RURAL SMALL AND MICROENTERPRISE
PROMOTION PROJECT

THE ECONOMY, SECTORAL CONTEXT AND IFAD STRATEGY

Lessons Learned from Previous IFAD Experience

The main lessons learned in Rwanda since the reactivation of IFAD operations in 1996 are summarized as follows: (i) local community capacity needs strengthening to ensure that communities are capable of operating and maintaining facilities developed by projects; (ii) project beneficiaries must have ownership of development activities and be empowered to plan activities based on their identified needs and priorities; (iii) the Government’s decentralization activities are progressing rapidly, providing new opportunities for the lower echelons of local government and civil-society organizations at the community level, and for associating non-governmental organizations (NGOs) with private enterprise in the development process through the outsourcing of contracts; and (iv) issues of credit and adequate linkages to market opportunities have become central to the poverty reduction process.

The lessons drawn from the first phase of the Rural Small and Micro-enterprise Promotion
Project (RSMEPP) form the basis for the proposals formulated in the second project. Experience in Rwanda shows that the following elements are needed for small microenterprises (SMEs) to emerge:
(i) improved technology to increase productivity, more profitable management of activities and the adoption of adequate quality standards to capture market opportunities; (ii) improved professional capacities of microentrepreneurs, entailing training in essential business, management and advanced technical skills to modernize the sector; (iii) awareness among rural producers of the need to organize themselves so that they can better look after their interests; (iv) existence of a market for SME products (in turn determined by the purchasing power of the local population); and finally, (v) improved access to credit for rural producers (by providing support to viable microfinance institutions so that they can offer appropriate financial services in rural areas).