0 46.3

Valid agree 31 38.3 38.8 85.0

strong agree 12 14.8 15.0 100.0

Total 80 98.8 100.0

Missing System 1 1.2

Total 81 100.0

13
9
The above table shows that the most of the respondents 31(38.2%) were agree 21(25.93%)
strong agree 1 6(19.75%) were d i s agree and last 1 2 (14.8%) were strong agree for the above
statement, in this situation the researcher reveal that the most of the respondents were agree.

1. 4.3.2 We use Islamic finance to reinforce Islamic financial institution

We use Islamic finance to reinforce Islamic financial institution

Frequency Percent Valid Cumulative

Percent Percent

strong disagree 17 21.0 21.3 21.3

disagree 34 42.0 42.5 63.8

Valid agree 20 24.7 25.0 88.8

strong agree 9 11.1 11.3 100.0

Total 80 98.8 100.0

Missing System 1 1.2

Total 81 100.0

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The above table shows that the most of the respondents 34(41.98%) were disagree

21(24.69%) agree 1 6(20.99%) were strong disagree and last 1 2 (11.11%) were strong agree for
the above statement, in this situation the researcher reveal that the most of the respondents were
disagree.

1. 4.3.3 We believe that the Islamic banks is mid-point to Islamic economic

We believe that the Islamic banks is mid-point to Islamic economic

Frequency Percent Valid Cumulative

Percent Percent

Valid strong disagree 4 4.9 5.0 5.0

disagree 7 8.6 8.8 13.8

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 agree 31 38.3 38.8 52.5

strong agree 38 46.9 47.5 100.0

Total 80 98.8 100.0

Missing System 1 1.2

Total 81 100.0

The above table shows that the most of the respondents 46(46.91%) were strong agree
31(38.27%) were agree 7 (8.64%) were d i s a g r e e and last 4 (4.9%) were strong disagree for
the above statement, in this situation the researcher reveal that the most of the respondents were
strong agree.

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  4.4.1 role Islamic finance increasing global economy development in Mogadishu, Somalia.

We believe that the Islamic finance have main role of increasing global
economy

Frequency Percent Valid Cumulative

Percent Percent

strong disagree 19 23.5 23.8 23.8

disagree 10 12.3 12.5 36.3

Valid agree 22 27.2 27.5 63.8

strong agree 29 35.8 36.3 100.0

Total 80 98.8 100.0

Missing System 1 1.2

Total 81 100.0

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The above table shows that the most of the respondents 29(35.80%) were strong agree
22(27.16%) were agree 1 9 (23.46%) were s t r o n g d i s a g r e e and last 1 0 (12.35%) were
disagree for the above statement, in this situation the researcher reveal that the most of the
respondents were strong agree.

4.4.2 Economic crisis: Islamic finance have less economic crisis according to conventional
economic

Economic crisis: Islamic finance have less economic crisis according to

conventional economic

Frequency Percent Valid Cumulative

Percent Percent

strong disagree 13 16.0 16.3 16.3

disagree 19 23.5 23.8 40.0

Valid agree 25 30.9 31.3 71.3

strong agree 23 28.4 28.8 100.0

Total 80 98.8 100.0

Missing System 1 1.2

Total 81 100.0

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The above table shows that the most of the respondents 25(30.86%) were agree 23(28.40%)
were strong agree 1 9 (23.5%) were d i s a g r e e and last 1 3 (16.0%) were strong disagree for the
above statement, in this situation the researcher reveal that the most of the respondents were agree.

4.4.3 We believe that the Somalia financial system is full represent in full Islamic model

We believe that the Somalia financial system is full represent in full

Islamic model

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 Frequency Percent Valid Cumulative
Percent Percent

strong disagree 11 13.6 13.8 13.8

disagree 18 22.2 22.5 36.3

Valid agree 38 46.9 47.5 83.8

strong agree 13 16.0 16.3 100.0

Total 80 98.8 100.0

Missing System 1 1.2

Total 81 100.0

The above table shows that the most of the respondents 38(46.91%) were agree 18(22.22%)
were disagree 1 3 (16.05%) were s t r o n g a g r e e and last 1 0 (13.58%) were strong disagree for
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the above statement, in this situation the researcher reveal that the most of the respondents were
agree.

