Business concept reforms to spur SME growth in Rwanda

Rwanda will implement a new set of business reforms aimed at boosting the contribution of small enterprises to the economy.

The country also wants to make Kigali one of the world’s top investment destinations, and hopes to achieve a higher ranking this year.
In the latest Doing Business Report 2011, Rwanda moved up 12 positions to position 58 of the top reformers globally.

The report benchmarks regulations that enhance business activities and those that hamper business. It focuses on business regulation and protection of property rights.

While SMEs constitute over 90 per cent of the businesses in Rwanda, with a potential of reducing poverty and delivering millions of dollars in revenue, their potential is crippled by the fact that they mainly operate in the informal sector.

In addition, SMEs still have limited access to finance due to high risk perception by lenders.

As a result, the Rwanda Development Board (RDB), the government agency spearheading the reforms, has said it will focus on implementing reforms that make it easy for SMEs to formalise their operations this year.

“We want to improve the way SMEs and other micro businesses do business — bring them into a formal set up,” said Claire Akamanzi, the chief of operations at RDB.

Ms Akamanzi said that with the first private credit reference now operational in the country, the process of getting credit will become easier.

New reforms to facilitate the businesses will include reducing further the process of starting a business, including implementing free online business registration.

It also includes reducing registration fees from Rwf25000 ($41) to Rwf15000 ($25).

“We want to encourage more businesses to register online and be able to register a business from anywhere without paying a fee,” she said.
Ms Akamanzi also said RDB has invested in training SMEs throughout the 30 districts in business and management skills.

“Even if we have some big businesses that contribute a lot to the economy, if we want to grow, then SMEs have to grow. When they grow, they can contribute more to the economy.”

Last year, the government said SMEs with a turnover of Rwf200 million (about $423,800) or below should declare taxes every quarter, instead of monthly, to create more time for SMEs to concentrate on their business.

Strong growth in the SME sector is needed to support not only Rwanda’s economic ambition of becoming a middle income country by 2020 but also to meet its development targets, including poverty reduction.

According to the International Monetary Fund, Rwanda needs an average growth of 8 per cent to meet its development goals, mainly driven by additional private investment.