Edward Ireri

Journal of Public Affairs Volume 16 Number 4 pp 350–358 (2016) Published online 23 February 2016 in Wiley Online Library (www.wileyonlinelibrary.com) DOI: 10.1002/pa.1595 ■ Academic Paper Does international monetary aid help or hinder Somalia’s social economic revival? Mohammed Hersi Warsame1* and Edward Mugambi Ireri2 1 2 Department of Finance and Economics, University of Sharjah, United Arab Emirates ITROMID, Jomo Kenyatta University of Agriculture and Technology, Nairobi, Kenya Somalia government has been accused of lacking transparency and proper accounting systems. This study investigates international monetary aid in Somalia’s social and economic revival. A purposely chosen sample of Somalis living in Kenya (N = 204) was used. Approximately 59.4% disagreed that the lives of a great number of Somali people have improved, while 65.2% acknowledged that there was lack of integrity and expertise in the management of foreign aids. Finally, the study suggests that the key to success of monetary aid in Somalia largely depends on; developing good financial infrastructure based on modern information technology and telecommunication, the establishment of strong financial institutions with good financial and aid policies, and enhanced transparency and rigorous accountability of Somalia government officials. Copyright © 2016 John Wiley & Sons, Ltd. INTRODUCTION The International Monetary Fund’s (IMF’s) purpose and scope were initially aimed at maintaining monetary and exchange-rate stability among a mostly industrialized membership Kenen (2007). Nowadays, membership is comprised mostly of developing countries, ranging from large, emerging markets to small, impoverished states, with crisis management as the fund’s primary task. The Somali Republic was founded in 1960 Gray (1989). It was then one of the poorest countries in the world, and it remains so now after 55 years. In 1969, Somali military officer Siad Barre seized power via a military coup and declared Somalia a socialist state (Norris, 2011). Since toppling of Barre, effective national governance has never been restored despite multiple efforts by Somalis and the international community. The US State Department estimates that around $2bn a year are directed towards Somalia in remittances, while the World Bank estimated at different junctures that Somalia was *Correspondence to: Mohammed Hersi Warsame (PhD), Department of Finance and Economics, University of Sharjah, United Arab Emirates, Box 27272, Sharjah, United Arab Emirates. E-mail:- Copyright © 2016 John Wiley & Sons, Ltd. the most remittance-dependent country in the world (Maimbo, 2011). Evidence proves that decades of foreign aid have not changed the future of many African states including Somalia. Estimates suggest that the West has spent about $600bn on foreign aid to Africa so far Akonor (2008), yet underdevelopment is widespread and some African states—like Somalia—are considered to have collapsed (Andrews, 2009). This can be perfectly illustrated with the fact that the UN Development Program usually does not even rank Somalia on its Human Development Index, simply because there is not enough available data for the country (Norris, 2011). As of August 2010, Somalia was in arrears to the IMF for $365.7m, to the World Bank for $231.3m, and to the African Development Bank (ADB) for $85m, amounting to a total of $682m in unpaid debts (IMF, 2005). Somalia’s outstanding debts account for 17% of the total arrears owed to the IMF. As a result of this instability, a declaration of its unsuitability to access IMF resources has been in place since 6 May 1988 (Gray, 1989). In 2012, the World Bank reported a pattern of aid mismanagement in Somalia, but already prior to that, in 2009 and 2010, about $130m delivered to the transitional government seemingly disappeared IMF aid in Somalia’s social economic revival 351 into thin air (BBC, 2012; Fortin, 2012). In July 2012, the East African Newspaper reported that over the period-, the first Somali Transitional National Government and the subsequent Transitional Federal Governments (TFG) received bilateral aid totaling $308m from Arab countries. However, successive governments were only been able to account for $124m—or one-third—of the total bilateral and domestic funds they received (Pambazuka News, 2012). A leaked copy of the 2012 report of the UN Monitoring Group on Somalia and Eritrea