Small-and-medium enterprises (SMEs) have been tipped to perform better this year compared to 2013, thanks to the reforms instituted by the government. 

"The reforms made last year will boost SMEs’ opportunities to do business and expand. Plans are underway to offer SMEs incentives and link the sector with financial institutions. We have also reduced the time it takes one to register a business to a few hours,” Livingstone Nkusi, a senior development officer in charge of small-and-medium enterprises at the Rwanda Development Board, said. 

Nkusi also noted that they are working on ways to link the sector with the private equity firms as a means of diversifying funding sources for businesses. 

The SME industry is the biggest employer, and comprises 98 per cent of the total businesses in the country. 

"Though the country’s financial sector is doing well, we need to focus more on private equity to increase access to capital. Limited access to finance has been a major challenge for the SME industry,” Nkusi said.

Analysts argue that giving small enterprises more incentives will improve their performance and drive growth.

Last year, the government introduced a flat tax rate for small-and-medium enterprises, one of the incentives aimed at supporting the sector. Also, the lease loan law is being amended to make it SME-friendly.  

Connie Bwiza Sekamana, the chairperson of the parliamentary economic and trade standing commission, last month said  lease loans are essential to help SMEs acquire capital equipment to increase economic activity and boost growth and job-creation.

Ben Kagarama, the Rwanda Revenue Authority Commissioner General, said there is need to build capacity of small-and-medium enterprises to thrive and generate revenue.

"If small businesses can be supported to grow, it will help expand the country’s tax base and revenue,” Kagarama said.

Pascal Mugisha, the national president of the Junior Chamber International, an international firm that trains local entrepreneurs, said it is essential to fund SMEs to stimulate more investments and grow the economy.

According to the Private Sector Federation, SMEs comprise of 97.8 per cent of the private sector, and contribute 41 per cent of the private sector employment. 

The sector has 100,000 SMEs but only 25,000 are registered.