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Contribution of small and medium enterprise to the economic development of Rwanda


par Valens NYANDWI
Universite Nationale du Rwanda - Licence 2013
  

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2.5. Popular types of small and medium enterprises

Small business exist in every type of industry, agriculture, forestry, and fishing, mining , construction, manufacturing, transportation , communication, and utilities, wholesale trade, retail trade, finance, insurance, and real estate, and services. In order of importance, however, they are most important in retail trade, services, construction, wholesale trade, and manufacturing.

Retail businesses sell their products directly to consumers. But they are tens of thousands of small retail enterprises, such as bakery, greeting card, record, apparel, jewelry and numerous other types of shops and stores.

v Characteristics of the SME Sector

This study noted that the small business segment of the economy is heterogeneous with businesses ranging in size from micro-enterprises to relatively large firms. Small businesses are very diverse and have different needs. They operate in the formal and informal economies. Some are simply survivalist whereas others are run by people with an entrepreneurial flair. Some are start ups; some are growing rapidly; others are experienced and highly sophisticated. They operate in different markets, local, national and global (Wikipedia, October 2007).

No single policy can cover all these businesses, formal and informal, operating in different industrial sectors and with many sector specific challenges. Thus, data categories should be sufficiently differentiated to provide detailed and nuanced information to support targeted policy approaches and practical interventions. It is worth reconsidering whether SMEs should be considered as «one group» as the acronym infers. For policy purposes, a one- size-fits-all approach certainly will not work.

Table 2 Difference between SMEs and Large Company

CATEGORY

SMEs

LARGE COMPANY

Management


· Proprietor entrepreneurship


· Functions-linked personality


· Manager-entrepreneurship


· Division of labor by subject matters

Personnel


· Lack of university graduates


· All- round knowledge


· Dominance of university graduates


· Specialization

Organization

Sales

Buyer's relationship

Production

Research development


· Highly personalized contacts


· Competitive position not defined and uncertain


· Unstable


· Labor intensive


· Following the market, intuitive approach


· Highly formalized communication


· Strong competitive position


·Based on long- -term contracts


· Capital intensive, economies of scale


· Institutionalized

Finance


· Role of family funds, self financing


· Diversified ownership structure,

access to anonymous capital market

Source: P.M. Hamuranek, C.F. Lettonayr, J.H. Picher, Title, Manual for small industrial business. (UNIDO, Vienna, 1994) Page 7 and 14.

The abbreviation "SME" occurs commonly in the European Union (EU) and in international organizations such as the World Bank (WB), the United Nations (UN) and the World Trade Organization (WTO). The term "small and medium businesses" or "SMBs" is predominantly used in the USA. In Rwanda the term is «SMEs» for small, and medium enterprises, and elsewhere in Africa, MSME is used for micro, small and medium enterprises.

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