Small Enterprises: Reality and the Horizons of their Development in Yemen [Archives:2000/04/Business & Economy]

Ismail Al-Ghabiri,
Yemen Times
Small industrial enterprises Yemen account to 31,738, or 95% of the total industrial institutions, constituting 48% of the total labor force in this sector. The industrial survey and analysis conducted by the ministry of industry in 1996 had shown that there was a dysfunction in the small businesses, where food industries come in the first place and there was a drop in the level of its participation the economic indicators. Small enterprises participation in economic shares amounts to 25% of production value, 48% of employment value, 21% of wages value and 32,6% of the additional value. Most of those industries are concentrated in Sana’a and Ibb and in less amount in other governorates. This sector depends on personal activity and without definite direction or program. In addition to this, production of this sector for the local market is mostly characterized by the imitation along with absence of the idea of exportation due to bad quality of its products.
First of all there must be an illustrative definition of small enterprises as a basis from which we can move to explore the essence of the subject. Concepts and criteria differ about defining small industrial enterprises. Among these prevalent criteria are those of labor and capital. Or as some define them as industries that form a productive unit employing ten workers and the value of production machines used in it amounts to 1-2 million riyals and that of a production unit, the value of its machines exceeds 2 million riyals and uses ten workers. As for the criterion of development unit depended for small industries, it is the criterion of the invested capital that does not exceed a sum of 200 thousand dollars.
Out of this we can infer that the tendency towards such industries has increased nowadays. The main reason is the big challenge facing big businesses and their incapability of keeping pace with the technological development and the fierce competition of prices and quality, the present policy of openness is now imposing, added to that the big businesses failure to realize the balance between the economic and social requirements and the difficulty of implementation and adjustment with the goals for which they have been built. Against this situation the importance of the tendency of light industries increased because of their ability to depend on limited materials and due to their having social and economic dimension and concept.
The reality of small enterprises and handicraft in Yemen is weak and simple. It is still confined to old stereotype and has not been upgraded to the level of small enterprises that have largely developed. It could not reach a high quality or achieve developed growth. This conclusion is based on indicators of the first industrial survey of 1996. If we look at the geographical distribution of small industrial enterprises, we find that they are concentrated in the cities of Sana’a and Ibb, and this could be attributed to population density. The woman role in this field is mainly confined to work depending on the skill of careful use of hands such as sewing and embroidery. Woman labor in this field forms 2.4% of the total volume of labor, i.e., 1258 employees.
Among the reasons behind weakness and inability of these industries in Yemen are attributed to their dependence on self efforts without any specified program. This sector did not rise to the level of small industrial enterprises due to its incapability of providing big industries with their needs of materials and therefore those industries are mainly dependent on importing their needs from abroad. Moreover, this sector cannot benefit from products of big enterprises because of non-existence of integration and absence of modern technology, added to that is that these these industries based on handicraft profession based on individual skills.
To develop this sector and make publicity for it abroad, industrial zones or industrial complexes must be founded without making it sustain large sums of money for buying pieces of land and for erecting buildings and also prevent its random spread in Yemen. To enable this sector to develop and be qualified to play an effective role in the national economy, we have to amend the commercial banks credit policy by allotting part of their funds for financing this activity through easy conditions regarding interest rates and encouraging the establishment of associations patronizing small enterprises. There must be encouragement of of founding a social fund in which the government must participate through financing houses, associations, industrialists and assistance from sisterly and friendly countries.
To develop this sector in order to participate in the process of development, the state should take a host of measures represented by the following:
1- Systematic arrangements represented by founding a supervising party to regulate its work and activity.
2- Promoting its products by holding commercial markets and exhibitions through different information media.
3- Improving the level of production by creating qualified and well-trained cadre capable of dealing with advanced technology and activating the role of woman, also by training and qualification.
4-The geographical distribution of the handicraft industries must be according to the aims of those industries.
5- Distributing the utilities on industries dependent on local raw materials and industries feeding medium and big industries.
6- Developing and adjusting the financing policy of local funding institutions and the foreign donors.
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