SMEs key to development

Editor, RE: “Nurturing skills, giving Made-in-Rwanda a stronger impetus” (The New Times, January 18). From a capacity development perspective, many SMEs, especially the smaller fledgling firms, are often hindered in their growth plans by internal and external obstacles such as size, managerial capacity, skills and access to knowledge and funds. For the drive to promote the Made-in-Rwanda brand or call it brands to bear fruit, one has to improve the skills of local producers to give them capacity to compete with foreign competitors. There is no economy that ever thrived without the SMEs being the bedrock of its success. But for SMEs to fully compete, we need to empower them through incubation facilities and skills development centres. These centres should play a vital role in developing critical skills in production with a special emphasis on quality. We also need to go an extra-mile and look at this in a broader value chain context. It is imperative that SMEs see themselves as actors in a much broader environment. Dairy production, processing and marketing (access to market) can, for example, build on who is who in the thread of production and supply and which capacity gaps need to be addressed. It is good to have high productivity but it’s much better to have high quality products that meet regional market demands. The Government’s initiative to plan community processing centres is an excellent model that needs full engagement of the private sector. It is designed in a way that a product/ service is offered from the region with a comparative advantage. This taps into supply opportunities but also ability to create value addition at the production level. Such choices should also bring out private sector involvement, particularly SMEs in the region, to take advantage of benefits and assurance of sustainability. If you are talking about plants that are used in crafts, it would be important to have places like Nyamagabe take advantage of this and users (craftsmen and women) get assured supplies. It would be important to look at wood producing sources and facilitate the supply of quality wood in production. Benchmarking arrangements to major production centres across the globe should be promoted. Another best strategy as put forward by Sarah Cheah is open innovation (OI). This is an alternative strategy for SMEs to partner with another company to acquire and generate new knowledge, as well as share the risks and rewards of collaborative innovation. By turning to OI, SMEs can access resources at a lower cost and gain faster entry to new markets. There are three types of open innovation, inbound OI (technology purchasing from outside, joint research, research contracts, joint venture, user innovation, collective intelligence). Open Innovation is relevant and critical for SMEs as it can accelerate the pace of innovations and innovative firms are critical elements in a country’s economic development and competitiveness. The success of SMEs guarantees job creation and a broader tax base. Richard Niwenshuti

Opinions

SMEs key to development