The government is considering revising the current industrial and entrepreneurship framework to support small and medium businesses, which are needed to create jobs.

Official figures show that over 85 per cent of the country’s industries are micro to small industries, and mainly in the agriculture sector. The data also shows that from 2008 to 2018, around 15 per cent of small businesses collapsed and it is linked to poor planning and execution of business plans.

“Most start-up businesses are failing due to challenges we are facing in the agro-processing value chain are a result of transitioning from being an agriculture-based economy to a services and industrial-based economy,” Soraya Hakuziyaremye, the Minister of Trade and Industry told Rwanda Today.

According to Ms Hakuziyaremye, the difficulties encountered by start up business will be taken into account in the revised entrepreneurial and industrial programmes that the government has embarked on.

“The policies were adopted in 2011, even before the ‘Made in Rwanda’ policy, which was initiated in 2015. We want to have all these initiatives incorporated in order to help us to reach more people. The revised policies are meant to be adopted by end of September,” she added.

According to the Ministry of Trade and Industry, the policies will take into account other institutions that are adding to the unemployment rate.

Unemployment rate

Government figures show a downward trend in the unemployment rate, mainly among the youth, due to a drive for self-employment. However, the country’s industrial sector remains small, with most firms facing stiff competition that is made worse by the country’s small size and geographic location.

According to the latest figures from the National Institutes for Statistics of Rwanda, the employment to population ratio, which is the proportion of labour force to the working age population, increased from 41.1 per cent in August 2016, to 47.3 per cent by August in 2018, as the number of graduates increases.

The government has been pushing graduates to be entrepreneurs but many cite challenges to do with raising capital and a limited capacity to draft business plans.

BDF

A recent senatorial sitting blamed the Business Development Fund (BDF) — a government institution that is spearheading the entrepreneurship programme — for not reaching out to the intended group. They accused the association of leaving the task of following up and monitoring to the Umurenge Savings and Credit Cooperatives.

However, the BDF management said that this year’s focus will be on increasing the number of SMEs and the support offered to them, despite the body’s budget not being increased.

“About 80 per cent of those we are targeting to support this year are the youth,” said Innocent Bulindi, the chief executive officer of BDF.

According to the National Industrial Research & Development Agency, 98 per cent of local firms are SMEs with limited access to finance, raw materials and skills. The situation is aggravated by the cost of trade, which increases by an average 20 per cent annually and access to serviced land is limited. This is despite the fact that the economy remains largely agrarian with a persistent trade deficit, notwithstanding the emerging positive trends in recent years in terms of diversification and the trade balance.