CHAPTER FIVE

FINDINGS, CONCLUSION AND RECOMMENDATION

5.0 INTRODUCTION

This chapter presented the findings of the study. The chapter also concluded the study as a
whole as it suggested some recommendations for further action.

5.1 FINDINGS

The majority of the respondents 48(59.26%) were male, while only 32(39.51%) were female.

The majority of the respondents the respondents of 34.6% of the respondents between 26-35 years,
while the 27.2 of the respondent age bet wee 18-25 years old. on the other hand, 30.9% of the
respondents 36-40 years, w h i l e o n l y the r e s p o n d e n t s age was Above-41 years was 6.2.

The majority of the respondents of the study 24(29.6%) of the respondents were single while
23(28.3%) of the respondents of the study were married, while 19(23.5%) of the respondents of the
study were divorce, while only 14(17.3%) of the respondents where widow.
the majority of the respondents 32(39.51%) of the respondents were holding bachelor only
24(29.63%) of the respondents were diploma. While 19(23.46%) were attained secondary. and
were the last respondents 5(6.2%) were holding master degree.
the majority of the respondents 24(29.63%) were strong agree We believe that the Islamic finance on
real estate development contribute the economic development, 22(27.16%) strong disagree
19(23.46%) were agree and last 1 5(18.52%) were disagree.
the majaroity of the respondents 31(38.27%) were agree one of the most important role of islamic
finance is to enhance standard people living, 21(25.93%) strong agree 15(18.52%) were strong
disagree and last 1 3(16.05%) were disagree.
the majority of the respondents 31(38.27%) were strong agree we use Islamic finance by practicing
21
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our Islamic region 30(37.04%) agree 13(16.05%) were disagree and last 6(7.41%) were strong
disagree
the majority of the respondents 31(38.2%) were agree were believe the islamic finance is
enhancing financial institution 21(25.93%) strong agree 1 6(19.75%) were d i s agree and last
1 2 (14.8%) were strong agree

the majority of the respondent 34(41.98%) we disagree we use islamic finance to reinforce isalmic
financial institution , 21(24.69%) were agree 16(20.99%) were strong disagree and last 12(11.11%)
were strong agree.
The majority of the respondents 46(46.91%) were strong agree were believe that the Islamic
bank is mid-point to Islamic economic 31(38.27%) were agree 7 (8.64%) were d i s a g r e e and
last 4 (4.9%) were strong disagree
the majority most of the respondents 29(35.80%) were strong agree were believe that the islamic
finance have main role of increasing global economy 22(27.16%) were agree 1 9 (23.46%) were
s t r o n g d i s a g r e e and last 1 0 (12.35%) were disagree

The majority of the respondents 25(30.86%) were agree Economic crisis: Islamic finance have
less economic crisis according to conventional economic 23(28.40%) were strong agree
1 9 (23.5%) were d i s a g r e e and last 1 3 (16.0%) were strong disagree
the majority of the respondents 38(46.91%) were agree Were believe that the Somalia financial
system is full represent in full Islamic model 18(22.22%) were disagree 1 3 (16.05%) were
s t r o n g a g r e e and last 1 0 (13.58%) were strong disagree

5.3 RECOMMENDATION

The researcher recommends the following:

1. The researcher recommends that leader of Somalia must post published Islamic bank system
not conventional bank system
2. According to the financial institution, government organization and non-government
organization must obey Islamic financial system

5.4 RECOMMENDATIONS FOR FURTHER RESEARCH

The researcher recommends the following topics for further research:

