{{Rwanda’s Vision2020 identifies six priority pillars and three cross-cutting areas, the development of which is crucial for making the necessary long-term transformations in the Rwandan society.
One of the pillars is the development of an efficient private sector spearheaded by competitiveness and entrepreneurship.}}
SMEs comprise 98% of all the establishments; micro-sized establishments – those employing between 1 and 3 people – account for 92.6% of all establishments while enterprises with only one worker account for 72% of all establishments.
This indicates that growth in the SME sector could be of strategic importance in addressing the challenge of unemployment in general and youth unemployment in particular.
Growth of the SME sector also has the potential to lower Rwanda’s trade deficit, owing to the low export potential mainly driven by traditional crops (coffee and tea) and minerals.
Rwanda’s vision is to address this trade imbalance by increasing export earnings through value addition.
Several initiatives to support SME development have been undertaken by various actors including the government, development partners, and development finance institutions.
The Government of Rwanda (GoR) designed the Small and Medium Enterprise (SME) Policy framework aimed at guiding the implementation of a coherent and coordinated policy to create an enabling environment for the growth of the SME sector.
It is envisaged that the growth of the SME sector will increase non-farm employment, develop business and technical skills in the Rwandan workforce, support targeted value-added clusters, grow the tax base, and spur industrial growth.
The SME policy is supported by other policies, laws and strategies that include the Trade Policy (2006), Industrial Policy (2006), National Policy on the Promotion of Cooperatives (2006), National Microfinance Policy and Implementation Strategy (2007), Financial Sector Development Plan (2007), Companies Act (2009), National Savings Mobilization Strategy and SACCO Strategy (2009) and the National Export Strategy (2011).
The SME policy therefore, among others, attempts to bridge the gap between previous policies which are cross-cutting in nature and targeted to large companies, thereby filling the void of policies specifically targeted to SMEs with a particular focus on facilitating investment finance.
{{Enabling Policy Environment and Infrastructure}}
The policy environment was oriented towards large companies. The Government has acted by developing an SME development policy under the Ministry of Trade and Industry and the 2011/12 SME Development Action Plan in addition to initiatives to improve the ICT infrastructure in the country.
The vision of the policy is to create a critical mass of viable and dynamic SMEs, significantly contributing to the national economic development and the mission is to stimulate growth of sustainable SMEs through enhanced business support service provision, access to finance and the creation of a conducive legal and institutional framework.
The objective is to foster job creation and an increase in the tax and export base through the promotion of competitive new and existing SMEs.
The Government has prioritized cluster development so as to spur value-addition sectors, increase Rwanda’s international competitiveness, create more employment and business opportunities, expand the supply of skilled people and technology, expand the local supplier base, increase efficiency and productivity and foster innovation.
The SME policy in particular supports the development of SME clusters in a particular field especially where backward and forward linkages can be exploited for instance via improving productivity and efficiency, stimulating and enabling innovation, facilitating commercialization and new business formation.
Improvements in competiveness including, addressing binding infrastructure constraints in transport and energy also remain a core objective of the Government.
For instance, in 2010, Cabinet approved the Strategic Investments Programme which comprises six key investment projects aimed at expediting the realization of the Vision 2020 and EDPRS objectives.
These projects, which prioritize investments in infrastructure including ICT, are expected to improve overall competitiveness, catalyze private sector and SME development, spur job creation, and facilitate export diversification thereby contributing to poverty reduction and inclusive growth.
Specific agencies have also been created to support the development of Rwandan cooperatives, whose business activities are similar to SMEs.
The Rwanda Cooperative Agency (RCA) works to train and regulate cooperatives in tandem with the Rural Small/Micro Enterprises Promotion Project Phase II (PPPMER-II), a project in MINICOM, mandated to provide marketing and other support to cooperatives and SMEs in rural areas
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