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The role of SMEs in rwanda from 1995 to 2010

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par Clotilde MUKAMUGANGA
National University of Rwanda - A0 2011

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1.2. Background of the study

Since 1950, development theory has been evolving both in terms of how rural development is conceived and how it can be best achieved. By the early 1970 , a number of major actors in international development had begun to agree that rural development could not no longer be defined strictly in terms of economic productivity and efficiency, that to be effective and sustainable ;the majority of rural people had to participate in the process of the development on going change (Robert B. Charlick 1984:1).

Today, most development economists do assert that if development is to be realized and become self sustaining; it will have to start in rural areas (Todaro 2003:418).The core problems of wide spread poverty, growing inequality, rapid population growth and raising unemployment ;all find their origins in stagnation and often retrogression of economic life in rural areas (Todaro:2003,419).

It is therefore argued that the rural areas need to be the leading element in (over) all strategies at least for the vast majority of contemporary third world countries.

Rural development has therefore become a topic that attracted many researchers and international entrepreneurs that are working and designing policies to increase living standards of rural people through: education, health services, transport facilities, provision of clean water, creation of research centers and provision of income generating projects. Lack of these indicators for development causes underdevelopment, poverty is the ultimate outcome.

Small and medium enterprises are of great importance of economic development through mobilizing and providing economic activities such as agriculture, commerce and trade.

The Rwandan economy is based largely on rain-fed agricultural production of small, semi-subsistence and increasingly fragmented farms.

The country's population is over increasing. However the increase in population steadily weakens the poor households which depend solely on agriculture for their live-hoods as more Rwandan are cultivators (Rwandan Economy; lecturer notes, 2008: 4). Thus, there is a need for them to ameliorate their standards of living through policies mentioned above by different institutions such as small and medium enterprises.

Among these SMEs, we note that «URWIBUTSO Enterprise» started 1983 by a young and dynamic SINA Gerard with one employee as compared to 421 employees today; something difficult to imagine based on the fact that he only used local human capacity and resources to develop his business which now benefits over 3, 000 families. URWIBUTSO means«something to remember «or souvenir.

A lot of good crops are grown in the area such as: cabbages, pineapples, sweet potatoes, etc but among the leading crops include:

Passion fruit, Banana and pineapple plantations, Red and yellow pepper, Apple, grapes and strawberry, Cereal crops such as wheat, maize, sorghum for the bakery and kimaranzara restaurant.

Therefore, small and medium enterprises especially those located in rural areas contribute more on rural development.

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