How do we salvage our SMEs?

From a capacity development perspective, many SMEs, especially the smaller fledgling firms, are often hindered in their growth plans by internal and external obstacles such as size, managerial capacity, skills and access to knowledge and funds.
Workers at minimex, a local maize milling factory. File
Workers at minimex, a local maize milling factory. File

Editor,

RE: “Nurturing skills, giving Made-in-Rwanda a stronger impetus” (The New Times, January 18).

From a capacity development perspective, many SMEs, especially the smaller fledgling firms, are often hindered in their growth plans by internal and external obstacles such as size, managerial capacity, skills and access to knowledge and funds.

The drive to strongly position the Made in Rwanda brand or call it brands, one has to strengthen the skills of the producers in order to meet the competing difference with international imported products.

There is no economy that has thrived without the SMEs being the bedrock of its success—none. But for SMEs to fully take on competition of foreign products sustainably, without being politically saved by the nice government policies of banning competition (second-hand made products), we need to position them and strategies like incubation facilities, skills development centers, center of excellency should be planted across the country.

These centers should play a vital role of developing critical skills in production with focus on quality.

We also need to go an extra mile and look at this in a broader value chain aspect. It is imperative that SME see themselves in a wider echelon of benefit to each existing enterprise within a define value chain.

Dairy production, processing and marketing (access to market) can for example build on who is who in the thread of production and supply and which capacity gaps need to be addressed. It is good to have high productivity but its much better to have high quality products that meets the regional market demands.

The Government initiative to plan community processing centers is an excellent model that needs full engagement of the private sector. It is designed in a way that a product/ service is offered from the region with a comparative advantage.

This taps into supply opportunities but also ability to create value addition at production level. Such choices should also bring out private sector involvement particularly SMEs in that region to take advantage of a shared benefit and assurance of sustainability.

If you are talking about plants that are used in crafts, it would be important to have places like Nyamagabe take advantage of this and users (craftsmen and women) get assured supply. It would be important to look at wood producing sources and facilitate the supply of quality wood in production. Bench marking arrangements with major production centers across the globe should be organized to facilitate shared learning.

Another best strategy as put forward by Sarah Cheah is open innovation (OI). This is an alternative strategy for SMEs to partner with another company to acquire and generate new knowledge, as well as share the risks and rewards of collaborative innovation.

By turning to OI, SMEs can access resources at a lower cost and gain faster entry to new markets. There are three types of open innovation, inbound OI (technology purchasing from outside, joint research, research contracts, joint venture, user innovation, collective intelligence).

Open Innovation is relevant and critical for SMEs as it can accelerate the pace of innovations and innovative firms are critical elements of a country’s economic development and competitiveness.

The success of SMEs guarantees job creation, increased tax base and lowers the burden to government.

Richard Niwenshuti

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