Reality of small & medium enterprises in Yemen [Archives:2005/877/Business & Economy]

Most of small industry projects in Yemen are concentrated in the capital secretariat and the government of Ibb. Survey studies indicate that the number of small enterprises and professions amounts to 32298 businesses at a rate of 98% of the total number of industrial businesses. There are around 53388 workers working in those enterprises and represent 48% of the total workers in the industrial sector and this aspect of activity seizes 25% of the value of the sector of conversion industry, 32% of added value and 21% of total wages.

The minister of industry and trade Dr Khalid Sheikh stresses the importance of the role played by projects of small enterprises in the development of the national economy and they constitute a significant vital process in accommodation and employment of a large number of workforce as well as their contribution to alleviation of the level of poverty in the society.

Dr Sheikh adds that the present stage is considered new for the activation of the industrial sector, both of small and medium projects, saying there is a necessity for the enhancement of effective participation by the private sector to contribute to the comprehensive developmental process.

The minister points out to the government program and what it has contained of obligations for the development of the sector of small businesses through working out an executive plan to increase the number of those project, raising their productive capacity, treating problems hindering their growth and improving of its products.

Donors believe that Yemen needs at least one million small enterprises in order to absorb surplus of labour estimated at by 5 million people.

Advisors in the German project for encouragement of small enterprises say almost all the donors are trying to associate their assistance for Yemen with the strategy of poverty alleviation. Thus, seven million and 700 thousand euros has been allocated for helping Yemen in developing the private sector to be capable of creating new job opportunities for the youth.

For three years, the Yemeni government has been endeavoring to implement something like a campaign for fighting poverty aimed at creating new job opportunities through the launching of individual initiatives protected by system of lending small projects that have economic feasibility.

A young man just returned from abroad says in order to avoid the situation he is leading he has to carry out one of three options, either to migrate once again, which is difficult at the time being, as he claims, to get a job or to have my own work, saying that is a complicated question and he could not find support or finance for it, despite his having skills in tailoring woman clothes.

He says the whole question needs funding to start work, buying cloth and finding assistant workers. He adds that he has been without work for three years and could not obtain ensured sources of income although the government has adopted a strategy for combating poverty and supporting small projects.

Government sources say the wide gap between the genuine rate of economic growth and population growth and deterioration of economic indicators; have led to the existence of a condition like “emergent economic status”.

While the national program for economic reforms has achieved successes in the aspect of economic stability, the official sources, nevertheless admit that the program has failed to stop the increasing number of the poor or the mitigation of side effects of reforms on various segments of the society. Estimating statistics reveal that around 35% of the 20 million people are now poor, compared to 42% in the mid of the nineties and this could be compared to the actual government pledges that may not be achieved in the same accuracy or success.

The managing director of human resources at the fund for financing small industries and projects Hisham al-Hakimi believes the acute shortage in qualified manpower in this sector is mainly attributed to inconvenience of the system of vocational and technological training education to requirements of this sector, added to that the absence of the role of civil society organizations, weakness of research and development and mainly the disconnection between research and scientific parties and those industries especially pertaining industrialization and marketing.

The official adds there is also the weakness in development of the traditional managing and centralization in taking daily decisions inside the small enterprises that is concentrated in the hands of the owner manager, who mostly not posses experiences to qualify him to play that role.

The professional in silver smith Ahmed al-Faqih says he was optimistic about policies of lending that some funds supervise but those expectations did not take effect when we applied to get loans. We discovered that we have been in a vicious circle. Conditions for having a loan stipulate that we have to be in possession of a project and then to apply to a loan for expansion. With those terms, we discovered that there are no positive indicators in the foreseeable future.

The World Bank sees that expansion ion the field of small and medium enterprises is still low due to the need of the society and the nation al economy for this kind of activities that would not require additional expenses at the level of infrastructure projects. Indicators published by the fund for financing small enterprises and projects that he fund has given loans to about 904 projects with an amount of more than one billion and 147 million riyals in addition to loans in dollars amounting to 700 thousand. The fund which being supported by the UN Development Program and the Dutch government since its foundation in 1991 has expected that its projects would contribute to employment of around 6934 workers, among them about one thousand women.

While indicators reveal a growth in the number of loans, they also reflect a disturbance in geographical distribution of the financed projects, this situation imposes on the fund the following of a better policy of distribution in its endeavor for taking part in the realization of the process of the aspired for economic development.

According to the fund sources there are examples of a very small projects that seem to be more successful, and they are scoring success in more than one objective, including empowerment of women and the youth in running private projects and marketing products that lead in consequence to improve standard of living of thousands of the poor.

Specialists in this field confirm that the condition of the small enterprises necessitates government technical support to develop this sector. That can be done through preparation of programs to strengthen small projects ability to create work opportunities and those programs should offer guidance to owners of those projects as well as organization of some training courses for personnel of this sector especially for the youth capable of running successfully private projects.
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