by Ulusomohamuduloso (2012), revealed that the TFG leaders had systematically neglected a funding mechanism managed by Price Waterhouse Coopers, in which donor support was established as a confidence-building measure. The report further stated that the fundamental problem with the Transitional Federal Institutions was that ‘their leaders had successfully marketed the government’s weakness, fragility, and possible collapse as a lure to attract more assistance’ and thus, ‘corruption, embezzlement, and fraud were no longer symptoms of mismanagement, but had in fact become a system of management’ (Pambazuka News, 2012). In July 2013, Monitoring Group on Somalia and Eritrea alleged that 80% of the withdrawals from the Central Bank of Somalia were made for private purposes. Besides this, the Somalia government was accused in 2012 by the Voice of America of lack of transparency, absence of an accounting system, and no disclosure of financial statements. The report further stated that the mismanagement of badly needed international aid was a serious affront that needed immediate attention (Voice of America, 2012). In an interview with the Voice of America Abdirizak (2012), Somalia’s former finance chief mentioned that many donations had gone straight to private officials rather than to the country’s central bank. Politicians, in turn, often deposited a fraction of the donor funds into the Central Bank and did not account for the rest (Pambazuka News, 2012). Consequences of this were reflected on a report released by the World Bank (2012) on their blog, informing that poverty in Somalia had remained rampant (43%), while 73% of the population lived below $1 and $2 per day. This was in spite of massive external inflows of cash in the form of remittances, official development assistance, and military assistance. The report stated that not all revenues were deposited in the Central Bank of Somalia and that there was a lack of proper accounting on how money was being spent. The report was released when Somalia’s top leadership and civil Copyright © 2016 John Wiley & Sons, Ltd. society representatives had gathered at the Second Conference on Somalia in Istanbul. Based on the events detailed earlier, the proposed main research question of this study is ‘Does International Monetary AID Help or Hinder Somalia’s Social and Economic Revival?’ DOES INTERNATIONAL MONETARY AID HELP OR HINDER SOMALIA’S SOCIO-ECONOMIC AND POLITICAL INSTABILITY PLIGHT? International monetary aid is necessary to fill a financing or investment gap, consequently lifting countries out of a so-called poverty trap. Boone (1996) empirically supports the existence of the Samaritan’s dilemma: in his analysis, foreign aid has zero effect on investment, but instead, individuals choose to consume. Thus, aid finances consumption rather than investment, supporting Buchanan’s prediction. As well, Coyne (2008) provides an example of the Samaritan’s Dilemma. Since 1995, the European Union had been the largest and perhaps the most influential donor in Somalia. At the same time, in the absence of a government, the IMF and the World Bank are not present in Somalia (Bayne, 2001). Prior to the collapse of the Barre regime in the country, foreign aid accounted for more than 70% of Somalia’s budget. This excessive amount of aid, in fact, created a dependency culture that has hardened any possibilities of change in recent years. Supporting this, Knack (2001), for instance, finds that higher levels of aid erode the quality of governance. HAVE THE LIVES OF SOMALI PEOPLE IMPROVED OR WORSENED BECAUSE OF INTERNATIONAL MONETARY AID? The 2012, 2013 budgets of the Republic of Somalia showed financing gaps of US$49.6m and US$29.9m, respectively. The actual external assistance had already declined between 2011 and 2012, possibly attesting for lack of trust and confidence by the donor community in regards to the accountability and financial integrity institutions of Somalia (Federal Republic of Somalia, 2013). The African Development Bank (ADB) has offered support to the TFG of Somalia for capacity building in public financial management and financial institutions since August 2010. The United States Agency for International Development (USAID) channels most of its aid through international and local NGOs. Other notable donors in Somalia include The United Nations Office for Project J. Public Affairs 16, 350–358 (2016) DOI: 10.1002/pa 352 M. H. Warsame and E. M. Ireri Services (UNPOS), The United Nations Support Office for AMISOM (UNSOA), The United Nations Development Programme (UNDP), and Danish International Development Agency (DANIDA) (Federal Republic of Somalia, 2013). To add to this situation, the absence of a formal banking sector has significantly constrained Somali’s private sector in terms of its ability to access credit and other financial services. The long absence of a national government, also, has further prevented access to international capital markets as well as the establishment of economic management institutions and regulatory bodies (World Bank, 2003). Thus, because of all this, humanitarian assistance has been an essential lifeline to millions of Somalis, given the enormous numbers of refugees and displaced people in Somalia; all this accompanied by the general collapse of Somali state institutions. Parallel to this, most of the development funds in recent years have been directed to the north of Somalia rather than the south, simply because security in the south is extremely poor, resulting in most international NGOs and contractors being unable to operate on the ground (Norris, 2011). Thus, it can be stated as a fact that Somalia INEGMA (2014) no longer needs aid, but rather investors willing to leverage capital and expertise, so to reconstruct the Somali economy. Rather than disbursing into international funds, the United Arab Emirates has always given aid directly through the federal government. Sachs (2005) sees more aid as increasing the possibility ‘to end extreme poverty by 2025’. Burnside (1997) also sees a correlation between aid and economic growth, but only when this is applied within a good policy environment. However, other studies indicate no significant correlation between aid and growth (Dovern, 2007; John, 2008). WHY INTERNATIONAL MONETARY AID HAS NOT ACHIEVED ITS MAIN OBJECTIVES IN SOMALIA? Aid reduces poverty and inequality, increases growth, builds capacity, and accelerates achievement of the Millenium Development Goals (Wood, 2008). On the other hand, Browne (2006) has argued that aid does not necessarily match development needs because its ‘size and direction are subjectively determined by donors’. A recent confidential audit of the Somali government suggests that in 2009 and 2010, up to 96% of the direct bilateral assistance to the government had simply disappeared, presumably into the pockets of corrupt officials (Transitional Federal Copyright © 2016 John Wiley & Sons, Ltd. Government, 2011). This suggests that aid can indeed contribute to and increase political instability by making control of the government a more valuable prize (Grossman, 1992). In fact, Maren (1997) goes as far as to blame Somalia’s civil wars on competition for control of large-scale food aid. The IMF and the World Bank have relied on their ‘financial programming’ and ‘financing gap’ exercises to design a policy framework that prioritizes macroeconomic stability and growth, respectively. Both models, however, have been extensively questioned as long-term policy models (Killick, 1995; Edwards, 1989). Because of this, there is indeed a need for collective efforts that measure the Somali economy for the improvement of monetary policies and currency reform (INEGMA, 2014). WHAT ARE THE KEY SUCCESS FACTORS OF INTERNATIONAL MONETARY AID IN SOMALIA? In the 1995 IMF seminar publication, Jaycox (1995) noted that although ‘the destiny of Africa lies in the hands of Africans’, Africa still needs international support. He argued that international donors can help African countries build the capacity to take ownership of their development by following the World Bank’s six guiding principles (Jaycox, 1995). Aid-recipient countries are expected to develop proper structures that make this aid and development more effective: transparency, public expenditure reviews, public investment programs, donor support of government programs, and medium fiscal programming (Christensen, 1995). The USA, in pursuit of its modern counter-terror objectives, provides continuous indirect financial and military support to Somalia’s Transitional Federal Government, despite its proven record of corruption, rampant and admitted use of child soldiers, and frequent inability to maintain control of territory (United States of America, 2011). This is performed by believing on the