2.12. Definition of Small
and Medium Enterprises in Rwanda
The Rwandan private sector has three many leading sectors in
it. These are sub-sector of agriculture, sub-sector of industry and sub- sector
of micro- business. The micro business sub-sector is the component of the
Rwandan economy about which least is known.
Businesses are generally informal sector are mainly: the use
of rudimentary equipments or tools, employment of members of the family
and a small number of employees (35-100 including the owner).
Rwandan small scale business men or industrialists might be
termed as explores and displaying the following characteristics:
ü The vast majority of them are self made men.
The startup capital is owned the founder, no feasibility or
market studies conducted with regards to the enterprise in this management of
this type of the enterprise is very substantially dominated by the key figure
of the founder.
ü These enterprises equipment quite often consists of
reconditioned, second hand machinery.
ü Most investment in this group is speculative
ü This type of enterprise usually takes legal form of
one-man business of limited partnership form (Minicom 1999: 3, 4).
Samuel C to et al (1990), a small enterprise is commonly
thought of as local restaurant, beauty shops, florists, and television repair
shops. Indeed these types of business do follow a common small businesses
pattern. They often employee fewer than 35 people and to him a business is
qualified to be small if it has one of the following elements: If the
management is independent, that is if the managers are the owners of the
business, if the venture capital is supplied by an individual or a small group
of people controls the ownership, if the enterprise is small compared to
relative size in its industry, if the area of operation is mostly local.
Wheelen and Hunger (1998: 284), a small business enterprise in
an independently owned and operated, not dominated in its fields and does not
engage in innovative practices.
In USA, the mostly commonly accepted definition of small and
medium sized enterprise is one that employs fewer than 500 people and generate
sales of less than 20 million USD annually.
In addition to that E.A Frohlich et al (1994: 12) has cited
that, one approach of distinguishing small scale and medium scale operations
uses fixed assets or the number of persons employed as a measure. This
criterion differs from country to country and there is no universally accepted
definition.
Definition by value assets and number of employees, worldwide
statisticians and economists refer to criteria that are easy to measure. For
instance, number of employees, sales and capital investment in developing
countries, even energy inputs are size criteria. But the most frequent
criterion is the number of employees, if the value of assets is taken as
criterion, the 50,000 USD to 500,000 USD range be considered typically of small
and medium enterprises.
If we define by number of employees in industrial economy
context in most often means fewer than 500employees while in developing
economies, it means not more than 100 employees.
According to definition provided by business act of 1953, a
small and medium enterprise is one that independently owned and operated by and
not dominated in its field of operations.
Authorized by this act, also small and medium business
administrations (SBA) developed a detailed definition that takes into account
such criteria as sales volume and a number of employees in the enterprise.
Incorporating these criteria into workable guidelines for use
in developing loans the SBA as established the upper limits for small
enterprises in this manner: Manufacturing firms 250 or fewer employees,
wholesaling USD 15 million in annual sales, retailing and services 1 USD
million to 5 USD million in annual sales depending on industry.
To explain it more, Martin W. Bukley (1994: 35-6) has put it
out that, the most authoritative definition of small and medium enterprises
came from Bolton committee report on an enterprise (report of the committee of
inquiry on small enterprise, chairman J Bolton) which was issued in 1971. A
small enterprise, it said, was generally one which employed less than 200
people as well as having three additional characteristics: A small share of
market, owners worked and took a personal interest in business, not part of
another (large) enterprise two years.
In case of Rwanda, Patrick Nugawera (1998) has revealed that
there is about 170-200 organized, small structured industrial and service
enterprise in the country (Rwanda).
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