MICRO AND SMALL ENTERPRISES IN LEBANON

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for initial capital, compared to 11.2% of female-operated businesses, while 12% of female-run MSEsgot their initial capital from other sources and channels. Furthermore, females tend to have slightlylower access to formal loan as a source of initial capital, while showing a somewhat higher tendencyto use informal loans (4.3% of male-run MSEs, 3.9% of female-run MSEs accessed formal credit forbusiness start-up).This leads to an examination of the surveyed MSEs’ ability to access formal loans, which is essentialfor the operation and sustainability of businesses for numerous reasons. The ability to access formalloans is an indication of efficient management on the part of the MSE, and the ability of the enterpriseto repay such loans is an indication of the profit margin of the enterprise. In addition, credit isessential for enterprises to expand.It is shown that few of the surveyed MSEs have access to formal loans (4.2%). Out of these 15 , most ofthe loans are obtained from banks (93%), while other sources include domestic firms (2%), nongovernmentalorganizations (2%) and other sources (3%). Access to credit varies with the enterprise’ssector of activity; however the results are non-conclusive due to the low number of MSEs accessingformal credit from the overall sample.The effect of gender on access to credit could not be adequately analyzed due to the low number offemale responses to this question.In terms of sector of activity, 66% of MSEs accessing formal credit work in the trade sector,compared to 23% for MSEs in other sectors, 7% of those in industry, and around 3% for hotels andrestaurants. The average interest rate is 10.44%.Finally, no significant correlation could be detected between access to formal credit and MSE size.The survey indicates that the share of the number of loans between the different categories of MSEs isas follows: 35.7% for one-person MSEs with an average interest rate of 10.24%; 48.2% for MSEsemploying 2-4 workers with an average interest rate of 11.1%; 8.9% for MSEs employing 5-9workers with an average interest rate of 8.6%; and 7.1%for MSEs employing 10-49 workers with anaverage interest rate of 9.6%.III.11 Average Present Value of Enterprise 16The average present value per enterprise in Lebanon is $59,446, with variations according to gender,sector, and size. The survey indicates that male-operated MSEs have almost double the present valuethan those operated by females. In addition, hotel and restaurant MSEs and bigger MSEs have thehighest present value.Significant differences exist among the average present values of MSEs in Lebanon according togender. The survey indicates that the average present value of the male-headed MSE is double thatfor females ($61,742 and $31,307, respectively).In addition, the highest present value is found in the hotel & restaurant and construction sectors withan average present value of $250 thousand. This is followed by industry (average present value of$100,210), other MSEs, and trade.As expected, the larger the MSE, the higher is its average present value, which is equivalent to$811,920 of those MSEs employing 10-49 workers compared to $22, 735 for one-person MSEs.Overall, medium enterprises (10-49 workers) have an average present value 13 times larger than theaverage present value of the sample as a whole.III.12 Value-added of MSEsThe value added of enterprises, especially MSEs, is difficult to obtain. This is primarily due to thereluctance of entrepreneurs to provide accurate information on these figures and the misleadingbackground information, but also because they are unable to do so as book-keeping is not always15Due to the limited number of answers, this section is only indicative and information obtained and analyzed here cannot begeneralized.16The average present value includes the value of the following assests: land, equipments and tools, buildings, inventory,and cash27
practiced. Nevertheless, value added is essential if policies targeting MSEs are effective, as a majorpart of any MSE, policy should target the improvement in the value-added of existing MSEs, as wellas direct new investments towards niche enterprises that have higher value-added.Value added as a characteristic of the enterprise is related to several factors, including its size, thesector of activity, the characteristics of the entrepreneur, gender, geographic location of the enterprise,clustering, level of technology utilized, organizational structure, present value of enterprise, andsubcontracting relationships.In order to arrive at specific results, the current study 17 provides analysis over (a) the current year; and(b) last year. This will assist in comparing performance over time, and might indicate some possibletrends for analysis.III.12.1 Value-added of MSEs 18 and sizeThe survey demonstrates that the added value of the surveyed MSEs increases with size.One-employee enterprises have the lowest value-added per enterprise of $534/month. This figuregradually increases with size to reach $1,218/month for the 2-4 employee category, and $10,050 forthe 5-49 employee enterprises category. The average number of persons engaged varies per category,from one person for the one-employee enterprises and 2.6 for the 2-4 employee category to 9.6 for the5-49 employee category.The linear pattern observed above somewhat changes when the value-added per worker - and not theenterprise - is considered. The table below illustrates that the value-added per worker in one-employeeenterprises is higher than that in 2-4 employee enterprises. This is primarily due to the fact that in onepersonenterprises the employee constitutes a form of wage/profit combination at the same time, inaddition to the fact that in these enterprises the duration of work is self-determined.The survey depicts that the average value-added per worker at interview time was $534/month forcategory 5-49 employee MSEs, with an average value-added per worker approximately twice as largeas that in one-employee enterprises (Table 19).Table 19: Value-added per Worker and Size of EnterpriseSize (no. of employees)1 2-4 5-49 TotalValue-added per worker at interview time 534 476 993 536Number of responses 271 300 40 611Average number of persons engaged 1 2.6 9.6 2.3III.12.2 Value-added and sector of activityValue added also changes according to the sector of activity. The hotel and restaurant sector has thehighest added value figure estimated at $3,038/month per enterprise. This is followed by industry at adistant second of $1,721/month per enterprise, while trade comes third. The average value-added perenterprise for the sample as a whole is $1,493/month per enterprise, with the sectors of hotels andrestaurants as well as industry above average.The value-added per worker produces slightly different results than those mentioned above. Industrygenerates the most value-added per worker ($596/month), followed by trade ($550/month), and othersectors ($488/month). The total average of value-added per worker is $536/month.17The value-added was calculated, based on the following formula:Value added per enterprise = + (average monthly sales revenues)- (average monthly raw material expenses)- (average monthly energy consumption)- (average monthly other expenses)The value-added per worker = (Value added per enterprise) divided by the (number of employees including employers)All figures are in USD18All value-added figures are monthly figures28
Page 1 and 2: ERF RESEARCH REPORTProject on “Pr
Page 3 and 4: III.17.3 Clusters------------------
Page 5 and 6: AcknowledgementThis is the first re
Page 7 and 8: By presenting this unique, serious
Page 9 and 10: The overall environment in Lebanon
Page 11 and 12: 3.6 Major ConstraintsThe most promi
Page 13 and 14: The distribution of entrepreneurs a
Page 15 and 16: project includes a field survey, th
Page 17 and 18: the same probability to be selected
Page 19: Table 8: MSE Distribution per Gende
Page 23 and 24: person enterprises is an evidence o
Page 25 and 26: Figure 3: Distribution of MSEs Acco
Page 27 and 28: Most of the surveyed MSEs operate i
Page 29 and 30: The survey also showed that larger
Page 31 and 32: The percentage of MSEs that are not
Page 33: Finally, it appears through the rel
Page 37 and 38: III.12.6 Value-added and technology
Page 39 and 40: of age compared to 19% of male entr
Page 41 and 42: Table 26: Age (current) Distributio
Page 43 and 44: The entrepreneurs opted to change o
Page 45 and 46: Table 34: Mixed Income and Sector o
Page 47 and 48: • Acquisition of modern technolog
Page 49 and 50: frequency distribution do not show
Page 51 and 52: do not belong to a cluster achieve
Page 53 and 54: III.17.11 Working Hours per WeekPro
Page 55: • Effective quality assurance mec

MICRO AND SMALL ENTERPRISES IN LEBANON

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