idea that the most successful efforts to develop Somalia will be built upon effective international coordination, constructive involvement of the private sector, and a willingness to make hard long-term choices (Norris, 2011). In 2008, a Financial Governance Committee was established to support the Central Bank and its governor. This was composed by Somalia’s government, the African Development Bank, the World Bank, and the IFM, all of them closely in an advisory capacity with the governor of the Central Bank (INEGMA, 2014). J. Public Affairs 16, 350–358 (2016) DOI: 10.1002/pa IMF aid in Somalia’s social economic revival 353 Security, justice, and Public Finance Management integrity have been prioritized by the new Federal Republic of Somali legislature and the Presidency. The need to build the citizens’ confidence and relationship with development partners assures that public funds will be managed in a transparent, equitable, and accountable manner (Federal Republic of Somalia, 2013). Indeed, Somalia needs a national payment system that allows the flow of funds in and out of the country. Monetary policy and currency reform are also vital. At the moment, the size of the Somali economy is unknown (INEGMA, 2014), and every donor has a different aid policy. Authors such as Kilby (2009) and Kilby (2010) explain this by arguing that aid can be granted for political reasons, and while the motive for granting it can influence the effect of the aid given, the motives behind it can be clearly seen: for instance, the USA and the World Bank put more emphasis on market-liberal policies Dreher & Hodler, (2013) while China is more reluctant to support economic freedom. Calderisi (2006) also supports this notion by arguing that internal rivalry and conflicting objectives of the World Bank, IMF, and UNDP have led to some confusion in the aid policy advice they give to Africa. The public access to key fiscal information and the lack of information to the general Somali public with respect to the management of public resources is a great challenge (Federal Republic of Somalia, 2013). Transparency International Organization (2014) ranks Somalia last in the Corruption Perceptions Index (Transparency International Organization, 2014). The Fund for Peace Failed States Index has ranked Somalia as the most troubled state for the fifth year on a row in 2012. Currently, and as noted in previous indexes, Somalia continues to endure widespread lawlessness, ineffective government, terrorism, insurgency, crime, and abysmal development. Despite this, however, the country does appear to be on a slow trajectory of improvement, giving reason to believe that conditions can in fact progress in the future (Fund for Peace, 2014). Somalia, like other developing countries, has accumulated debts in arrears. The executive of the Federal Republic of Somalia believes that the IMF and the World Bank’s recognition of the Government will help implementing the necessary public finance management reforms (Federal Republic of Somalia, 2013). RESEARCH OBJECTIVES The main goal and challenge of this research lied in answering the question posed as follows: Copyright © 2016 John Wiley & Sons, Ltd. Does international monetary aid help or hinder Somalia’s social economic revival? SPECIFIC OBJECTIVES In order to answer this question, the research proposes the following additional specific research objectives: (1) To find out if international monetary aid is helping or hindering Somalia’s socio-economic and political instability plight. (2) To investigate how the lives of the Somali people have improved or worsened because of international monetary aid. (3) To examine why international monetary aid has not achieved its main objectives in Somalia. (4) To ascertain what are the key success factors of monetary aid in Somalia. RESEARCH DESIGN AND METHODOLOGY A purposive study design with a sample size N = 204 was adopted. We gained accurate information from Somalis who had at least a high school level of education, with adequate knowledge about the operations of the international monetary aid in Somalia. The study was conducted in the month of June 2015 in Eastleigh Kenya, a suburb populated mainly by the Somalis community in Nairobi. The study had 10 independent variables that were categorized into the four main study objectives. The survey questions associated with the 10 independent variables were scored on a 5-point Likert scale. Within this, 1 accounted for ‘strongly disagree’, and 5 accounted for ‘strongly agree’. The demographic dependent categorical variables used in the study are shown on Table 1. DISCUSSION ON THE FINDINGS FROM THE DESCRIPTIVE STATISTICS The significant results are shown on Tables 2 and 3. Objective 1 was achieved by testing independent variables 1 and 2. 