The influence of pay incentives on workforce performance in Benadir local government in Somalia

Abstract In post-conflict and fragile institutional environments such as Somalia, motivating public-sector employees is critical for organizational reconstruction and effective service delivery. However, implementing incentive systems remains challenging due to economic instability, low institutional trust, job insecurity, and culturally specific dynamics, including clan loyalty and the high value placed on social recognition. This study examined the association between material (financial) and moral (non-financial) pay incentives and workforce performance in the Benadir Local Government (BLG) in Mogadishu, guided by Herzberg’s Two-Factor Theory and with job satisfaction examined as a mediating variable. A quantitative cross-sectional survey design was employed, using simple random sampling to collect data from 172 permanent BLG employees. Data were analyzed using descriptive statistics, multiple regression analysis, and Structural Equation Modeling (SEM) through SPSS and AMOS. The findings indicate that both material incentives (β = 0.45, p < 0.05) and moral incentives (β = 0.30, p < 0.05) are significantly associated with workforce performance, jointly explaining 60% of performance variance. SEM results further show that material incentives have a strong direct association with performance (β = 0.50, p < 0.01), while moral incentives influence performance both directly (β = 0.35, p < 0.05) and indirectly through job satisfaction (β = 0.20, p < 0.05). Overall, material incentives appear more strongly linked to short-term performance outcomes, whereas moral incentives support sustained performance through enhanced job satisfaction. These findings highlight the importance of balanced, transparent, and culturally sensitive incentive systems in strengthening public-sector performance in post-conflict contexts.