Operations of small-and-medium enterprises (SMEs) in Rwanda will soon start signing performance contracts with government, a move that is aimed at enhancing productivity, and promoting value-addition in the sector.
The Minister for Trade and industry, Francois Kanimba, said the agreements will make it easy for government to evaluate the SME industry’s productivity, and also identify bottlenecks pulling back the sector’s performance.
Government has already signed similar contracts with more than 40 export-oriented companies and co-operatives, especially in the mining, manufacturing, agro-processing and transport and logistics sectors. The contracts are in line with the country’s growth blueprint, the second Economic Development and Poverty Reduction Strategy (EDPRS II), designed to boost production and exports, among others.
Kanimba said the SME sector still grapples with challenges, like limited skills, poor packaging and branding, access to credit and markets, as well as limited innovation, among others.The government pledged to improve infrastructure to ease some of the constraints faced by entrepreneurs.
Martin Maniraguha, the managing director of Hema, a beverage firm, is optimistic that more government support will help strength the capacity of SMEs and enhance potential of the sector to produce for export. This could also translate into more jobs and increased income.
The move, according to experts, is critical to spur the country’s struggling export sector. So far, there is a positive trend in specific sectors like tea and coffee, which are benefiting from similar support. Rwanda’s coffee export revenues have, for instance, increased to $8.3 million (Rwf6.5 billion) during the first three months of 2016, up from $6.6 million same period in 2015. Equally, the country’s tea export receipts increased to $18.8 million (Rwf14.9 billion) during the reporting period, from $17.7 million last year, recent National Agriculture Export Board (NAEB) statistics indicate. However, the total exports decreased by 26.07 per cent in 2015.
Under EDPRS II, Rwanda is targeting to increase exports to 28 per cent per year by 2018, from about 20 per cent currently. Therefore, the signing such contracts with the SME sector, which makes up 98 per cent country’s total businesses, should be seen as trying to help realise some of these goals