Domestic private sector a key engine for economic growth

Rwanda needs to develop alternative engines of growth that are sustainable and benefit ordinary Rwandans, not just foreigners and the elites. It is with great conviction that I believe the domestic private sector through small and medium enterprises (SME’s) could form this alternative growth engine – this will not only benefit national economy, but countless individual Rwandans as well.

Rwanda needs to develop alternative engines of growth that are sustainable and benefit ordinary Rwandans, not just foreigners and the elites.

It is with great conviction that I believe the domestic private sector through small and medium enterprises (SME’s) could form this alternative growth engine – this will not only benefit national economy, but countless individual Rwandans as well.

So far, the government’s efforts to specifically help SMEs have focused on training programmes for SME managers and the grooming of a few SMEs which are deemed to have the potential to become home-grown business giants.

The result is that a few enterprises receive a disproportionate amount of funding and assistance from the government, while those that really need the help get very little.

The government should dispense of its habit of “picking winners”. Instead, more effort should be put into attracting venture capital (VC) funds to our country.

These private sector investors can provide a greater amount of funding that start-ups need to bring their ideas to market. VCs are more in touch with the market than civil servants are, so they are in a better position to assess the investment potential of start ups.

Also, the risk of failure is spread out among many VC firms. So even if one VC makes a wrong investment, the fallout will be more limited than if a government agency makes a huge bet on an industry which ends up in utter failure.

This takes me to my next point, entrepreneurship. Entrepreneurship is the bedrock of SMEs. Without entrepreneurs starting small businesses, there would be no SMEs to speak of.

Thus, increasing the number of entrepreneurs and their success rate will directly contribute to the growth of SMEs. The government has a few training programmes to support entrepreneurs.

However training alone will not help Rwanda reach the tipping point of entrepreneurship. For this to happen, a culture of entrepreneurship needs to be developed among not just working adults, but has to start from young with students and their parents. The entrepreneurial culture in Rwanda is weak.

We need a mindset shift in our society regarding what constitutes career success. Our current education system is too geared towards preparing students to be good employees, not entrepreneurs.

Most local students strive to “distinctions” in their exams so they can get access to Government funding in the local universities and land a stable, well-paying job working for some large firm or the government.

Entrepreneurs require a very different skill set from salaried workers. A business owner needs to do a lot of selling and marketing of one’s goods or services. This takes a lot of innovation, confidence and humility — all skills which our schools have not adequately prepared our young for.

The stigma of failure in our culture needs to be changed. There needs to be a greater tolerance for those who stumble while trying.

A lot of the “afraid to fail” mindset originates from our education system, where examination results define a student’s success or failure. Schools should see it as their mission to nurture future business owners, not just salaried workers.

These are just a few alternatives that could help SMEs and entrepreneurs in Rwanda. I believe that growing our local private enterprises holds the key to our next phase of economic growth, which unfortunately I feel is somewhat overlooked.

liban.mugabo@gmail.com

Liban Mugabo is a graduate student in Singapore

 

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