RURAL SMALL AND MICROENTERPRISE
PROMOTION PROJECT
THE PROJECT
Components
The project implementation period
is seven years and is divided into three phases.
The first two-year phase will deal with the establishment
of operations, the second three-year phase will
cover expansion, replication and consolidation.
The third phase of two years will entail a gradual
handingover to local institutions.
Capacity-Building (Component
1) (USD 2.1 million)
This component comprises three
sub-components. Awareness-raising and
community mobilization will consolidate
the entrepreneurial capacities of SME operators
and their organizations, especially those belonging
to the subsistence SME category. Awareness-raising
and community mobilization activities will start
during the first year of the project in order
to lay the groundwork for implementation. This
sensitization process, combined with a participatory
diagnostic assessment, will deepen understanding
of project objectives by local authorities, technical
partners (external service providers) and the
beneficiary communities involved.
Basic capacity-building
will develop a sustainable service delivery system
for SMEs. Following the diagnostic assessment,
beneficiaries will be trained and assisted in
starting up SMEs and developing associations.
Beneficiaries will be supported through specialized
training and functional adult literacy programmes,
provision of information/documentation, structuring
of joint liability groups, exchange visits and
assistance with the legal framework of the associations.
In addition, support will be provided to the professional
organizations (federations, chambers) to strengthen
their organizational capacity, management and
negotiation skills, and prepare them to assume
responsibility for service delivery to SMEs. These
professional organizations are key to the project
and represent the principal service delivery mechanisms
for SMEs on a cost-recovery basis.
Policy support for SMEs.
The project will support the Ministry of Commerce,
Industry Investment Promotion, Tourism and Cooperatives
(MINICOM) in the establishment of a national stakeholder
platform that will enable the exchange of information
and advice on policy, institutional and legal
issues relevant to SME development.
Support to Rural SMEs (Component
2) (USD 6.4 million)
Component 2 will support three
sub-components. Support to management
and technical skills training. A range
of training programmes will be developed to support
SME development. Successful participants from
the sensitization and training activities under
Component 1 are eligible to enter into an apprenticeship
programme, which will teach the required technical/professional
skills to starting entrepreneurs. Management and
accounting training will be conducted in separate,
successive courses for new and more advanced entrepreneurs.
Training in loan application and credit management
will develop entrepreneurs’ capacity to
draft loan applications and to manage/repay their
loans. Technical training in appropriate technology
and in-country and international study tours will
be organized for more advanced SMEs to improve
their techniques and the quality of their products
and services.
Marketing support.
Among the variety of activities offered under
this sub-component, producers will receive support
for their organizational development so that they
can become more competitive and agree on a pricing
system. Marketing courses include: (i) establishment
of quality standards for certain products (carpentry,
basket-weaving, dry-season activities); (ii) innovation
in product diversification and packaging; and
(iii) packaging, pricing, distribution and advertising.
Trade halls will be constructed in the districts
and provinces, and one such centre in Kigali will
allow artisans to promote their products on the
market. The project will support the participation
of target group members at provincial and international
trade fairs. To deepen understanding of the markets,
selected marketing studies will be carried out
at the sub-sector and commodity chain level. An
information system for SMEs will also be developed.
Technical support and
assistance. The Technology Development
Fund under RSMEPP-I will become a sub-component
for technical support to assist artisans in the
use of appropriate technologies and in technology
improvement. It will also provide training in
simple and innovative technologies.
The project will work with local and/or international
research institutes.
Support to Microfinance Institutions
(Component 3) (USD 3.0 million)
The project will have three
lines of credit: (i) seed capital (RWF 15 000
- 200 000) through local financial centres or
existing microfinance institutions (MFIs); (ii)
regular credit through existing institutions (RWF
150 000 - 1 500 000); and (iii) investment credit
for more advanced SMEs (RWF 1 000 000 - 5 000
000). Activities under this component hinge on
the project facilitating the ‘graduation’
of SMEs from a lower to a more advanced operational
category. The proposed financial services will
be situated within the wider framework of the
target group’s apprenticeship process. This
process is based on a phased progression in terms
of credit provision and savings mobilization,
which at all times should constitute 20 to 30%
of the amount of the latest loan taken out. For
apprentices, this minimum may be lowered, and
appropriate alternative incentives found for the
poorest entrepreneurs.
Support to banks and
formal MFIs. The project will categorize
activities by credit type:
(i) for seed capital funds, the project will support
initiatives such as those of the Union of People’s
Banks of Rwanda (UBPR) and the Financing Centre
for Entrepreneurs networks, to establish service
points (tellers) within the districts; (ii) for
regular credit, the objective is to create a sustainable
partnership between expanding SMEs and the MFIs
present in the provinces and districts. Activities
will focus on the elaboration of credit products
for SMEs (appropriate to their technical characteristics
and training), and on creating access to credit
lines that transfer part of the credit risk to
the financial partner; (iii) for investment credit
and MFI refinancing, activities will be carried
out either with the Rwanda Development Bank (BRD)
or with commercial banks. The primary objective
of this is to facilitate access to credit by leader
SMEs, as these are no longer assisted by the UBPR
or similar institutions (with a loan ceiling of
RWF 3 million). A further objective is to help
viable local financial service centres and registered
MFIs to access refinancing capital so that they
can be integrated into the national banking system,
and to develop their capacity to match project
resources and member savings with commercial credit.
Support to local financial
centres. Based on the specific needs
of SMEs, local financial centres (LFCs) will be
developed to promote savings and disburse credit
in rural areas. The project will support existing
organizations in opening new branches and/or help
existing branch offices improve their operations.
Where existing organizations cannot be used or
expanded, the project will support the establishment
of new LFCs on a cooperative basis. Particularly
with regard to savings, the legal and regulatory
position of the local financial centres will be
set within the framework of the recent Microfinance
Instruction issued by the National Bank of Rwanda
(NBR). A small team of national experts will be
in charge of drafting procedures and trainer guidelines,
data analysis, external audits, advisory studies
and contact with the NBR. Costs will initially
be borne by the project and when proven viable,
LFCs will gradually pay for the services themselves.
Project Coordination and Management
(Component 4) (USD 3.2 million)
Project management will be conducted
through a decentralized management structure with
one project coordination unit (PCU) and six decentralized
offices. The PCU will be responsible for the coordination,
management, and monitoring and evaluation (M&E)
of activities. The PCU will be staffed by a coordinator,
three component heads, an M&E specialist,
an accountant and an information specialist. The
project will establish decentralized offices at
the provincial level to guide implementation and
to integrate the target group and other members
of civil society into the SME approval and implementation
process. To ensure the support and monitoring
of local activities, there will be a provincial
office with a core staff comprising one head of
office/M&E expert, and SME and microfinance
specialists.
|