Rwandan small and micro businesses comprise 97.8% of the private sector and account for 36% of private sector employment. There are over 72,000 MSMEs operating in Rwanda.
Rwandan medium sized enterprises are well-established businesses that are individually or jointly owned. They have set administrative processes, qualified personnel and trained staff, employ between 50-100 people and account for 0.22% of businesses in Rwanda contributing 5% of total private sector employment.
Therefore MSMEs comprise approximately 98% of the total businesses in Rwanda and account for 41% of all private sector employment. The vast majority of MSMEs (93.07%) work in commerce and services. This is followed by 1.86% in professional services, 1.66% in Arts & Crafts, 1.33% in industry, 0.94% in financial services, 0.7% in tourism and 0.45% in agriculture and livestock.
MSME’s Policy Objectives
- Promote a culture of entrepreneurship among Rwandans
- Facilitate SME access to development services including business development services, access to local, regional and international markets and market information, promote innovation and technological capacity of SMEs for competitiveness
- Put in place mechanisms for SMEs to access appropriate business financing
- Simplify the fiscal and regulatory framework for SME growth
- Develop an appropriate institutional framework for SME development
Challenges facing micro small and medium enterprises in Rwanda
- Lack of entrepreneurial culture in terms of building human capacity and supporting potential growth
- The unstructured environment in which SMEs operate and their inability to be open to new or innovative ideas presents a major challenge to the development of the SME sector
- Limited innovation and competitiveness in the SME sector caused by a lack of technical and managerial skill.
- Lack of good quality business development services tailored to their needs.
- High cost of doing business is cited by MSME owners in terms of high energy and transport costs.
- MSMEs in Rwanda face significant compliance burdens dealing with existing regulation. The current tax regime is both costly and difficult to comprehend
- SMEs face difficulties accessing and utilizing information regarding local, regional and international pricing, a major constraint to business planning as well as about the regulatory environment in Rwanda and regionally.
- Poor participation in the policymaking process, meaning they have little knowledge of interventions designed to assist them.
- SMEs have inadequate access to market information that could benefit their businesses as well as inadequate knowledge about marketing their products both nationally and internationally.
- SMEs often have limited abilities to develop the skills of their staff or to take advantage of local economies of scale in terms of energy, transport or raw materials.