Rethinking micro, small and medium-scale enterprises

The world is hampered with anger and hunger: employees have been laid off. Their vital businesses have either collapsed or their market has gravely diminished overnight. Social media is awash with wistful emotions: we are all thoroughly fed up with the lockdown.

What started as washing hands, quickly transitioned to social distancing until finally, escalating into total lockdown. The damage caused by the spread of Covid-19 is long-lasting, people have perished and economies recessed.

 

In many countries, including Rwanda, the lockdown has now finally begun to be lifted. However, whilst the government attempts to employ the best practices of social distancing, restrictions on travels, and closure of borders, economic activities such as the flow of goods remain severely disrupted. 

 

 In 2019, Rwanda's economic growth rate was at 8.5%. In January 2020, the International Monetary Fund (IMF) had projected it to grow further at a rate of 8 %. However, revised forecasts optimistically suggest the growth of only 3.5% or less, dependent upon the recession we are about to witness.

 

In a multiplicity of economies, micro, small and medium-scale enterprises (MSMEs) play an imperative role in keeping economies in proliferation. They create employment for the masses and facilitate equitable income distribution, thereby contributing to holistic national growth. As confirmed in a report by Microsave (2017), MSMEs account for approximately 97% of the businesses, contribute to 55% of the total of GDP, employing around 41% of Rwanda’s population.

In today’s rush, the focus tends to be on the big players in the economies, like banks or big investments, yet the micro, small and medium enterprises are the most vulnerable ones. These often operate in small size, with limited financial resources. In such a time, they are unable to cope with the hardships yet even during normal times, it is a struggle for them. They often operate in order to survive rather than thrive.

A Rwandan shoe merchant has been unable to resume her work, despite lockdown being lifted. She had previously rented a small space downtown at about Rwf200, 000 per month, but once lockdown, hit she could no longer afford the rent, she recalls prioritising her savings to feed her family. A reluctant decision many have had to make. An events host and DJ from Kigali no longer have a venue to unleash his craft, or the customers happy to pay to experience it. Another businesswoman had just launched her own travel company, expecting to tap into the lucrative foreign tourism market. She now remains with an expired website and the memories of the sums of money she had projected to make.  There are millions of similar stories from around the world and they can become lost in their numbers.

Despite this, some businesses have ground through the test of time. But even their victory is just the beginning. From the ashes of our economies, inevitably new creatives are set to emerge, they could constructively disrupt the previously dominant trades.

In such a turbulent economy, the only certainty is that the world will not be the same anymore, the approach to business is bound to be remodelled by fresh young enthusiasts. We have previously solved economic problems by recapitalisation of businesses, but this may not even be enough. We need to consider prompt capacity building and equipping of the young people and those engaged in MSMEs with matching skills that can aptly assist them to make laudable returns on the funds injected in their trades and ably sustain themselves.

“In the West, the role of Venture Capitalist is not simply to provide cash,” affirms Dan Senor & Saul Singer in the book ‘Start-Up Nation: The Story of Israel’s Economic Miracle’. “It is mentoring, plus introductions to a network of other investors, prospective acquirers and new customers and partners and this makes the venture so valuable to the budding start-ups.” If the MSMEs are to be sustainably reinstated into the economy, the stakeholders, like the government, private sector and other development partners should not only borrow a leaf, rather, the entire forest.

The writer is a storyteller/public speaking trainer, leadership coach and student at African Leadership University.

editor@newtimesrwanda.com

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