1. H0 (null hypothesis 1): international monetary aid does not contribute to Somalia’s social economic revival The results were insignificant on age, gender, the level of IMF awareness, and the education levels, being p > 0.05. Thus, the null hypothesis can be J. Public Affairs 16, 350–358 (2016) DOI: 10.1002/pa 354 M. H. Warsame and E. M. Ireri Table 1 Summarizes the frequencies and percentage scores of demographic variables in the study Age 18–25 years 26–32 years Over 33 years Gender Male Female IMF awareness Very advanced Reasonably advanced Basic Poor Education High school Diploma/high diploma College degree/bachelor Graduate degree (Master’s or PhD) Frequency Percent 98 81 25 - 114 90 55.9 44.1 - - - - 2. H0 (null hypothesis 2): international foreign aid is ineffective and possibly damaging to Somalia’s socio-economic revival Note: The results indicate the percentage distributions of the four demographic variables used in the survey. The survey was purposively designed. Any respondent with a less than a high school level of education was not included in the survey. IMF, International Monetary Fund. accepted, therefore concluding that international monetary aid does not contribute to Somalia’s social economic revival. The finding agrees with Bayne (2001) who stated that in the absence of a Table 2 Age government, the IMF and the World Bank were not present in Somalia, lest their impact would have been felt by many Somalis. The results were insignificant on age, gender, the level of IMF awareness, and the education levels, being p > 0.05. Thus, the null hypothesis can be accepted, therefore concluding that international foreign aid is ineffective and possibly damaging to Somalia’s socio-economic revival. The finding agrees with Bayne (2001) that the culture of aid dependency hardens any possible change from aid dependency, and Knack (2001) high levels of aid erodes quality of governance as we have seen from the study on Somalia. Objective 2 was achieved by testing independent variables 3 and 4. 3. H0 (null hypothesis 3): Somali’s lives have not improved because of international monetary aid in Somalia The results were insignificant on age, gender, the level of IMF awareness, and the education levels, being p > 0.05. Thus, the null hypothesis can be accepted, therefore concluding that Somali’s lives Both the international monetary aid donors and the Somalia government officials lack the integrity and expertise necessary to achieve the desired goals of the financial assistance Disagree Neutral Agree Strongly agree 18–25 years 21 (10.3%) 24 (11.8%) 29 (14.2%) 24 (11.8%) 26–32 years 3 (1.5%) 15 (7.4%) 51 (25%) 12 (5.9%) Over 33 years 0 (0%) 8 (3.9%) 12 (5.9%) 5 (2.5%) Overall score 24 (11.8%) 47 (23%) 92 (45.1%) 41 (20.1%) Gender Male 16 (7.8%) 32 (15.7%) 39 (19.1%) 27 (13.2%) Female 8 (3.9%) 15 (7.4%) 53 (26%) 14 (6.9%) Overall score 24 (11.8%) 47 (23%) 92 (45.1%) 41 (20.1%) Majority of government officials involved in foreign monetary aid in Somalia have vested interest in the failure of the international monetary aid’s objectives. Age 18–25 years 21 (10.3%) 24 (11.8%) 29 (14.2%) 24 (11.8%) 26–32 years 3 (1.5%) 15 (7.4%) 51 (25%) 12 (5.9%) Over 33 years 0 (0%) 8 (3.9%) 12 (5.9%) 5 (2.5%) Overall score 24 (11.8%) 47 (23%) 92 (10%) 41 (20.1%) Gender Male 16 (7.8%) 32 (15.7%) 39 (19.1%) 27 (13.2%) Female 8 (3.9%) 15 (7.4%) 53 (26%) 14 (6.9%) Overall score 24 (11.8%) 47 (23%) 92 (45.1%) 41 (20.1%) Note: The results indicate the significant cross tabulations. The Likert scale used did not include strongly disagree because it failed the initial condition for chi-squared test that requires that at least the missing counts on the cells should not be more than 20%. This led to merging the results with those of disagree. Copyright © 2016 John Wiley & Sons, Ltd. J. Public Affairs 16, 350–358 (2016) DOI: 10.1002/pa IMF aid in Somalia’s social economic revival 355 Table 3 Age Financial infrastructure based on modern information technology and telecommunication will improve