MANIFESTO REVIEW: Economy (Pillar 3 Part 3)

The National Industrial Research and Development Agency (NIRDA) was established by the government to coordinate research and technology acquisition by the private sector.

Private Sector Development, Cooperatives and Investment

According to Rwanda’s long-term Vision 2020, the country should be transformed into a middle-income, private-sector-driven economy. To achieve this, the government has taken numerous measures to strengthen private enterprises as well as cooperatives.

NIRDA

The National Industrial Research and Development Agency (NIRDA) was established by the government to coordinate research and technology acquisition by the private sector.

NIRDA, which is supervised by the Ministry of Trade, Industry and East African Affairs, was created in 2013 with the mandate of implementing the national industrial development policy, patent inventions and traditional knowledge in relation to industrial development and trade of research products and carry out industrial and technology development research through the establishment of technology incubation centres, pilot plants and rural industrialization.

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Workers in a textile factory.

Other responsibilities are to contribute to the establishment of trade companies of research products; to train entrepreneurs who wish to invest in new or improved industrial research products; to establish and develop industrial research and development partnerships with international, regional and national institutions, whether private or public; to facilitate the vertical growth of small and medium enterprises for them to enter new markets and introduce new improved products; to advise the Government on the national industrial research and development policy; and to build the capacity of small and medium enterprises by providing prototype development, reverse engineering, manufacturing facilities and business incubation.

The activities of NIRDA are strongly built on its Department of Research and Development, which is composed of four Divisions: 1. Agro-processing and Biotechnology; 2. Pharmaceutical and Chemical Industries; 3. Cleaner Energies and Environmental Management; and 4. Process Engineering, Manufacturing and High-Tech.

NIRDA has come up with an ambitious strategy designed to help to more than double the country’s industrial output in the medium-term; to foster industrial growth across Rwanda under its community processing centres model; to create jobs; and to reduce the prevalent rural-urban migration.

The processing centres also act as vehicles of skills transfer in the long-run, and provide markets. Already, such centres are operational in Nyabihu, Burera, Gatsibo and Rwamagana districts, crucially providing dairy farmers, and Irish potato and banana growers in those areas a ready market for their produce.

The multiplier effect that comes with the establishment of these industrial centres will ultimately improve people’s living standards and help the country reach its development targets in the coming years.

NIRDA has already concluded a technology-needs assessment in agro-processing, biotechnology, chemical and pharmaceutical industries in order to identify their strengths, weaknesses, opportunities and threats (SWOT).

Private Sector

Public-Private Dialogue, a platform where issues of private sector growth are discussed, has been established and is fully functioning. A Public-Private Partnership Policy and law are in place.

The Private Sector Federation has strengthened the professional associations, and these have acquired mutual recognition agreements with their EAC counterparts, while the Rwanda-Uganda business forum is held every year, with four editions conducted so far.

The government is also encouraging Rwandan entrepreneurs to join hands with their colleagues both inside and outside the country, to exchange information and devise strategies enabling the Rwandan private sector to take part in programmes promoting environment, research and technology to improve production.

Labour information system

The government has also put in place a permanent monitoring system, the Labour Information System, to track new job creation by the private sector so as to lower unemployment rate.

In addition, government has consolidated different job creation initiatives into the National Employment Programme.

The National Institute of Statistics has also been given more capacity to monitor and report employment trends through surveys.

Doing Business Reforms

The Doing Business ranking, published annually by the World Bank, ranks economies worldwide according to the ease of doing business, which is measured in 10 areas which include starting a business, construction permits, and getting electricity or credit.

Since Rwanda’s first listing in 2005, the government has implemented 47 reforms in all areas, which has resulted in spectacular improvements in the business environment, such as reducing the time to register a business from several days to just six hours.

As a result, in the 2017 Doing Business ranking, Rwanda is 56th  out of 190 countries globally, and it is the second best place to do business in Africa.

Local Banks and Financial Inclusion

In the 7-Year Government Program, the government presented strategies to help local banks to improve customer care as well as payment systems for local and international payments in accordance with international standards, and to increase private sector borrowing and housing financing.

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Microfinance institutions have played an important role in supporting SMEs.

This has resulted in a rapid increase of electronic payment facilities, with 361 ATMS and 1,339 point-of-sale devices installed as of 2015.

The percentage of loans to the private sector as a share of GDP had reached 19.7% by December 2015, against 13.2% in 2011.

The capacity of microfinance institutions (Microfinance, Umurenge SACCO, UmwalimuSACCO, COOJAD etc.)for rural investment promotion and development has been strengthened, with all 416 SACCOs now having loan granting licenses.

The government also took the decision to consolidate all Umurenge SACCOs into a cooperative bank, and the process of strengthening and consolidation of Umurenge SACCOs is ongoing through the drafting and validation of Umurenge policies; finalisation of the procedures manual and chart of account; the computerization of Umurenge SACCO which is under way; the provision of IT hardware; the procurement of a core banking system which is in process; the migration of existing data from the first 90 SACCOS in phase one to establish the Umurenge SACCO management information system (MIS); and the training of SACCO management on the new policies which is ongoing.

As a result of all these efforts, financial inclusion has reached 72% compared to 48% in 2008.

BDF

The Business Development Fund (BDF) was put in place as one of the mechanisms to help businesses (especially SMEs) to secure loans, and encourage them to explore new sectors while making innovations in income-generating activities.

Created in 2009, BDF initially operated only in Kigali, but is now in the process of decentralising its services. It has also taken over all the district-based Business Development Centres.

The company has supported 1,307 beneficiaries to get loans through its Agriculture Guarantee Fund, for a total amount of Rwf 20.9 billion, while its Small and Medium Enterprises Guarantee Fund provided guarantee loans worth Rwf 15.9billion which has helped 3,257 businesses to obtain credit.

Currently, BDF is also adjusting its operations to be more effective in financing youth, women and SMEs.

Cooperatives

The government has also taken measures to encourage individual professionals to set up cooperatives. Under the program, members of farmers’ associations were sensitised to operate through cooperatives, and for those financially able, to join trade and investment companies.

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Members of a cooperative show their products during an exhibition.

A total of 2105 farmers‘ cooperatives were formed and they have invested a total of Rwf 12,027,247,436 over two years.

The government has also initiated a programme of uniting cooperatives into unions and federations per sector, in order to make their products and services competitive on national and international markets. 120 unions, 13 federations and one Confederation have thus been formed.

Furthermore, the Government has decentralised cooperative inspection and audit services at the provincial level, and annually inspection and audit reports are produced.

In 2012/2013, 1557 cooperatives were inspected (465 financial ones, or SACCOs, and 1092 non-financial ones, or marketing coops) while 54 SACCOs and 69 Marketing Cooperatives were audited.

  • By Hope Magazine
  • Posted 10th January 2017

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