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{June 2009}
2.3 Industrial Revolution........................................................................................................11 2.4 The objectives of industrial development in the current development.........................12 2.5 Favorable factors enhancing the economic development of small-scale industries.....13 2.6 Micro Finance and Small-Scale industries .....................................................................14 2.7 Somaliland Industrial Revolution....................................................................................15 2.8 Somaliland Current Industries........................................................................................15
2.8.1 Somaliland Small-Scale industries ..............................................................................................16 2.7.2 Importance of Small-Scale industries..........................................................................................16 2.8.3 Failed industries in Somaliland....................................................................................................20 2.8.4 Causes of failure in industries......................................................................................................21
Chapter three__________________________________________________________22 Methodology___________________________________________________________22 Chapter Four___________________________________________________________25 Data Presentation and Analysis____________________________________________25 CHAPTER FIVE_______________________________________________________41 CONCLUSIONS AND RECOMMENDATIONS_____________________________41
5.1 Conclusion .......................................................................................................................41 5-2Recommendation...............................................................................................................42
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Somaliland economically and creating employment opportunities, because the industries like a fore mentioned factories can play a very important role in the economic growth, not only for employment opportunities but also for skills promotion and income generation as well. Therefore, it become necessary to establish national small industrial organization, which has the capacity to strengthen, direct, encourage, harmonize and promote privateowned industries and locally processed production of local Small-Scale industries in order to avoid overlapping and wasting our scarce resources.
Under these conditions small-scale industries in Somaliland and other business enterprises were revived initially by returnee which were within a short time of period impacted on all types of commercial transactions and production activities specifically related to basic human needs like shelter, food, clothes and household commodities etc. During the peaceful years in Somaliland the contribution of Small-Scale industries in Somaliland to the economic and social life of the country has been tremendous. The Small-Scale industries have participated the employment condition in the country; it has contributed to the retention of skills as well as skill creation and saved some of the countrys hard currency. In this my paper, I will examine the constraints of Small-Scale industries in Somaliland and impact of the nations economic as whole and the consequences of the problems associated with the breakdown of small-scale industries in the country. In this paper I will try to present in dept about the economic prospects of developing Small-Scale industries in Somaliland. First industry is a broad term for any kind of economic production, in economics and urban planning industry is a synonym for the secondary sector, which is type of economic activity involved in the manufacturing of raw materials in to goods and precuts. Industries in the sense of manufacturing became a key sector of production and labor in European and North America Countries during the industrial revolution. So, The developing industries in Somaliland is the only one which benefited the above
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.opportunities and it covered the needed for industries for the entire population of Somaliland and saved hard currency for the country that was being to spend the importation of industries form abroad countries. The purpose of the study is to better understand the current situation of the factor industries in Somaliland and their role of economy and to identify the existing industries and their locations in the country. It will also focus on their weaknesses, strengths and their capability in all aspects of economy, by examining their situation through identifying in case of major opportunities and obstacles that might encounter their economic influence. Generally, maturity of Somaliland industries is light industries and established during the past eight years. Somaliland industries produces different thing of materials such as: water bottling factors, hard soap and powder soap factors, bread, mattress, cushions, soft drinks and home furnishing materials.
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Somaliland industries produces different thing of materials such as: water bottling factors, hard soap and powder soap factors, bread, mattress, cushions, soft drinks and home furnishing materials. The development in Somaliland Small-Scale industries and constraint. The causes of constraint: Lack of capital investment. Shortage of skilled labor. Lack of banking system. Lack of technological support. Limited of government regulation. That is main constraint in small industry of Somaliland. Impact in Somaliland Small-Scale industries development: Direct contribution of the Small-Scale industries development to the economy are the full employment they provide the citizens ,the hard currency the save in the country, the tax the pay to the government and preliminary investment they made such as the land the buy, vehicles they hire and the buildings the build or rent Even though, there is no reliable source hard currency in the country, the breakdown of light industries can increase the trade imbalance of the country.
