Business initiative reduces poverty, unemployment in Yemen

Published August 9th, 2011 - 08:06 GMT
According to officials and economists, the government initiative is boon for entrepreneurs in that it combats both unemployment and poverty
According to officials and economists, the government initiative is boon for entrepreneurs in that it combats both unemployment and poverty

Ten years ago, Yemeni entrepreneur Rashad al-Sharabi established a small print shop in Sanaa comprised of only five employees. However, after taking advantage of a government assistance program for small business industries, he has been reaping great success that has "spurred him to widen the scope of his ambition". The government programme enabled al-Sharabi to quickly repay his initial 10 million riyals start-up loan within one year of opening his shop. It has allowed him to secure two additional loans to expand his business and launch a major project with a staff of 20 employees.

Small business industries throughout Yemen, like Al-Sharabi's venture, are enjoying widespread success due to the government's 'Support for Small Scale Industries' programme that was introduced over a decade ago to assist the nation's small businesses.

According to officials and economists, the government initiative is boon for entrepreneurs like al-Sharabi and the national economy in general, in that it combats both unemployment and poverty. Abdul Ilah Sheyban, the Deputy Minister of Industry and Commerce, said that small scale industrial ventures "constitute about 90 % of the industrial sector, and are the largest segment in terms of number and geographical distribution across the majority of regions in the republic".

"The small scale industry sector holds promise and has garnered considerable interest from the government," he told Al-Shorfa. "It plays an important role in supporting the economy, providing new job opportunities, and combating poverty," adding that the ministry has conducted a number of studies and projects in collaboration with donors to bolster small business industries.

One such recent study was conducted in collaboration with donors and the main support agency, the Social Fund for Development. Sheyban said the survey's results, which are now in the processing phase, will help the ministry identify and avoid weak aspects of work programmes. The aim is to assist entrepreneurs launch and hone competitive ventures, as well as increase their customer satisfaction, market staying power, and export potential.

"We currently have 12 funding programmes supporting small scale industries, and 680,000 active clients," according to Osama al-Shami, director of the Social Fund's Small Scale Industries Development Unit. "Up to 16 billion riyals, from 1998 to the present time" have been loaned out to borrowers and repaid following their success, al-Shami told Al-Shorfa.

Additionally, the Fund provides financing for programmes and lending institutions across all provinces for a variety of industries, including fish and livestock farming, agricultural projects, and small, urban markets. Dr. Taha al-Faseel, professor of Economics at Sana'a University, said that these small scale industrial ventures require attention, especially since the Yemeni economy depends largely on oil revenue.

The Yemeni economy is in dire need of diversifying its revenue sources, explained Dr. al-Faseel, adding that dependency on oil revenue makes the national economy chronically vulnerable to crisis and shocks arising from unforeseen events. He said that the government attention received by such sectors "gives a strong impetus to efforts aimed at combating poverty and unemployment, and to concentrating primarily on expanding the revenue structure of the economy through utilising the country's resources".

PhD candidate Nabila Abdullah Ghaleb, whose field research in late 2010 has helped provide focus for small business assistance programmes, told Al-Shorfa, "Small scale industries have elevated the income of proprietors, as the study showed a statistically significant variance between family income levels before and after obtaining loans, with income rising by 60.6 per cent subsequent to obtaining loans."

The results of Ghaleb's study show that the "ventures attained good market value, unemployment rates among the proprietors' family members were reduced, and proprietors were able to save, giving them the ability to cope with any crisis they may face".

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