the success of international monetary aid in Somalia Disagree Neutral Agree Strongly agree 18–25 years 10 (4.9%) 26 (12.7%) 37 (18.1%) 25 (12.3%) 26–32 years 4 (2%) 31 (15.2%) 28 (13.7%) 18 (8.8%) Over 33 years 0 (0.0%) 7 (3.4%) 16 (7.8%) 2 (1%) Overall score 14 (6.9%) 64 (31.4%) 81 (39.7%) 45 (22.1%) Gender Male 10 (4.9%) 26 (12.7%) 48 (23.5%) 30 (14.7%) Female 4 (2%) 38 (18.6%) 33 (16.2%) 15 (7.4%) Overall score 14 (6.9%) 64 (31.4%) 81 (39.7%) 45 (22.1%) Weak financial institutions and bad policies hamper the success story of international monetary aid in Somalia. Age 18–25 years 12 (5.9%) 15 (7.4%) 39 (19.1%) 32 (15.7%) 26–32 years 2 (1%) 15 (7.4%) 51 (25%) 13 (6.4%) Over 33 years 0 (0.0%) 5 (2.5%) 12 (5.9%) 8 (3.9% Overall score 14 (6.9%) 35 (17.2%) 102 (50%) 53 (26%) The success of international monetary aid in Somalia will largely depend on the creation of strong financial institutions, transparency, and enhanced accountability of government officials. Education High school 6 (2.9%) 29 (14.2%) 15 (7.4%) Diploma 13 (6.4%) 38 (18.6%) 17 (8.3%) Bachelor 10 (4.9%) 45 (22.1%) 11 (5.4%) Graduate 5 (2.5%) 2 (1%) 13 (6.4%) Overall score 34 (16.7%) 114 (55.9%) 56 (27.5%) Note: The results indicate the significant cross tabulations. The Likert scale used did not include strongly disagree because it failed the initial condition for chi-squared test that requires that at least the missing counts on the cells should not be more than 20%. This led to merging the results with those of disagree. have not improved because of international monetary aid in Somalia. This finding agrees with Akonor (2008) and Andrews (2009) that even after decades of foreign aid, the future of many Somalis has not changed. 4. H0 (null hypothesis 4): Somali’s lives have not worsened because of international monetary aid in Somalia The results were insignificant on age, gender, the level of IMF awareness, and the education levels, being p > 0.05. Thus, the null hypothesis is accepted, concluding that Somali’s lives have not worsened because of international monetary aid in Somalia. Objective 3 was achieved by testing independent variables 5, 6, and 7. 5. H0 (null hypothesis 5): both the international monetary aid donors and the Somalia government officials have the integrity and expertise necessary to achieve the desired goals of the financial assistance The results showed significant association differences on age χ 2 (6) = 29.94; p < 0.001 and gender χ 2 (3) = 12.42; p = 0.006. This prompts to reject the Copyright © 2016 John Wiley & Sons, Ltd. validity of the null hypothesis, therefore accepting the alternative hypothesis that both the international monetary aid donors and the Somalia government officials lack the integrity and expertise necessary to achieve the desired goals of the financial assistance. The other dependent variables; education level of the respondents and the IMF awareness levels were not significant (p > 0.05). 6. H0 (null hypothesis 6): the majority of government officials involved in foreign monetary aid in Somalia might not have vested interest in the failure of the international monetary aid’s objectives Significant association differences were revealed on age χ 2 (6) = 29.94; p < 0.001 and gender χ 2 (3) = 12.42; p = 0.006. This prompts the rejection of the null hypothesis, therefore accepting the alternative hypothesis that the majority of government officials involved in foreign monetary aid in Somalia might have vested interest in the failure of the international monetary aid’s objectives. The other dependent variables; education level of the respondents and the IMF awareness levels were not significant (p > 0.05). The finding was able to agree with Pambazuka News (2012) that corruption, J. Public Affairs 16, 350–358 (2016) DOI: 10.1002/pa 356 M. H. Warsame and E. M. Ireri embezzlement, and fraud were no longer symptoms of mismanagement, but had in fact become a system of mismanagement in Somalia. The finding also backs the reason as to why most Somalis believe some government officials have their own vested interest as reported on Ulusomohamuduloso (2012) that 80% of the withdrawals from the Central Bank of Somalia were made for private purposes. Therefore, some government officials have vested interest in the failure of the international monetary aid objectives in Somalia. 