Why do big companies always require internal referrals from candidates in order to get a job?

Any big company in Qatar (including Q companies) always require referrals or some friend or relative inside the company for a candidate to get a job. As a qualified person with experience, I find it quite surprising and unfair that qualified people lose their chances to inexperienced, unqualified people for government jobs and positions in big companies. I should say, its almost equal to racism. I also found people from a particular ethnic background prefer and recruit people from the same background.

Last week, I met a person who only finished schooling, get recruited into a government organization. When I asked how he got recruited, his simple answer was, 'the manager is my uncle's friend'.

I assume almost 80% of the job seekers must have come across such a situation.