A Quantitative Analysis Determining the Performance of Small and Medium Enterprises (SMEs) in Leather Footwear Production in Selected Common Market for Eastern and Southern African (COMESA) Countries

Abstract

A study using quantitative analysis determined the performance of Small and Medium Enterprises (SMEs) involved in the production of leather footwear and other leather products. The study was carried out in February 2014 in selected countries with no previous baseline studies related to SME’s associated with the leather sector. Therefore, the study covered Burundi, Kenya, Rwanda, Uganda and Zimbabwe. The main objective was to identify critical factors that undermine the growth of these SMEs’ with regard to turnover, employment, exports and profitability. Seventy-six SMEs were interviewed during the study period with data collection using a semi-structured questionnaire, visits to production units, discussion with key informants and involving a consultative review which encompassed different documents and reports. The outcome of the interview was then expressed as numerical attributes depicting various results of measured variables. For example, the demographic trends indicated average number of employees per SME ranged from 2.68 ±1.16 persons for Zimbabwe to 11.38 ±12.26 persons for Kenya with an overall average for all the sample countries standing at 5.5± 6.18 persons. The study further showed that Females represented more than one third of the employees in all the countries sampled. Production wise on average, SMEs produced 18.9 ±22.7 and 27.8 ±43.3 pairs per day for men and ladies shoes respectively. On the other hand the average output for School shoes and Sandals stood at, 26.5 ±33.5 and 25.5 ±21.3 respectively. The labour productivity per day was 3.4 pairs for men shoes, 5 pairs for ladies shoes, 4.8 pairs for school shoes and 4.6 pairs for sandals. Thus, the study demonstrated that based on average productivity of above ten pairs per person observed in India and China, the performance of the selected countries SMEs were dismal with respect to productivity. The lowered productivity meant the SMEs were uncompetitive and unable to meet market demand at the national and regional level. Mostly, their shortcomings were related to a plethora of challenges being faced by these SMEs where overall citations in decreasing order were lack of machineries, raw material problem (availability, cost and quality), financial problem (working capital) and market problem among others. Therefore, interventions that promote SMEs development need to address the stated challenges that the sector is currently facing in a holistic manner.