7. H0 (null hypothesis 7): the majority of aid agencies in Somalia do not suffer from considerable financial mismanagement The results were insignificant on age, gender, the level of IMF awareness, and the education levels being p > 0.05. Thus, the null hypothesis is accepted, concluding that the majority of aid agencies in Somalia do not suffer from considerable financial mismanagement. Objective 4 was achieved by testing independent variables 8, 9, and 10. 8. H0 (null hypothesis 8): financial infrastructure based on modern information technology and telecommunication will not improve the success of international monetary aid in Somalia Significant association differences were revealed on age χ 2 (6) = 12.92; p = 0.04 and gender χ 2 (3) = 9.91; p = 0.02. This prompts the rejection of the null hypothesis, therefore accepting the alternative hypothesis that financial infrastructure based on modern information technology and telecommunication will improve the success of international monetary aid in Somalia. The other dependent variables; education level of the respondents and the IMF awareness levels were not significant (p > 0.05). 9. H0 (null hypothesis 9): weak financial institutions and bad policies do not hamper the success story of international monetary aid in Somalia The results revealed a significant association difference on the age of the respondents χ 2 (6) = 18.42; p = 0.005. This prompts the rejection of the null hypothesis, accepting the alternative hypothesis that weak financial institutions and bad policies hamper the success story of international monetary aid in Somalia. Our finding agrees with Killick (1995); Edwards (1989) that long-term policy models by IMF and World Bank were questionable, and that collective efforts that measure the Somali economy as reported by INEGMA (2014) were suitable for the improvement of monetary policies and currency reforms in Somalia. Copyright © 2016 John Wiley & Sons, Ltd. 10. H0 (null hypothesis 10): the success of international monetary aid in Somalia will not largely depend on the creation of strong financial institutions, transparency, and enhanced accountability of government officials The results revealed significant association difference on the education level of the respondents χ 2 (6) = 24.52; p < 0.001. This prompts the rejection of the null hypothesis, accepting the alternative hypothesis that the success of international monetary aid in Somalia will largely depend on the creation of strong financial institutions, transparency, and enhanced accountability of government officials. The finding agrees with Jaycox (1995); Christensen (1995) that the creation proper structures will make aid and development more effective: transparency, public expenditure reviews, public investment programs, donor support of government programs, and medium fiscal programming. The results failed to reveal significant association’s differences on age, gender, and level of IMF awareness (p > 0.05). ORDINAL LOGISTICS REGRESSION Polytomous ordinal logistics regression was conducted on the hypothesis; the majority of aid agencies in Somalia suffer from considerable financial mismanagement using all the demographic variables. The Nagelkerke R square 0.05 indicated that age, gender, and levels of IMF awareness independent variables used in the study were able to account for 5.3% of the variation in the final model. This meant that there were other factors that would still needed to be investigated because it still influences the respondents’ response on the question on ‘the majority of aid agencies in Somalia suffer from considerable financial mismanagement’. The codes used in the analysis can be seen on Table 4. The odds ratio of agreement on ‘the majority of aid agencies in Somalia suffer from considerable financial mismanagement’ was 2.54 (95% confidence interval, 0.04 to 1.83) times higher for respondents within the age bracket 25–32 years old, as compared with those with over 33 years old, a statistically significant effect Wald χ 2 (1) = 4.14, p = 0.04. This meant that most Somalis within the age bracket of 25–32 years old would agree that the majority of the aid agencies in Somalia do not suffer from considerable financial mismanagement compared with those who are over 33 years old. The remaining dependent variables failed to indicate any significant differences. The other independent variables used in the study failed to fulfill the necessary condition (test of parallel