Yemeni small industriesRecession in added value [Archives:2003/654/Business & Economy]

July 28 2003

Mahyoub Al-Kamaly
Yemeni small industries are facing recession in the proportion of their productive performance and marketing despite that their number exceeds 300 thousand installations specialized in many fields. Owners of workshops and smaller industries attribute the low level of production of their projects to financial and technical obstacles, weakness of legislation supporting their activities, marketing network and their products incapability of competing with prices of smuggled or imported goods.
Despite the fact that the government has adopted, a part of its plans, strategic goals for solving the problems hindering development of small industries, yet the loans offered to owners of those workshops and factories are still very limited in their effect. Small industries employers from those working in the fields of carpentry, smithery and handicraft industries in old Sana'a market confirm that their specialty is exposed to retreat due to dwindling of its production performance. This has hindered their productive projects and contributed to reduction in the proportion of their presence in local markets.
In its bid to help in the growth of small industries the government has since October 1998 worked with the German government and the German organisation for cooperation (GTZ) and the German institute for economic studies for the establishment of a joint project implemented by the Yemeni ministry of industry in some governorates. Owner of the factory for clothes textiles at al-Milh market in old Sana'a Mohammed al-Matari wonders about what has become of that project as he observes he has not tangibly felt the project's contribution to solving the problem of unemployment or improving the environment of small industries and marketing their production at a better level in the local market. He adds that his factory has large production of folklore clothes but it suffers from lack of marketability. The reason is that the importers usually bring cheap clothes and modern fashions which besiege the national identity of the folkloric costumes and promote for foreign costumes incompatible with then Yemeni heritage or the social customs and traditions.
The volume of small industries in Yemen is estimated at 85 percent of the general industrial production. The government has at an early stage thought of building a unit for developing small industries in order to increase the added value of small projects and curb aggravation of poverty in the Yemeni society.
The Royal Dutch government has supported the project of developing small industries and also the United Nations Capitalist Development Fund (UNCDF) has helped in financing or technical assistance. The unit's branch in Aden granted loans to more than 300 small projects for funding investment projects yielding economic benefits to their owners. However, sources at the unit for development of small industries confirm that big industrial installations benefit from the existence of small industries and feed them. But they added that importation destroys the entire national industry.
Director-general of state administration of small industries at the ministry of industry says the government support to rise in the number of small industries which have constituted 95 percent of the total volume of industry. Forty-eight percent of employees in industry sector work in those small industries. Economics professor at Sana'a university Dr Ali Qaed views that the absence of professional and technical training has affected requirements of work at small industries, besides the severe lacking of administrative and technical and organizational expertise for smaller projects.
Proprietors of small projects mention that the loans granted by certain sides are not distributed according to studied criteria and some interference is done I favour of some installations, a matter that deprives others of getting financing support and impedes their growth and increase of their production.