Keza (not real name), a women entrepreneur in Rwanda, was invited to a business management seminar. Based on the evaluation of her business, Keza was asked to contribute RWF 25.000, a non-refundable registration fee, as her commitment towards the 5-day training led by international experts. The self-confident Keza vehemently rejected the invitation: “I do not work with people who charge me for training. Normally, I am paid to attend trainings.” In a way, this reaction was not unexpected. There are a great number of SME support programs in Rwanda and they often offer travel allowances, perdiems and savior grants to motivate entrepreneurs to take part in their programs. The rationale for this is that SME support programs fulfill an important role in the Rwandan marketplace. Entrepreneurs need to be trained to be able to grow out of the informal and in to the formal sector. Moreover, international competition is increasing by the day, and Rwandan entrepreneurs need to up the ante to stay in the race. Indeed, Rwandan entrepreneurs need all the help they can get. If this is true, then how can one argue that it is not a good idea for SME support programs to be free of charge or to offer remunerations? The answer is that misdirected charity - the act of gratuitous giving – has demonstrable negative effects on the development of a country. Without any doubt, charity is needed when people are in extreme distress and dire need. The problem though of charitable giving in SME support programs is that charity does not foster an entrepreneurial mindset. Charity creates dependency and lethargy. It destroys the motivation of an entrepreneur to take responsibility for his or her future. Such criticism of aid is not new. Economist Bill Easterly, a former prominent World Bank employee, has repeatedly attacked the missionary attitude of many economists and development workers. African intellectuals also weigh in on the discussion. Zambian economist Dambisa Moyo speaks about 'dead aid', referring to the enormous amounts of money that have been distributed in Africa as aid but which has not produced any long term change. A recent study by the Argidius Foundation on ‘what works in business development’ provides evidence for these ideas and shows that SME support programs who charge for their services perform better than those offered for free. In this study, more than 50 SME service providers supporting over 7.000 enterprises were evaluated. It might seem counterintuitive at first sight, but when entrepreneurs are required to co-pay, the quality of applicant improves, the entrepreneurs are more committed and motivated, and they are more engaged in sharing their problems and working to address them. When you read the biographies of successful entrepreneurs worldwide, you will find time and time again that they have one thing in common. All of them were passionate about what they believed in. They were ready to sell their last shirt just to make their vision become reality. And nowhere will you read about a successful entrepreneur that just waited long enough for free offers to come his or her way. Back to Keza. Was she wrong not to participate in the seminar for which she was asked to contribute financially? We do not know. However, what we do know is that her decision not to participate was made for all the wrong reasons. Entrepreneurship is not about accumulating freebies. It is about creating opportunities for oneself. It is about improving products, increasing market share and extending ones client portfolio. For this, entrepreneurs should never be afraid to invest in themselves. If you are an entrepreneur, reading this article, ask yourself who you want to be: an entrepreneur waiting for a free ride or an entrepreneur watching out to catch the right train. This choice will have a clear impact on whether you will or will not be among those shaping Rwanda´s future. Alice Nkulikiyinka is Country Director of Business Professionals Network (BPN) Rwanda. She is also board member of Rwanda Development Board (RDB) and I&M Bank. With more than ten years of experience working in the Business Development Support sector, she is a leading expert on entrepreneurship and economic development in the country.