{June 2009}
To study the market competition in small-scale industries To study economic impact of small-scale industries. In this my paper, I will examine the constraints of small-scale industries in Somaliland and impact of the nations economic as whole and the consequences of the problems associated with the breakdown of light industries in the country.
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Small Scale Industries may sound small but actually plays a very important part in the overall growth of an economy. Small Scale Industries can be characterized by the unique feature of labor intensiveness. The importance of this industry increases manifold due to the immense employment generating potential. The countries which are characterized by acute unemployment problem especially put emphasis on the model of Small Scale Industries. Small scale industries can be characterized with the special feature of adopting the labor intensive approach for commodity production. As these industries lack capital, so they utilize the labor power for the production of goods. The main advantage of such a process lies in the absorption of the surplus amount of labor in the economy that was not being absorbed by the large and capital intensive industries. This, in turn, helps the system in scaling down the extent of unemployment as well as poverty. It has been empirically proved all over the world that Small Scale Industries are adept in distributing national income in more efficient and equitable manner among the various participants in the process of good production than their medium or larger counterparts. Small Scale Industries help the economy in promoting balanced development of industries across all the regions of the economy. This industry helps the various sections of the society to hone their skills required for entrepreneurship. Small Scale Industries act as an essential medium for the efficient utilization of the skills as well as resources available locally
{June 2009}
II. Small-scale industry is usually less capital intensive than heavy industry, and is more consumer-oriented than business-oriented (i.e., most of light industry products are produced for end users rather than as intermediates for use by other industries). Light industry facilities typically have less environmental impact than those associated with heavy industry, and zoning laws are more likely permit light industry near residential areas.11
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their own cans, boxes, etc., and owning railways and steamship lines, etc. In businesses enjoying this last advantage, we sss Among the second class of advantages claimed for large scale production, economies in marketing the goods, are the following: (a) economy in securing trade, through advertising and commercial travelers; (6) economy in "carrying " stocks of goods, a relatively smaller stock being sufficient to meet the fluctuations in demand; (c) economy in getting goods to consumers, through the power to secure better freight rates for large shipments, and through the power possessed by some concerns to avoid "cross freights"; (d) economy in securing a foreign market, through the greater power of the large concern to withstand the cutthroat competition common in "hard times." The Strong Points of Small Scale Production. Against these alleged advantages of large scale production may be set the following considerations which seem to promise a continuation of a considerable measure of small scale production, at least in certain lines of industry: (a) First of all, it is claimed by experts that in many lines of business a plant of moderate size is the plant of really maximum efficiency in regard to capital and labor costs. (6) In many cases the advantage of the large scale business in the matter of concentration of power is neutralized by the fact that modern invention, especially in connection with electricity, is revolutionizing the methods of distribution of power, putting the small manufacturer on a level with his greater rival, (c) It is, furthermore, very doubtful whether large scale producers can secure that minute and economical supervision which characterizes small scale industry ; whether, in other words, hired managers can compete in this regard with individual entrepreneurs who will reap all gains as they bear all risks. (d) The small producer has a distinct advantage in his greater power to know the personal wants of his market. In many industries the personal element plays so large a part that the small producer will for a long time be able to hold his own, even if he cannot oust the large producer from the field. Finally, by cooperation of neighboring small producers, it is possible to secure much the same opportunities as to (e) invention and improvement of processes and (f) utilization of " waste " that we have spoken of as regularly inhering in large scale industry.2
2
www.Economywatch.com/worldindustreis.com
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It must be borne in mind that our comparison has been between small scale and large scale production, not between small scale production and monopolized production. Monopolized production is usually, though by no means always, production on a large scale. But production on a large scale is not at all the same thing as monopolized production. Had we been speaking of the production of monopolized goods, it would have been possible to add many to the list of alleged advantages or economies in production, and some of the advantages of which we have spoken would in the case of a monopoly have been much more marked and undisputed. Thus in the matter of "cross freights" and again in the case of advertising, many would admit advantages in the case of a monopoly who would deny that they accrue simply to large scale production.
http://www.wikipedia.org
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The first Industrial Revolution merged into the Second Industrial Revolution around 1850, when technological and economic progress gained momentum with the development of steam-powered ships, railways, and later in the nineteenth century with the internal combustion engine and electrical power generation.
