Performance contracts between govt and SMEs to boost exports

Operations of small-and-medium enterprises (SMEs) will soon start signing performance contracts with government, a move that is aimed at enhancing productivity, and promoting value-addition in the sector. The Minister for Trade and industry, Francois Kanimba, said the agreements will make it easy for government to evaluate the SME industry’s productivity, and also identify bottlenecks pulling back the sector’s performance. Government has already signed similar contracts with more than 40 export-oriented companies and co-operatives, especially in the mining, manufacturing, agri-processing and transport and logistics sectors. The contracts are in line with the country’s growth blueprint, the second Economic Development and Poverty Reduction Strategy (EDPRS II), designed to boost production and exports, among others. Under EDPRS II, Rwanda is targeting to increase exports to 28 per cent per year by 2018, from about 20 per cent currently. Therefore, the signing such contracts with the SME sector, which makes up 98 per cent country’s total businesses, should be seen as trying to help realise some of these goals. Like in the previous contracts, government pledged to improve infrastructure to ease some of the constraints faced by entrepreneurs. Kanimba said the SME sector still grapples with challenges, like limited skills, poor packaging and branding, access to credit and markets, as well as limited innovation, among others. “This government will work hard to ensure these challenges are addressed. However, small and medium businesses, through their various clusters, will be obliged to increase production to support economic development of the country,” he told The New Times on Thursday. Martin Maniraguha, the managing director of Hema, a beverage firm, is optimistic that more government support will help strength the capacity of SMEs and enhance potential of the sector to produce for export. This could also translate into more jobs and increased income. Elsewhere The move, according to experts, is critical to spur the country’s struggling export sector. So far, there is a positive trend in specific sectors like tea and coffee, which are benefiting from similar support. Rwanda’s coffee export revenues have, for instance, increased to $8.3 million (Rwf6.5 billion) during the first three months of 2016, up from $6.6 million same period in 2015. Equally, the country’s tea export receipts increased to $18.8 million (Rwf14.9 billion) during the reporting period, from $17.7 million last year, recent National Agriculture Export Board (NAEB) statistics indicate. However, the total exports decreased by 26.07 per cent in 2015. So, the deal with SMEs could play a critical role in reversing this trend, experts say. E-portal for SMEs The planned electronic platform for SMEs will ease access to market information, according to Ivan Aloa, the chief executive officer of Big Business Development Centre, the brain behind this innovation. “This will increase market linkages, innovation and competitiveness of the industry,” Aloa said. Trade experts say e-commerce could help SMEs to penetrate new regional and global markets. business@newtimes.co.rw

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Performance contracts between govt and SMEs to boost exports