The majority of the small-and-medium firms (SMEs) in Rwanda are struggling to stay afloat because their working capital is tied up in debts.
According to a survey by KPMG, 76 per cent of the SMEs were weighed down by client debts.
KPMG’s Robert Onyango identified the other challenges faced by the sector as shortfall in initial capital, stringent credit terms imposed on the small-and-medium businesses by their suppliers, decrease in power supply, lack of the equipment to work with, high levels of competition and lack of qualified staff.
Onyango presented the survey report recently in Kigali.
The survey was aimed at identifying and recognising Rwanda’s fastest-growing medium-sized firms to showcase business excellence and highlight the country’s successful entrepreneurship stories.
Grace Gasana, who runs grocery in Kacyiru, Kigali told Business Times that many people who take tea, milk or snacks on credit and never pay up.
“This affects the business and I always end up using personal money to recapitalise the business instead of using the previous day’s sales,” Gasana noted.
Onyango said the survey showed the construction sector as a prime area to invest in with the agricultural sector and service sector in second and third place respectively.
“There is a lot that can be gained from such surveys because they help us to know the interventions we can make to ensure that businesses build their capacities, especially in terms of better financial planning,” said Livingstone Nkusi, the Rwanda Development Board technical officer in charge of SMEs.
Rwanda’s economy grew by 8 per cent last year, with the informal sector receipts increasing by over 45 per cent.