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4. Encouragement and development of the private sector to enable it to grow and contribute to industrial growth. 5. Laying down appropriate principles of concentration and dispersion in location of new projects. 6. Consolidation and regrouping of small-scale industrial units and handicrafts into viable economic size in the form cooperation of support more sophisticated industrial development. 7. Continuous survey of industrial opportunities and preparation of feasibility studies for future industrial development of the country.
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workout, pressing and handcrafts as well as individual industrial sectors such as the wood material processing, wood, bamboo, and cane and palm fiber processing sectors.4
www.scripd.com/small-scaleidustries.com/economywatch.com
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breakdown the productivity of the local industries, other problem is joining markets in neighboring countries like Somalia which a chaotic area and Ethiopia which did not open the doors of its market to Somaliland products.6 The other important industry is Hargeisa wheat flour, and participated the rich market of its products in Somaliland, it provided a good quality product to the market, but this industry existed a short period due to a challenges and other problems which led the breakdown of its production and finally moved to Ethiopia where it get a facilities which they cant get in Somaliland These and other industries can change the employment condition of Somaliland and save a hard currency if they successfully run and get their facilities.
Industrial labor
In an industrial society, industry employs a major part of the population. This occurs typically in the manufacturing sector. A labor union is an organization of workers who have banded together to achieve common goals in key areas such as wages, hours, and working conditions, forming a cartel of labor. The trade union, through its leadership, bargains with the employer on behalf of union members and negotiates labor contracts with employers.
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Somaliland industry has been fully influenced by the socio culture. The mentality of pastoralists is always there it is not also far from other cultural influences. First of all the industry is established without feasibility study. The technology is not selected by the establishing members spares/ Raw material supply assurance needs acceptable competitive price is not there selection of site for suitability and cost price reduction is not there. They did not take any consultancy for the establishment of that industry besides this there is no legally well dedicated memorandum and articles of association as well as internal regulations as an regulatory France work, control and smooth functionary of the entity in a transparent and accountable manner what also is missing is the base of production which is totally unknown in this country culturally including maintenance and over handing strategies. This sector is the base of the success of any productive entity, economically, politically, and administratively to be in concise. The majority of those in the industry lack The know of the sector even the area they are in for business. The technology and markets involved The management and its evaluation and control The lack of the strategy of planning marketing that needs to be based locally, regionally and globally.7 All these factors and many others make the industrial production in Somaliland a burden and un successful. The public sector of the development of an industry for certain political reason for example; to produce affordable production for its local population or to produce high quality immersive production for export to carry a hard currency where have mainly the raw material is ever 70% local to introduce certain technology in the country for the welfare of its people. The many factors and critters for establishment of an industry we are not courage able . Adequate knowledge of industrialization is ministry.
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Human resource are 97% not available and even are not viable to be prepared for the coming future needs. Financial reasoning there are no investment and commercial bank in Somaliland that an industry is dependant to in any country. Poor and weak purchasing power where 10% of the local population are living less then 2 US per family per day, there fore low consumption. Lack of foreign market penetration due to market conservation of the developed countries though certain products we allowed under trade agreement term between governments specially developed and underdeveloped. Active Small-Scale industries in Somaliland 1. Togdheer Mineral Water 2. Saafi Minerla Water 3. Hargeisa Spring Water 4. Ilays Detergent Industry 5. Hargeisa Plastic factory 6. All Khayraad Foam Factory 7. Foster Sam Sam Factory 8. BerrBara Tanney 9. Hargeisa Food and Beverage Industry 10. Raaho Foam Factory 11. Safa Food Factory 12. Gamuur Fiber Class Factory 13. jerinimo Factory 14. Golis Water Factory 15. Shifo Bure Natural Recourse 16. Hides and Skin Factory 17. Shamis Mineral Water 18. Togdher Union Electric 19. AllBaraka Natural Water 20. Hoodo Plastic Factory
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21. Xareeda Mineral Water 22. Nadalo Food Processing Factory 23. Almis Conventional 24. United Basic Industries 25. Afgal Food Industry 26. Shaam Food Factory 27. Batuun Leather Taning 28. BerBera Fisher Glass 29. DurDur Factory 30. SaxanSaxo Factory 31. Indhadeero Soap Industry 32. Ilays Elecric Industry 33. Som/tires Factory 34. Marble Granite Factory
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platform. The information occlusion made some enterprises pursue the market trend blindly and lacked rationality in their investment, which led to the lack of market competence and the development potential. 4. Shortage of Technological Development There are several branches of technology and engineering specialized for industrial application. This includes mathematical models; patented inventions and craft skill see automation industrial architecture industrial design, industrial process, industrial arts and industrial applicability, all of these technological development they are not exist in
9
Somaliland.
