Impact of Managerial Policies on Financing Small-Scale Industries in Sudan (1998-2003)

Abstract

Financing is the most acute problem facing small-scale industries across countries. Although this sector contributes to various national economies but generally they are facing many problems such as shortage of capital; collateral required; infrastructural facilities; training; and many other problems. The main objectives of this study are to investigate the impact of managerial policies on financing small-scale industries in Sudan; to clarify the concept of managerial policies and their formulation; to acquaint with small-scale industries; to figure out problems facing their development; to find out support and efforts exerted by the government to solve their problems; to expose experiences of some developed and developing countries in financing and supporting small-scale industries; and to search the best methods for developing these industries. To realize these objectives the researcher has designed two sets of questionnaires, one address entrepreneurs of small-scale industries and incorporates 36 questions, and the other one addresses managers of investment sections in various banks in Khartoum State and consists of seven questions. The State has been divided into three geographical areas; these are Khartoum, Khartoum North, and Omdurman. Seven types of small industries have been chosen randomly, these are oil pressing, engineering workshops, soap industries, carpentry, leather products, shoemaking, and plastic. A sample of 153 small industrial units was selected and a stratified random sample method was utilized. For collecting data from financial institutions (Banks) 15 banks were selected purposively . The results of the study showed that:- - There is no one consensus definition of small-scale industries throughout the world. -Also they showed that small-scale industries in developed and developing countries have played great role in providing employment opportunities; generating Income; and regional development. -Small-scale industries in most developing countries operate within the informal sector; because of this it became problematic for the financial institutions to provide them with the required credit facilities. -Many of the small—scale industries faced problems related to policy and administrative actions. -The study also shows that the geographical distribution of the industrial establishments in Sudan is uneven. -The study found that the managerial policies of Bank of Sudan in terms of credit policy did not recognize small-scale industries. -Unavailability of financing, poor technology, transportation, and high taxation are the most chronic problems facing small-scale industries. -Entrepreneurs did not obtain loans at the beginning of their operations; they relied completely on their own sources. -The study shows that banks are not keen to finance small-scale industries sector; they charged high interest rates and required unaffordable collaterals which are beyond the capacity of most entrepreneurs. -The study reveals that Ministry of Industry has no effective managerial policy assisting small-scale industries. -It also shows that the present credit policies are insufficient and need effective reforms. -And finally it reveals that the Sudanese investment acts have never provided entrepreneurs of small-scale industries with privileges, or facilities, or even guarantees. The study recommended that:- 1- Government of Sudan should encourage formal credit institutions to finance the sector by taking the following step:- - Initiation of credit guarantees schemes for small entrepreneurs. 2- In order to foster development of small-scale industries, government should adopt a more comprehensive policy pertaining to this sector. Also it must strive to develop innovative credit programs suitable for the needs of small-scale industries entrepreneurs. 3- Government should indorse special legislations for small-scale industries. 4- Government should revise tax structure so as to provide some protections to small industries. 5- The Ministry of Industry must take a policy for the development of small-scale industries. 6- Bank of Sudan should be keen to issue policies that are favorable to small industries and must direct all financial institutions to provide the sector with the required financing.