1. Role of murabahah investment in developing personal economic development in
Mogadishu, Somalia
2. Role of Islamic bank origination with creating Islamic system in Mogadishu, Somalia
3. Impact of insecurity in developing financial institution in Mogadishu, Somalia
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Conclusion

Islamic finance in some countries is large enough to affect the quality of their national accounts,
monetary and financial statistics, and indicators of the structure and soundness of national financial
systems

Islamic finance, despite its name, is not a religious product. It is however a growing series of
financial products developed to meet the requirements of a specific group of people. Conventional
finance includes elements (interest and risk) which are prohibited under Shari’ah law.

Economic growth is obtained by an efficient use of the available resources and by increasing the
capacity of production of a country. It facilitates the redistribution of incomes between population
and society. The cumulative effects, the small differences of the increase rates, become big for
periods of one decade or more. It is easier to redistribute the income in a dynamic, growing society,
than in a static one. There are situations when economic growth is confounded with economic
fluctuations

Appendix
Referencer

Dr. Rashid Ahmad (2013). An Introduction to Islamic Modes of Financing for Elimination of
Interest Based transactions in Banking Sector of Pakistan: Introduction

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file:///C:/Users/tosjiba%20pc/Downloads/20%20(1).pdf

chartered institute of management accountants, AN INTRODUCTION TO ISLAMIC FINANCE:

introduction .p.3.

https://www.cimaglobal.com/Documents/Islamic%20finance/Rebrand%20Brochures/Islamic
%20Introduction%20brochure_Mar2015.pdf

chartered institute of management accountants, AN INTRODUCTION TO ISLAMIC FINANCE:

introduction .p.3.

https://www.cimaglobal.com/Documents/Islamic%20finance/Rebrand%20Brochures/Islamic
%20Introduction%20brochure_Mar2015.pdf

Russell Krueger,(2017), Some Notes on Islamic Finance in the National Accounts: Introduction:
Islamic finance.p.1-2.

https://unstats.un.org/unsd/nationalaccount/RAmeetings/TFOct2017/IF_Notes.PDF

Alina Haller on 01 November,( 2016), Concepts of Economic Growth and Development. Challenges
of Crisis and of Knowledge: introduction.p.65

file:///C:/Users/tosjiba%20pc/Downloads/09fa.pdf

Alina Haller on 01 November,( 2016), Concepts of Economic Growth and Development. Challenges
of Crisis and of Knowledge: conomic Growth and Development – Conceptual Approach.p.67.

file:///C:/Users/tosjiba%20pc/Downloads/09fa.pdf

Alina Haller on 01 November,( 2016), Concepts of Economic Growth and Development. Challenges
of Crisis and of Knowledge: conomic Growth and Development – Conceptual Approach.p.67.

file:///C:/Users/tosjiba%20pc/Downloads/09fa.pdf

Islamic Economic Studies,(2014) Islamic Finance in the United Kingdom: Factors Behind its
Development and
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Growth: Development of Islamic Finance.p.44&45.

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3158570

HMTreasury,( 2008), Shariah Compliant Real Estate Development Financing and

Investment in the Gulf Cooperation Council:introduction.p.3

https://www.researchgate.net/publication/235314713_Shariah_compliant_real_estate_developm
ent_financing_and_investment_in_the_Gulf_Cooperation_Council/link/577635ee08ae1b18a7e17
713/download

IBRAHIM Muhammad Faishal, Shariah Compliant Real Estate Development Financing and

Investment in the Gulf Cooperation Council: Shariah Compliance and Real Estate Investment
Trusts.p.7
https://www.researchgate.net/publication/235314713_Shariah_compliant_real_estate_developm
ent_financing_and_investment_in_the_Gulf_Cooperation_Council/link/577635ee08ae1b18a7e17
713/download

IBRAHIM Muhammad Faishal, Shariah Compliant Real Estate Development Financing and