5. Absence of banking role Absence of banking system in Somaliland in of the causes of obstacles most of the surveyed industries are complaining about the deficiency of effective banking system in Somaliland. For example a result show that lack of banking system is 30% of major impediments facing small-scale industries in Somaliland. Therefore the banking role is can play a major role of failing industries and also succeeding industries, as the respondents indicated 20% of them states that insufficient capital is cause of the failure of industries, so if effective banking system is available in Somaliland they would give loans to avoid capital shortage
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3.1 Date Collection Methods The Research methodology that was used to accomplish this paper was interviews which was gathered from people well-informed about the failure of industries, the tool was questionnaire which was developed to gather information from randomly selected population The primary data are the results of the interviews and questionnaires. The secondary data are the current information about the definition of small-scale industries and their development and constraints, its related literature review.
3.2
Sampling
The subjects of this research are small-scale industries based Hargeisa, in this study I selected sample ten industry owners and managers mostly faced decline and growth situation of their business as probability and non-probability convenience sampling. These industrialists will respond to survey questionnaires distributed. These survey questionnaires are closed-ended questions asking about impeding factors for their industries. In this study the
3.3
Limitation of study
Limitation of the study can be from different source. For example the written scarcity of written document about Literature Review the industries of Somaliland has became limitation to my research. Due to this limitation and other constraint, this paper several other limitations.
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Another limitation is, most of the interviewed were reluctant to share information. 3.4 Limitations of the Data Study As we know, every research has its limitations that do not allow the researcher to perform the research as accurately as needed, like other studies, the research limitations are the following: i ii iii vi Distributing and collecting data Taking regular courses of university Time Cost
The major limitations of this research paper were cost, time and collecting data. Time The time of this research paper was short and it is possible to have much time as well as resources to conduct enough as needed in the. The people involved when doing the research were sensitive to this investigation of research. Cost Cost was also a inevitable limitation that faced to this research because of the various stages of the study. It needed same costly items including out relevant information from the written books, electronic communications, printing the research paper and photocopying of the preparing of this paper.
Difficulty in collecting Data Another main limitation which is associated with this research paper was the difficult of the research like questionnaire and performing the analyze.
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Same of the organization, I distributing the questionnaire have different departments and section and I found it difficult and confused which section is fit for the questioner to be handed and this has lost more extra cost and time. The most problems that I met during the contributions of the questionnaire and collecting data were, the managers of the companies or human resource department could not be seen first and it was also difficult to collect easily or quickly because very manager was busy and did not try to respond as soon as you. Some times some of the managers lost the questionnaire papers. The greatest problem that I met was lack of technical equipment like computer and printer.
Chapter Four
Data Presentation and Analysis
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This chapter shows the analysis of the research paper; it interprets the data contained by the questionnaire, which was the primary data of the research. The questionnaire contained about twenty-two questions, which we will analyze each one to provide a detailed analysis about the information gathered. The first question was about ages of the owner of the companies the research has found that ages of 10% the managers of small scale industries is between 20 25 years old, while 60% of the of them aged 36 -50 years old, and finally 30% of the managers interviewed aged above 50 years. This means that most of managers aged 36 50 years.