lines) required J. Public Affairs 16, 350–358 (2016) DOI: 10.1002/pa IMF aid in Somalia’s social economic revival 357 Table 4 Parameter estimates on majority of aid agencies in Somalia suffer from considerable financial mismanagement 95% confidence interval Estimate SE Wald χ 2 p value Lower-bound Threshold Location (Q12 = 2) (Q12 = 3) (Q12 = 4) (Age = 1) (Age = 2) (Age = 3) (Gender = 1) (Gender = 2) (Awareness = 1) (Awareness = 2) (Awareness = 3) (Awareness = 4) (Education = 1) (Education = 2) (Education = 3) (Education = 4) -a 0.066 0a-a-a - — 0.282 —- —- — - — 0.055 —- —- — - — 0.814 —- —- — - — 0.487 —- —- — Upper-bound- — 0.619 —- —- — Note: Link function: Logit. Age = 1 (18–25 years), Age = 2 (26–32 years), and Age = 3 (over 33 years). Gender = 1 (male) and Gender = 2 (female). Awareness = 1 (very advanced), Awareness = 2 (reasonably advanced), Awareness = 3 (basic), Awareness = 4 (poor), and Awareness = 5 (mediocre). Education = 1 (high school), Education = 2 (diploma/high diploma), Education = 3 (college degree/bachelor), and 2 Education = 4 (graduate degree-Masters/PhD). The model fitting information of the final model was χ (9) = 9.95, p = 0.36; thus indicating 2 that the final model had given a significant improvement over the baseline intercept-only model. The Goodness-of-fit test was Pearson χ 2 (195) = 177.05, p = 0.82, Deviance χ (195) = 177.37, p = 0.81, thus proving that the model for the study was fit and good. The Cox and Snell 2 R-square 0.048 and Nagelkerke R-square 0.05, Mc Fadden 0.02. The likelihood ratio tests 2Log likelihood 277.49, χ (9) = 9.95, p = 0.36. 2 The test of parallel lines was 2Log likelihood 255.51, χ (18) = 21.98, p = 0.23. for a good polytomous ordinal logistics regression model; and thus, they were disqualified even though some of them exhibited statistically significant differences. CONCLUSION We can conclude that Objective 1 was assessed using hypothesis 1 and 2. The two null results prompted the acceptance of the null hypothesis that asserts that international monetary aid does not contribute to Somalia’s social economic revival, and that because of this, it is ineffective and possibly damaging to Somalia’s socio-economic revival. The results on the survey clearly established that the majority of Somalis still believe that corruption by senior government officials, embezzlement, and fraud were no longer symptoms of mismanagement, but had in fact became a system of management. These facts are indeed more relevant by the acceptance of the null hypothesis for Objective 2, where majority of the Somali respondents in the study disagreed with the hypothesis proposing that the lives of most Somalis have improved because of the international monetary aid. Objective 3 had two of its null hypothesis rejected. It came out clearly that both the international monetary aid donors Copyright © 2016 John Wiley & Sons, Ltd. and the Somalia government officials lack the integrity and expertise necessary to achieve the desired goals of the financial assistance. Also, the results revealed that majority of government officials involved in foreign monetary aid in Somalia have their own vested interest in the failure of the international monetary aid objectives. However, inasmuch as there are some corrupt NGO and Somalia government officials, majority of the aid agencies in Somalia do not suffer from considerable financial mismanagement. The findings of this study reveal that the key to success of monetary aid in Somalia will depend on the development of good financial infrastructure based on modern information technology and telecommunication, establishment of strong financial institutions, good financial and aid policies, and above all, enhanced transparency and accountability of Somali governments’ officials. BIOGRAPHICAL NOTES Mohammed Warsame received his Ph.D. in Banking and Finance from Durham University (UK). Dr. Warsame also holds two prestigious professional qualifications, namely, Chartered Certified Accountant (ACCA) and Certified Islamic Professional J. Public Affairs 16, 350–358 (2016) DOI: 10.1002/pa 358 M. H. Warsame and E. M. Ireri Accountant (CIPA). Dr. Warsame is a faculty member at the University of Sharjah, UAE. Mr. Ireri Mugambi is the Senior Research Scientist and Director at Smart Health EQAS Consultants Limited company, with over 10 years experience. 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