Investment in the Gulf Cooperation Council: Shariah Compliance and Real Estate Investment
Trusts.p.7
https://www.researchgate.net/publication/235314713_Shariah_compliant_real_estate_developm
ent_financing_and_investment_in_the_Gulf_Cooperation_Council/link/577635ee08ae1b18a7e17
713/download

IBRAHIM Muhammad Faishal, Shariah Compliant Real Estate Development Financing and

Investment in the Gulf Cooperation Council: Shariah Compliance and Real Estate Investment
Trusts.p.7
https://www.researchgate.net/publication/235314713_Shariah_compliant_real_estate_developm
ent_financing_and_investment_in_the_Gulf_Cooperation_Council/link/577635ee08ae1b18a7e17
713/download

IBRAHIM Muhammad Faishal, Shariah Compliant Real Estate Development Financing and
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Investment in the Gulf Cooperation Council: Shariah Compliance and Real Estate Investment
Trusts.p.8
https://www.researchgate.net/publication/235314713_Shariah_compliant_real_estate_developm
ent_financing_and_investment_in_the_Gulf_Cooperation_Council/link/577635ee08ae1b18a7e17
713/download

IBRAHIM Muhammad Faishal, Shariah Compliant Real Estate Development Financing and

Investment in the Gulf Cooperation Council: Shariah Compliance and Real Estate Investment
Trusts.p.15
https://www.researchgate.net/publication/235314713_Shariah_compliant_real_estate_developm
ent_financing_and_investment_in_the_Gulf_Cooperation_Council/link/577635ee08ae1b18a7e17
713/download

Mahmoud MohieldinZamir Iqbal,(2011), The Role of Islamic Finance in Enhancing Financial

Inclusion in Organization of Islamic Cooperation (OIC) Countries: introduction.p.1

https://www.researchgate.net/publication/228202582_The_Role_of_Islamic_Finance_in_Enhancing_Finan
cial_Inclusion_in_Organization_of_Islamic_Cooperation_OIC_Countries/link/0fcfd5087df10340c7000000/d
ownload

APPENDIX (B)

QUESTIONNAIRE

Dear
respondent

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We are mohamed ahmed salad, samira abdirahman omar, furqaan mohamed ali, currently
doing graduation thesis on bachelor degree at of plasma university faculty of Business
Administration especially department of Islamic bank and finance we are required to
conduct a research about “of Islamic Mode Finance on Economic development”. We are
pleased to inform you that you have been selected to participate in our study. we hope you
could complete the questionnaire as honestly and objectively as possible. This questionnaire
is purely for academic purpose not for other and your participation is voluntary. We promise
that your responses will be treated confidentially.

So we request you as model kindly to participate filling this questionnaire objectively and
truthfully.

Section 1: personal information

SECTION (A): PROFILE OF THE RESPONDENTS (PR)

Please tick ( ) the appropriate response the following demographic information.

1. Gender

Male Female

2. Age

18 - 25 26 - 35
36 - 40 40 & above

3. Marital status

Single Married

4. Educational level

Secondary Diploma
Bachelor degree master

5. Experience

Less than 1 year 1-2 years

 3-4 years above 4 years
Section (B): questions
1= Strongly Agree 2 = Agree 3 = disagree 4 = strongly disagree
n Questions SA A DA SD
o
1 We believe that the Islamic finance on real estate
development contribute the economic development
2 One of the most important role of Islamic finance is to
enhance standard people living
3 We use Islamic finance by practicing our Islamic region
4 We believe the Islamic financial is enhancing financial
institution
5 We use Islamic finance to reinforce Islamic financial
institution
6 We believe that the Islamic banks is mid-point to Islamic
economic
7 We believe that the Islamic finance have main role of
increasing global economy
8 Economic crisis: Islamic finance have less economic crisis
according to conventional economic
9 We believe that the Somalia financial system is full
represent in full Islamic model