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See figure 1
F IGU R E 1
60%
30%
10%
20 - 35
36-50
a b ove 50
The second question was about the gender of managers. The study has found that 90% of the total respondents were males while 10% were females. This means most of managers of small scale industries are male because its a hard job, it needs many hours to be worked. See figure 2
F U E2 IG R
10 %
m le a fe a m le
9 0%
The third question was about the educational qualification of the managers.
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The study has found there were no managers in which their educational qualification is Elementary, while 40% of the respondents were Secondary school graduates, at the same time 40% of the respondents were Bachelor degree holders, while 10% were Master & PhD holders, finally another 10% of the respondents indicated Others, including technical institute, mechanical, etc. For further clarification please look figure 3
10% 10% 40% 0% elemantary secondary Bachelor Master & PhD Others 40%
The fourth question was about the kind of the organization. The study has discovered that 20% of the organizations interviewed were service industries, there were no merchandizing industries, 70% of the industries interviewed were manufacturing industries, finally 10% of the industries matched all categories including service, and manufacturing. This shows us that the small scale manufacturing industries are increasing in our country. See figure 4
FIGURE 4
100% 50% 0% 20% 0% 70% 10%
Service
Marchendising manufacturing
All
The Fifth question was about the legal organization of the industry.
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The study has found out that 20% of the respondents were sole proprietorship industries, while 70% of the respondents were partnership industries, finally 10% of the respondents indicated that the legal type of their industries is corporation, this means that the most of small scale industries in our country are partnership which means many shareholders formed it. See figure 5.
FIG R 5 U E
70%
20% 10% 0%
So p p le ro riato r
P artn ersh ip
C rp ratio o o n
O ers th
The Sixth question was about number of employees work in this small-scale industries in the country. The study has shown that 40% of the respondents described that 10 20 employees work their industries, while 30% of the respondents showed that 21 30 employees work their industries and finally 30% of the respondents indicated that more than 30 employees work their industries permanently. This shows us that small size of labor force work in the industries in our country, some of the managers indicated that they can increase the number of employees work in their industries but the main constraint is lack of enough investment, and that is why they cant fully utilize their resources. See the table below. Q# 6 Question Choice Number of Employee works in your 10 20 industry 21 30 Above 30 Total The seventh question was about who manages the industry. The study has found out that 15% of the respondents is managed by hired managers, while 55% of the respondents showed that partners manage their industries and finally Copyright All Rights Reserved to Mohamoud Abdi Hassan (tiger) (29) Frequency 4 3 3 Percentage 40% 30% 30%
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30% of the respondents expressed that individual owners manager their own industries. This shows us that small scale industries in our country needs to hire expert managers who can lead more profits and can survive the company many obstacles which can result to bankruptcy. Lack of hired expert managers is one the main obstacles which led many small scale industries opened in our country to shutdown after very short period. See figure 7
F U E7 IG R
H ired m anagers P atrners Invididual ow ners Invididu ow al ners
1 5% 5 5% 30 %
P atrners H ired m anagers
The Eight question was about who manages the industry. The study has found out that 30% of the respondents started their industries with limited capital between $10,000 - $20,000, while 60% of the respondents started their industries with an amount of capital between $20,000 - $30,000, finally 10% of the respondents mentioned that they initial capital was estimated amount of money between $40,000 $50,000 dollars. The study has clarified one big constraint which emerges when investing small industry and it is very limited initial capital, because if they were having more capital, they could invest bigger industry. See this table. Q# 8 Question Your Initial Capital was Choice $10,000 - $20,000 $20,000 - 30, 000 $ 40,000 - $50, 000 Total The Nine questions were about does your organization get any Support from the government at the initial time? Frequency 3 6 1 Percentage 30% 60% 10%
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The study has found out that 90% of the respondents indicated that they didnt get any support from the government of Somaliland, one the managers described that the government it self is an obstacle for their industries because we import essential inputs so the government allows not to impose a tax for the first five years of the industrys life, but should be very good if they make it free of charge in order to produce cheap products, but when they impose it a tax, the finished goods we produce becomes higher than the foreign goods, the government didnt restrict the traders who import the products in which our industries produces, and that results hazardous challenges which finally results the bankruptcy of the local industries. In the other hand 10% of the respondents mentioned that they receive supports from the government include, free registration of the government, low cost trading license, sometimes they receive land to build the industry. Most of the managers described that they need more support than the current from the government. The tenth question was about your yearly Income is estimated to be? Q# 10 Question Your yearly income Choice $10,000 - $20,000 $20,000 - 30, 000 Above- $50, 000 Total Frequency 7 2 1 Percentage 70% 20% 10%
The study has discovered that 70% of the respondents earn an estimated yearly income between $10,000 - $20,000, while 20% of them mentioned an average income of $20,000 - $30,000, and finally 10% of the respondents described that yearly income they receive is above $50,000. this question has discovered the yearly income or the revenue in which small industries generate whole the year is too low, this point resulted that most of the wealthy people in Somaliland discourage investing small-scale industries.
