2.9. Limitations of Small
and Medium enterprises in Rwanda
Small and medium enterprise strength comes from the ability of
smaller firms to react quickly and flexibly to adapt to market realities and to
take advantage of opportunities that would not be an advantage to larger firms.
Small enterprises grow to medium enterprises as they are increasingly able to
develop the resources to expand out of their local economic system.
Thousands of small companies operating at the micro level,
taking advantage of local resources and opportunities, form the base of a
healthy economy by providing local services, jobs and supplying or processing
for larger firms and markets. Although substantial supporting initiatives had
been undertaken by the Government, they have failed to create the enabling
environment necessary to develop the sector.
Key challenges include:
1. Limited resources and human capacity for
previous initiatives meant they were unable to fulfill the mandate of SME
development or to extend their services country-wide
2. Limited coordination and partnership in
these initiatives meant that many ongoing activities, in the public and private
sector, were not sufficiently connected and harmonized to maximize their
potential for SME development.
3. A limited policy environment lacking focus
and a prioritization of cluster and sector specific policies meant that the
general policy environment was not targeted at SMEs
4. The structure of previous finance schemes, by placing them
in large intermediary institutions with complicated application procedures and
limited assessment capacity, meant the SMEs found them difficult to access.
5. The (low) quality and «one size fits all»
approach for business development services meant that the
private sector did not take advantage of them, though the current PSF model is
working to address this constraint.
6. The general regulatory environment in Rwanda
is structured toward large companies that have the time and resources
to comply, making the existing structures a challenge to grow for SMEs.
7. Inadequate Infrastructure for rural SME development
that inhibits implementation of innovative ideas and provision of
services.
2.10. Preferred policy
objectives for promoting SMEs in Rwanda
Evident in best practice policies and «lessons
learned» in Africa, Australasia and Europe, a number of clear factors are
required in order to enable success. These factors include:
· Support and incentives for new activities that
is time-bound
· Clear benchmarks provided to measure success
over time
· Active monitoring and evaluation of
performance
· Sustained dialogue with the private sector
· High-level political oversight and ownership of
the policy implementation process. For each policy objective, policy choices
are evaluated on their suitability to achieve the objectives of the policy,
their feasibility in being delivered with the systems and finance available,
and their acceptability among stakeholders.
2.10.1. Policy objective
1: Promote a culture of entrepreneurship among Rwandans
Entrepreneurial culture is underdeveloped among Rwandans given
the short history of business in the country and the absence of successful role
models. Many Rwandans will not become entrepreneurs, but will contribute to the
growth of business as skilled employees.
Skills development, as well as the promotion of
entrepreneurship for those in programs that display entrepreneurial motivation,
are already being addressed by TVET and PSF initiatives. However, as identified
by the PSF capacity needs assessment, promoting a culture where those with the
desire and energy to become entrepreneurs are nurtured and encouraged is
integral to growth of the SME sector.
Whilst entrepreneurship has been introduced into the
curriculum of numerous institutions, there is often not yet a practical
element. By offering practical opportunities for young people interested in
business to engage in entrepreneurship, they are more likely to engage in
entrepreneurial activities.
v Strategies
A number of key policy strategies are required to achieve the
aim of this policy objective.
They will be executed in collaboration with Ministry of
Education and the Workforce Development Authority.
» Introduce a component of
entrepreneurship training into school and TVET curriculums, both focusing on
risk and innovation and also business skills such as financial management and
marketing
» Introduce a youth entrepreneurship
course for existing associations of out-of-school or vulnerable youth
interested in starting their own business; the course would include training in
business skills such as financial management, marketing, risk and innovation;
this would be funded by the capacity building component of the SME fund.
» Implement a mentoring program for
young people starting businesses via the BDS centers; leaders of local
successful businesses should be recruited and trained in how to offer advice to
young people
» Introduce talks on business related
topics and visits by leaders in government and private sector targeting
children from their early age, i.e. pre-primary and primary school
v Strategies
A number of key policy strategies are required to achieve this
component.
» In each district with a BDS, develop a
strategy on how to network with SMEs to determine their changing market
information needs and how to best create tools for them to access this
information.
» Comprehensive databases of market
information to be made available at BDS centers
for SMEs
» Facilitate participation of SMEs in
International Fairs and in Trade Missions.
» Develop and implement a program on
preferential access by SMEs to Government procurement contracts.
| 
