Assessment of the impact of business environment on Small and Medium Enterprises (SMEs) performance in Sudan

This study aims to assess the effect of the business environment on the performance of small and medium enterprises (SMEs) in Sudan. According to the World Bank, Sudan is considered one of the most difficult regions in the world to do business, which clearly indicates that there is a problem in the business environment. The study used data from the World Bank's Enterprise Surveys database of 2014 for 607 SMEs in Sudan. Multiple linear regression was adopted to test the effects of business environment on SMEs' performance. The results of the study show that external financing sources are statistically significant and negatively affect the performance of SMEs in Sudan. The variables regarding internal financing sources are found to be statistically significant and indicate that the use of internal financing sources have a positive effect on the performance of SMEs. The results also display a statistically significant and positive impact of power outages on SMEs' performance. However, loss of sales due to electrical outages and products value losses due to breakage or damage while in transit to the domestic market show a statistically significant and negative effect on the performance of SMEs in Sudan. Moreover, bureaucracy and the number of visits and inspections by tax officials are statistically significant, demonstrating a negative influence on SMEs' performance. Corruption-related variables are found to be statistically significant and to have a positive effect on SMEs' performance. On the contrary, crime on account of losses due to theft reveals an adverse impact on the performance of the SMEs in Sudan. The results would provide knowledge to entrepreneurs and business owners/managers on how to start and run their businesses by being aware of the factors that affect their business performance. Other stakeholders such as financial institutions and foreign investors could use the obtained results to evaluate the nature of business in Sudan. However, the study did not include all regions of Sudan, which requires further and more comprehensive studies in this area in Sudan.