1.

INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The relationship between entrepreneurship and unemployment has been an interesting topic for
researchers for quite some time. (Mowlid Adan Diriye, 2018). Entrepreneurship development
contributes to unemployment reduction when it creates employment through the startup of new
entrepreneurship or the expansion of existing ones and they increases social wealth by creating
new markets, new industries, new technology, and net increases in real productivity, increases
income which culminates in higher standards of living for the population then it is logically to
state that if the number of entrepreneurs of any given country increase, the unemployment
indicators will decrease and vice versa.
In recent years, the promotion of youth entrepreneurship as a means of improving youth
livelihoods in the Third World has attracted increasing attention from scholars and policy
makers. Most of this attention has focused on sub-Saharan Africa where many countries are
faced with seemingly overwhelming problems posed by ever-growing numbers of unemployed
youth (Chigunta, 2017)
Despite that most developing countries of the world are now understanding the impact of
entrepreneurship programs on unemployment and the growth of their economy, and therefore
making deliberate efforts to promote entrepreneurship, maintain and sustaining effective
entrepreneurship development program remains a global phenomenon. The relationship between
effective entrepreneurship program and unemployment is so important that almost all nations of
the world takes entrepreneurship as a top priority in their agenda. In Nigeria and even in other
countries for example in Bangladesh, Entrepreneurship Development Program is now being
considered as important driver of economic growth, generating employment, and unemployment
reduction through the empowerment of young men and women.
The population of Africa is now one billion and by 2050, this figure is projected to increase to
nearly two billion. By demographic transitions, African youths, defined as those between the
ages of 15–35 years old are growing at the fastest rate in the world but they make up 60 percent
of the total unemployed and only 37 percent of the labor force. A World Bank survey of 200,000
people in 20 countries revealed apathy and hopelessness among the poor, but self-employment
and wages were noted as tools for upward mobility. Therefore, integrating more youths into the
small business sector can contribute to alleviating of unemployment. (RIMMINGTON, 2011).

Although Somali entrepreneurs started creating private sectors and increased the income of the
families but still the rate of the unemployment increased because Somalia has been a country the
chronic complex emergency since 1991 when the Somalia government was collapsed The
resulting civil war and frequent natural disaster have led to a lack of basic services and great
human suffering and humanitarian crises, and many public jobs were lost and increased
unemployment rate. (Ali Yassin Shaeikh Ali, 2013)
Given the high unemployment rate, the stagnant growth of real GDP per capita, and the high
inflation rate of Somalia, there is still a lack of sufficient studies that consider the nexus between
unemployment and Entrepreneurship variables in the context of Somalia. Several studies have
Tested the unemployment and Entrepreneurship nexus in Africa, Asia, and Europe. Therefore, ,
this study is going to bridge that gap by ascertaining the role of entrepreneurship on
unemployment reduction in Mogadishu-Somalia.
A definition of entrepreneurship has been debated among scholars, researchers, and even policy
makers since the concept was first established in the early 1970s. (Sterntiorr and Burgers, 2012)
view of entrepreneurship is the ability to develop a new venture or apply a new approach to an old
business. Schumpeter (2014) defines entrepreneurship as the ability to perceive and undertake
business opportunities, taking advantage of scarce resource utilization. According to
Encyclopedia Entrepreneurship is the practice of forming a new business or commercial
enterprise, usually in an industry or sector of the economy with a large capacity for growth. In this
study entrepreneurship will be defined is the process of creating something of value by devoting
the necessary skills, time and effort, and, assuming the accompanying financial and sometimes
physical and social risks, to reap the resulting monetary rewards and personal satisfaction”.
The international labour organization (ILO) defines the unemployed as the number of all
economically active population who are without work but are available for and are seeking work,
including those who have lost their jobs and those who have voluntarily left work. It is one of the
macro-economic problems, which every responsible government is expected to monitor and
regulate. In the same vein, according to (Olaaele, Akeke, and Oladunjoye, (2011)) unemployment
is “a situation in which persons capable and willing to work are unable to find suitable paid
employment”. Thus, unemployment is a situation where the teaming population who
are mentally and physically capable to work are not able to get a commensurable job. this study
will concentrate decreasing of unemployment at the side of entrepreneurship.
Therefore, there are two main views on the relationship between entrepreneurship and
unemployment. The first of these is that unemployment will decrease as entrepreneurship
increases. The second one is that increase in unemployment encourages entrepreneurship. So there
is a positive relationship between entrepreneurship and unemployment