Banks have been urged to play a key role in building the capacity of small-and-medium enterprises (SMEs), especially by training business owners in financial management, to make the sector strong and sustainable. 

Francois Kanimba, the Minister for Trade and Industry, noted that acquiring financial skills is essential for the sector to flourish and become sustainable. The SME sector accounts for about 98 per cent total businesses in the country.

Kanimba noted that though the sector has huge potential, it has been affected by poor managerial skills, as well as lack of capital and technical knowhow.

He was closing a three-day financial training workshop for SMEs in Kigali on Wednesday. The training, organised by I&M Bank and supported by the European Investment Bank, attracted 30 SMEs officials from across the country. The trainees were trained in financial literacy skills, liek business management and market forecasts.

European Investment Bank’s Nikolaos Milianitis noted that strong partnership between SMEs and financial institutions is critical to grow the sector.

"Our support to banks is aligned with the objective of building the SME sector’s capacity to support the economy. This, however, requires that sector players understand financial matters and product development,” Milianitis said.

According to Sanjeev Anand, the I&M Bank managing director, financial training should be aligned with sector’s needs to have an impact. He added that equipping the sector with requisite financial skills gives banks confidence to lend SMEs "since we are sure they can manage the funds and use them for the right purpose”.

Although the number of small businesses registered online has been increasing (from 473 businesses in 2011 to 6,584 2014), there is fear that most could actually be closing because of various challenges like lack of access to credit, and taxes.

Joshua Mbaraga, a Kigali-based businessman, believes financial literacy is key to ensure small businesses are sustainable and profitable. The high loan default rate among SMEs is blamed on poor financial management skills. Therefore, equipping SME players with financial skills could help change this state of affairs.