The eleventh question was about where do you obtain the raw materials used for production? (31)
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The study has discovered that 10% of the respondents indicated that they receive their raw materials in Somaliland, while 60% of them indicated that they import the raw materials they use from abroad, finally 30% of them mentioned that they receive the raw materials they use from both domestic and foreign markets. See figure 11
FIGURE-11
30%
10%
Local Abroad Both
60%
The twelve questions were about, If the raw materials are not available in the Somaliland, do you think it is an obstacle to your production?
The study has discovered that 90% of the respondents mentioned that it is big obstacle since the raw materials their industries uses is not available in Somaliland, while 10% of them indicated that they mentioned that it is not big threat if they didnt find raw materials in the country. This result shows us that one of the biggest challenges which faces the small-scale industries is lacking raw materials in the country, because they FIGURE-9 FIGURE 12 import raw materials, it costs higher cost which results to produce high price finished goods, then the people prefer to buy foreign products instead of locally produced products, because consumers always mention since there is no difference in the cost of 100 the two products, the imported foreign products are better than domestically produces ones, so will prefer the foreign products, finally this increases the possibility of
60 bankruptcy. See figure 12 40 20 0 Yes No Yes No 80
90
10
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The thirteenth question regarding your Industrys product, how many competitors do you face in your markets? The research has found out that all small-scale industries face competition in their market, 20% of small-scale industries described that they face their market a number of competitors which is less than 10, while 50% of the competitors indicated that they face their market more than 10 competitors, finally 20% of respondents indicated that they dont know the number of competitors they share same market. This shows us that establishing same small-scale industries which produces same produces is a big threat which can contribute the bankruptcy of the small-scale industries. See figure 13.
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FIG URE-13
50% 0%
No Com petition
20%
Few than 10 er More than 10
Fewer than 10 D ont know
20%
Dont know
The fourteenth question asked According to the existing competition, your organization is? The study has ascertained that 30% of the respondents are competition leaders, while 40% of small-scale industries are followers, 20% of them are challengers, and finally 10% are niche which means they are struggling to stick their position. See figure 14
FG R - 4 I U E1
4% 5 4% 0 3% 5 3% 0 2% 5 2% 0 1% 5 1% 0 5 % 0 % 4% 0
3% 0
2% 0 1% 0
La e e dr F llo e o wr Ca n e h lle g r Nh ic e
La e e dr
F llo e o wr
Ca n e h lle g r
Nh ic e
The Fifteenth question asked Current situation of industry: The study showed that 35% of the small-scale industries are in critical condition which means they are struggling to survive or we can simply say they are in Break Even Point, no profit, they cover their variable cost only, while 5% of the small-scale industries are stagnant, they didnt make any improvement also didnt decline, while 15% of them are making a decline, they are not willing to exist the coming years, finally 45% of smallscale industries are making growing, the most of this group are newly established (34)
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industries at the same they receive most of their inputs in the local with cheap price, some of them are bottled water industries, bakeries, electricity etc. see figure 15.
