Kathmandu. The role of micro, small and medium enterprises (MSMEs) is important in economic prosperity and social welfare. Such industries contribute to the achievement of economic and social goals through job creation, value addition, innovation and empowerment.
In the context of Nepal, MSMEs account for 99.8 percent of the industrial enterprises (923,356 total enterprises), 84.7 percent of the engaged manpower (3,228,457 total people), 62.2 percent of the annual sales (total sales of Rs. 2,915.6 billion) and 99.96 percent of the enterprises run by women managers (273,436 women directors).
The Government of Nepal and Nepal Rastra Bank have been implementing various programs for the establishment and promotion of micro, small and medium enterprises. However, measuring the effectiveness of such programs has not been adequately and routinely.
The Birgunj office of Nepal Rastra Bank (NRB) has collected data from 321 industries in Chitwan and Makwanpur districts under a special study programme. The data was collected from the selected industries through a multi-step stratified sample selection method, filling out questionnaires through direct interviews. The study used descriptive data, diagrams, and analytical methods to examine the factors influencing the performance of the industry.
The main findings are as follows:
- }Regarding the concept of overall administrative processes, 15.7 percent criticized it as “bad” and 16.4 percent as “very poor”.
- Raw material conditions were categorized as average by 46.3 per cent and poor by 32 per cent.
- 47.6 per cent rated the overall market environment as ‘average’, while 43.0 per cent rated it as ‘poor’ to ‘very poor’. This indicates general dissatisfaction with the state of the market.
- rated the leadership ability as average by 49.7 percent and by 34.4 percent as poor to very poor.
According to the survey, 52.7 percent of the industries have shown a deteriorating performance (23.7 percent moderate and 29 percent high), 20.3 percent are stable and 27.1 percent are improving.TAG_OPEN_li_58
The average return on investment was 11.7 percent, average capacity utilization was 50.7 percent, annual average operation was 11.4 months and daily average operation was 11.3 hours.TAG_OPEN_li_57 Similarly, the average annual sale is about Rs. Rs. 40 lakhs, paid-up capital Rs. Rs. 25 lakhs and total fixed capital Rs. It appears to be 50 million.
45.TAG_OPEN_li_55 9 per cent rated the industry’s position as average, 29 per cent rated it as poor to very poor and 25 per cent rated it as good to very good.
55.TAG_OPEN_li_54 5 percent of the industrialists rated the overall labor environment as poor to very poor and 35.6 percent as average.
51 TAG_OPEN_li_52.9 percent of the industries surveyed said that the overall condition of the infrastructure was good, while 28.4 percent considered it to be average.
A total of 39 TAG_OPEN_li_51.0 per cent of micro, small and medium enterprises (MSMEs) rated the overall credit finance situation as “average” and 44.6 per cent rated it as “poor” to “very poor”. Personal savings are found as the major source of investment, while loans taken from banks and financial institutions are the second largest sources of investment.
43 TAG_OPEN_li_50.1 percent of the industrialists expressed dissatisfaction with the overall tax system, while 36.2 percent considered it to be average.
In terms of technology adoption, 45.5 percent said it was average and 36.8 percent said it was weak.TAG_OPEN_li_48
In terms of the negative impact of the macroeconomic environment, 40.8 percent felt the negative impact and 25.1 percent felt the high negative impact.TAG_OPEN_li_46
The majority of industries (37.8 per cent) rated industry-related training as “average”, with 35.9 per cent rating it “poor” to “very poor” and 3.8 per cent rating it as “poor”.TAG_OPEN_li_45 Only a relatively small proportion (26.2 per cent) rated industrial training as “good” to “very good”.
82.1 percent of industrialists have categorized the adequacy of the government’s and Nepal Rastra Bank’s incentive and assistance programs from poor to very poor.TAG_OPEN_li_44 This reflects the dissatisfaction of many with the adequacy of existing stimulus and aid programs.
According to the ordered lagit model, incentives from the government and central banks and adoption of technology have had a positive impact on the performance of the industry.TAG_OPEN_li_43 Raw materials and labour conditions have a positive impact, while the performance of industries with female managers has been found to be higher than that of male managers. Economic and political instability are the major negative factors for reduced performance, while administrative complexities and market influences are negative, though statistically inconclusive.
Based on the findings, the study suggests a number of improvements and modifications:
- Effective coordination between various agencies and programs should eliminate duplication and maximize positive impact and minimize negative impact.
The business environment needs to be improved through digitalization, process simplification, and quality regulation.TAG_OPEN_li_42
The Government of TAG_OPEN_li_41 Nepal and Nepal Rastra Bank should pay special attention to maintaining stability and sustainability in the financial and monetary system. Political stability is essential for the good performance of industries.
The performance of industries should be enhanced through knowledge exchange based programs, leadership development and women empowerment.TAG_OPEN_li_40 In addition, there is a need to improve the road and information technology infrastructure and spread awareness about the initiatives of the government and Nepal Rastra Bank.
To increase financial access, the design of innovative financial services and consumer protection must be strengthened.TAG_OPEN_li_39 It is necessary to adopt the latest and alternative methods of credit evaluation method using modern information technology.
