Factors Influencing the Performance of Small and Micro Enterprises (SMEs) of Somaliland a Case Study in Hargeisa Town

Abstract

Small and Micro Enterprises (SMEs) play an important economic role in many countries of the world. Over the past 10 years, economic planners have realized the importance of the small enterprises in achieving economic development. SMEs occupy a prominent position in the development agenda of many developing countries like Somaliland. Currently, In Somaliland, the Government has been promoting the development of SMEs through the formulation and implementation of Small and Micro Enterprises Development Strategy, but some enterprises fail to sustain, and some others remain for a long period of time without transforming into middle level enterprise. The purpose of the study is therefore to assess the factors influencing the performance of small and micro enterprises, in Hargeisa town, Somaliland. Primary data were collected from a sample of 198 randomly selected SMEs engaged in Electronics, Boutiques/clothes shop/tailoring, Transport, Supermarket and Retail shop, through structured questionnaire by using stratified random sampling techniques. Data were analysed using descriptive and inferential statistics with using a Statistical Package for Social Science (SPSS version-23). Specifically, multiple linear regression analysis was carried out to examine the variation in the performance of enterprises related to the variation in each of the independent variables of the study. The results show that the performance of small and micro enterprises is determined by age of the respondent, education level of respondents, business type, preparing plan for future operations, record keeping and financial control system, management experience for business and marketing related skill, but being male or female and being one or more than one ownership have no effect on capital change. Based on the result we can recommend that stake holders of the sector should work on preparing training programs on management issues and creating experience sharing opportunities especially to those enter into the sector without any management experience. Similarly based on the result we can recommend SMEs should start using plan to their business activities and also adopt a formal record keeping and financial control system in their internal practice.