FIGURE 15
35% 15% 5%
45%
Stagnant
Decline
Growth
The Sixteenth question was In general, interpretations of regulations affecting my firm are consistent and predictable. The study has discovered 10% of the respondents fully agreed that interpretations of regulations affecting their firms are consistent and predictable, while 20% of them also agreed, in the other hand 30% disagreed that interpretations of regulations affect their firms also another 40% of the respondents fully disagreed that interpretation of regulation has an effect in their firms. See figure 16
FIGURE 16
40%
Fully Agree
Agree
Disagree
Fully Disagree
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The Seventeenth question asked was the following regulations have been serious barriers to run my Industry: The Study has discovered that 20% of the respondents underlined when obtaining business license is serious barrier to many new small-scale industries, 15% of the smallscale industries highlighted that labor regulations is a serious threat to their industries, 40% of the respondents mentioned that taxation regulation from the government is a serious threat to their industries and finally 30% of the respondents indicated that National Trade Policy is a constraint to the existence of their industries. Therefore the government should try to lighten these threats to survive many struggling small-scale industries. See figure 17
FIG R 17 U E
Business Licensing, 20% Taxation regulations, 40% Labor regulations, 15%
The eighteenth question asked was the tax paid to government by your organization is logical and affordable The study has discovered that 10% of the small-scale industries fully agreed that it is logic and affordable the tax they paid to the government, while 20% of them agreed that it is somehow logic and affordable tax, while 30% of small-scale industries disagreed and described that they couldnt affordable to pay the tax they paid to the government, another 40% of them fully disagreed that it is totally a burden and an obstacle the tax they Copyright All Rights Reserved to Mohamoud Abdi Hassan (tiger) (36)
{June 2009}
paid to the government. This shows us that the government has imposed a heavy tax on small-scale industries; one of the managers sampled mentioned that the government makes input tax, sales tax and also profit tax, he mentioned that it is unaffordable to pay all these taxes since they generate small amount of revenue. See figure 18 FIGURE 18
30% 40%
20%
10%
Fully agree
Agree
Disagree
Fully disagree
The nineteenth question was Does your organization get any subsidiary from the government? The study has discovered that there is no single small-scale industry which gets any subsidiary from the government at all; all small-scale industries sampled confirmed that the government didnt plan any amount of its budget to give the small-scale industries as a subsidiary. They confirmed that if the government gives the small-scale industries a subsidy, many investors would get an encouragement of investing small and medium scale industries. See figure 19
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F U E1 IG R 9
10 2% 10 0% 8% 0 6% 0 4% 0 2% 0 0 %
100 %
0 % Ys e N o
Question Twentieth what are the obstacles that face your industry? The study has discovered that 10% of the respondents mentioned that unskilled labor is the biggest obstacle which faces their industries, while 15% of the respondents mentioned the most hazardous obstacles which faces is lack of advanced technology, 20% of them are suffering from lack of micro finance {capital mismanagement}, another 20% of them are suffering competition of imported products, 10% of the respondents described that they are suffering from insufficient capital, and finally 25% of the respondents underlined that their biggest threat is the legal constraints. This shows us that the small scale industries in our country is faced on many challenges and threat which needs to be solved, because the above mentioned challenges weakened their production and also caused the bankruptcy of many small scaled industries previously opened in Somaliland, if it is not solved together, it will also result the many other small-scale industries which operates now to close its doors. See figure 20
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FIGURE 20
Unskille d la bor, 10% Legal constraints, 25% Lack of adva nced te chnology, 15%
Unskille d labor Lack of a dva nce d te chnology Lack of m icro fina nce Com pe tition of im porte d products insufficient capita l Lack of m icro fina nce , 20% Legal constra ints
The Twenty First was does the government of Somaliland is doing well to remove these barriers. The study has confirmed that 30% of the respondents agreed that the government is doing well to remove the barriers opposing the small-scale industries, while 70% of the respondents disagreed that the government is not doing its best to remove the barriers opposing them, one of the managers said the government is completely unaware the Challenges and opportunities of the government so how it can solve the constraints we are suffering from, he mentioned that Ministry of Industries didnt serve the interest and the development of the small-scale industries. See this information in graphically please look at figure 21.
