Rwanda Development Bank’s (BRD) announcement that it secured €8m from the European Investment Bank (EIB) is good news for Small and Medium Enterprises across the country.
The loan is aimed at increasing medium and long term financing for SMEs and ultimately enhance private sector development, which is needed to spur the country’s economic growth and job creation.
Whilst limited access to finance is a constraint, the lack of technical skills to operate the SMEs is also an impediment to their survival and growth.
Rwanda’s vision to become a middle-income country by 2020 largely hinges on the rapid expansion of the private sector - including a vibrant SME sector - to drive the desired annual GDP growth rate of 8.1 per cent and increase off-farm employment.
SMEs constitute 96.5 per cent of the businesses operating in Rwanda. However, due to the limited technical and business skills, most start ups fail within their second year of operation.
To guarantee their survival, it is imperative that the overall weaknesses in management and lack of access to markets should be addressed. The new national policy, which lays the foundation for the establishment of new SMEs and strengthening of the existing ones, should be widely promoted and adopted to help address such challenges.
As additional financing for SMEs is raised, focus should also be put on training SMEs in business management, financial control, research and market development, among other areas that are crucial to their success.