The Role of the Private Sector in a Poor Society [Archives:2001/26/Business & Economy]

June 25 2001

Many are of the view that the Yemeni private sector seeks to make high profits, exceeding 35% of products and services’ real cost. They indicate that only 5% of these profits are used to fund developmental or public projects. This limits the role of this sector in the social and human care field. A big debate has been raised between governmental sources on the one hand and supporters of private sector regarding the role of the latter in supporting the poor section of the society. 
However, official statistics indicate that the total number of employees working in the private sector is about 2.9 million. They constitute 80.5% of the total work force: 71.7% male and 28,3% female. 
Sources in the private sector confirm that comments on the activities of the private sector are impractical as the sector bears financial expenses for building public projects including schools, health centers, paving roads, digging wells, giving direct financial supports to the poor, etc. Sources also add that there is data that proves that big companies in the private sector have allocated a sizable share of their profits to be spent on charitable societies working to support the poor. Despite that, figures maintain that illiteracy is still dominating the private, public or mixed sectors. 48,3% of the employees are illiterate and 24% can read and write. The rate of illiteracy among males is 36,9% and 83,2% among females. Statistics also indicate that there is a clear decline in the educational services provided by the private and public sectors. The illiteracy rate in countryside reaches 75%. 
Sources in big private companies stated that their social and human activities are well-supported despite the heavy taxes these companies are are made to pay. 
The view that the private sector is only seeking profits and does not establish public services is actually far from true. Facts bear out that this sector has been supporting many public projects and the poor section in our society. The private sector is highly aware of the fact that the Yemeni society is a good consumer market. The sector is also aware that if the people feel that the sector is only exploiting them and is not providing any kind of social and human support, then they will shun products of this sector. 
In conclusion, the Yemeni private sector is certainly understanding of the economic situation of Yemeni society and is taking an active part in supporting thousands of poor families. The sector has some problems in the commercial sense for when the government levies more taxes on them, it directly increases prices of products to compensate for the loss. This is a bad economic strategy which harms the lives of millions of citizens.