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FIGURE 21
70% 30%
Agree Dis-Agree
Agree
Dis-Agree
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The research discovered small-scale industries are in critical condition which means they are struggling to survive or we can simply say they are in Break Even Point, no profit, they cover their variable cost only, while 5% of the small-scale industries are stagnant, they didnt make any improvement also didnt decline, while 15% of them are making a decline, they are not willing to exist the coming years, finally 45% of small-scale industries are making growing, the most of this group are newly established industries at the same they receive most of their inputs in the local with cheap price, some of them are bottled water industries, bakeries, electricity etc. .
5-2Recommendation
Suggestion of this research is made according to the supposed causes of industrial failure. To begin with, recommendations with to regard of failure of industries are presented in following points. Many small-scale industries in Somaliland are established with inadequate finance which may result a decline of the industry. In order to protect failure caused by financial problem, loans from the banks and other credit institution can cover their need of sufficient capital. Somaliland industries would like to provide their products in a reliable market, but the foreign product takes a big share of the market. Although Somaliland is free market economy. However, is too good to the for local product if the government interfere the foreign goods by imposing on a high taxes. Small-scale Industries need skilled and effective labor which can produce a dependable product. To improve the knowledge and skill of small-scale industries employees through variety of training. Establish industrial zone for all Somaliland cities to create the government. Strengthening government coordination and small-scale industries. Government should reduce the tax Finally the certainty of the local customers is important point. Many customers prefer the foreign manufactured goods instead of consuming local products.
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Bibliography
1- Small industrial development organization (Sido) Article news 2-www.Economywatch.com/worldindustreis.com 3-http://www.wikipedia.org 4- www.scripd.com/small-scaleidustries.com/economywatch.com 5- Source: Somaliland Industry Association 6- Source: Somaliland Industry Association 7-Source: UNITED NATIONIIDUSTRIAL DEVELOPMENT ORGANISATION 8-International Labor Organization (news articles) 9-Case Study of student-online electronic books/wkipedia.org 10. Gamuur Fiber Class industry 11.Foster SamSam 12. All Khayraad Foam Factory
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Appendix I
University of Hargeisa
Thesis questionnaire Cover letter
Dear respondent
I am attending the faculty of economic and political science at university of Hargeisa for May final research paper, currently I am carrying out a survey to find out
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UNIVERSITY OF HARGEISA
QUESTIONNAIRE
Research Topic: Somaliland Small-scale industries development and constraints
Survey Questionnaire
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INSTRUCTIONS: Please answer all questions. For multiple choice questions please tick the box that corresponds with your response. For the remaining questions, please FILL IN the blanks as indicated. Enterprise information Entrepreneur Name 1. Owner: 2 Age 20-35 36-50 above 50 Gender Male Female Education Primary 2. Kind of organization y Service Secondar Bachelor Manufacturer other above 30 Hired Managers 30,000-40,000 above50,000 Masters & PHD Others
Merchandise 3. What is the legal organization of this Industry? Sole proprietorship Partnership Corporation 4. Number of Employees 10-20 21-30
5. Who manage your Industry? Individual owner(s) partners 6. Your Initial Capital was? 10,000-20,000 20,000-30,000
7. Does your organization get any Support from the government at the initial time? Yes No 8. Your yearly Income is estimated to be? Less than 5000-10,000 11,000-50,000 5000 9. What kind of products does your industry produce? Consuming Commercial Industrial goods goods goods 1 Where do you obtain the raw materials used for production? 0. Local Abroad Both above50,000 others
1 If the raw materials are not available in the Somaliland, do you think it is an obstacle to 1. your production? Yes No 1 Regarding your Industrys product, how many competitors do you face in your markets? 2. No Competition More then 10 Fewer than 10 Dont know
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