Description
During on this brief explanation define entrepreneurship impact assessment report april 2014.
ENTREPRENEURSHIP
IMPACT ASSESSMENT
REPORT
April 2014
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Entrepreneurship Impact Assessment Report
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Entrepreneurship Impact Assessment Report
Entrepreneurship
Impact Assessment Report
April 2014
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Entrepreneurship Impact Assessment Report
CONTENTS
LIST OF TABLES.......................................................................................................................iii
LIST OF FIGURES.....................................................................................................................iv
ACKNOWLEGEMENTS.............................................................................................................v
EXECUTIVE SUMMARY............................................................................................................vi
1.0 INTRODUCTION.................................................................................................................1
1.1 Overview.......................................................................................................................... 1
1.2 Objectves.........................................................................................................................1
1.3 Design and methodology..................................................................................................1
1.4 Report structure...............................................................................................................2
2.0 FINDINGS..........................................................................................................................3
2.1 Descripton of the populaton..........................................................................................3
2.2 Business plan trainings 5
2.3 Startups 7
2.3.1 Project preparaton 8
2.3.2 Project conversion 12
2.3.3 Triggers and motvatons of startups 20
2.4 Capital invested and jobs created 24
2.5 Districts, Sectors, BDC and fnancial insttuton contributon to entrepreneurship 29
2.6 Other insttutons partcipatng in entrepreneurship and their contributon 32
2.7 Challenges to the creaton and management of businesses 35
2.8 Suggestons from respondents to improve entrepreneurship program 39
3.0 THE DETERMINANTS OF ENTREPRENEURSHIP 41
3.1 The determinants of project preparaton 41
3.2 The determinants of project conversion 42
3.3 The determinants of bankruptcy 44
CONCLUSION AND RECOMMENDATIONS 45
APPENDICES 47
A.PROFESSIONS 47
B. OCCUPATIONS 48
C. ECONOMIC SECTORS 49
D. LIST OF ACRONYMS 49
BIBLIOGARPH 50
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Entrepreneurship Impact Assessment Report
LIST OF TABLES
Table 1: Sampling table 2
Table 2: Trainees by last occupaton (%) 4
Table 3: Prepared projects by economic actvity (%) 9
Table 4: Reasons for not preparing a project (%) 9
Table 5: Prepared projects by level of educaton (%) 10
Table 6: Businesses created by economic actvity (%) 14
Table 7: Stage of prepared projects by province (%) 15
Table 8: Created businesses by economic actvity and province (%) 17
Table 9: Failure for project conversion (%) 19
Table 10: Capital invested (in thousands Rwf) 24
Table 11: Jobs created 28
Table 12: Loan applicatons received 31
Table 13: Loan applicatons funded 31
Table 14: Insttutons that partcipated in entrepreneurship (%) 32
Table 15: Assistance obtained from insttutons (%) 33
Table 16: Challenges in business management (%) 37
Table 17: Challenges to loan depreciaton (%) 38
Table 18: Suggestons to improve entrepreneurship (%) 39
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Entrepreneurship Impact Assessment Report
LIST OF FIGURES
Figure 1: Trainees by age group (%) 3
Figure 2: Trainees by educaton level (%) 3
Figure 3: Trainees by profession (%) 4
Figure 4: Changes occurred afer trainings (%) 5
Figure 5: Prepared projects by sex (%) 8
Figure 6: Prepared projects by province (%) 8
Figure 7: Prepared projects by age group (%) 10
Figure 8: Trainees by stage in business (%) 11
Figure 9: Prepared projects by stage of implementaton (%) 11
Figure 10: Stage of prepared projects by sex (%) 13
Figure 11: Converted projects by economic actvity (%) 13
Figure 12: Conversion by age group (%) 15
Figure 13: Conversion by province (%) 16
Figure 14: Stage of prepared projects by marital status (%) 18
Figure 15: Stage of prepared projects by level of educaton (%) 18
Figure 16: Triggers of startng a business (%) 20
Figure 17: Motvaton of running a business (%) 21
Figure 18: Origin of capital (%) 25
Figure 19: Atractons of youth in business (%) 29
Figure 20: Services ofered by Districts and Sectors (%) 30
Figure 21: Constraints to business implementaton (%) 35
Figure 22: Reasons for loan denial (%) 36
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Entrepreneurship Impact Assessment Report
This study was commissioned by the Rwanda Development Board through its Human Capital
and Insttutonal Development (HCID) Department.
Special thanks go to the M&E team of HCID for its contribution in the designing of the
methodology and the questonnaire, as well as their invaluable inputs to the process.
To the respondents who were willing to provide the informaton from which this report was
produced.
The team of enumerators and data entry must also be thanked for efficient and
professionalism in conductng the interviews.
We would not, of course, have had the data on which the report is based without the local
government authorites, public and private insttutons, throughout Rwanda, which took their
tme to partcipate in this process.
ACKNOWLEDGMENT
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Entrepreneurship Impact Assessment Report
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T
his study aimed at assessing the impact of RDB’s entrepreneurship trainings in increasing
start-ups, growth and job creaton from 2009 to 2011. The fndings demonstrated a positve
contributon to awareness and new start-ups.
Before trainings, people did not know they could commence a business, however small it may
be, grow it and reach a business of their dream. They were not aware that it is possible to have
a business as well as a wage employment. They thought to be an entrepreneur one must have
a lot of money and live in urban areas.
The entrepreneurship trainings shifed the mindset towards more aggressive initatves. The
trainees not only were no longer afraid of entrepreneurship, but also prepared and converted
their projects. It is in that context, 65.2% of trainees created their businesses and 25,100 jobs
although those jobs were mainly temporary.
Most of the businesses are related to livestock (26.7%), crop producton (19.4%), trading of
crop products (17.5%) and services (10.5%). Male (74.4%) are more dynamic than female
(66.7%) in creatng a business. In additon, the age is regarded as an important explanatory
variable of business creation. As age increases, the rate of converted projects also
increases. This phenomenon could be explained by the obstacles encountered by youth in
startng a business such as lack of capital and collateral as well. Furthermore, the financial
institutions are reluctant to trust unmarried person; which is the status of the bulk of youth.
Nevertheless, the microfnance insttuton managers, mainly SACCOs, declared 73.4% of them
funded at least 70.0% of the loan requests. Among the reasons to reject a loan applicaton
include the lack of collateral (38.7%), insufcient repayment capacity (30.6%), loan repayment
(17.7%), insufcient saving (17.7%) and insufcient bank liquidity (14.5%).
However, some fnancial insttutons encountered some challenges such as deviaton of loan
purpose (41.9%), incapacity of repayment (35.5%), poorly prepared projects (32.3%) and
delays in repayment (30.6%), even though the number of cases for each bank is low.
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EXECUTIVE SUMMARY
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Entrepreneurship Impact Assessment Report
Eastern (80.3%) and northern (79.2%) provinces converted more prepared projects than
others, especially Kigali City which converted only 48.9% of its prepared projects. This is due to
the fact that most of the businesses are created in livestock and crop producton while those
actvites are ofen impassable in towns.
However, the created businesses are mainly small. The average of the invested capital exceeds
hardly 420,000 Rwf. 90% of them have been created with a capital less than 1 million Rwf.
The source of funds is mainly personal saving (61.9%), property sale (20.6%), family assistance
(20.3%). Only 24.0% of the entrepreneurs benefted from the bank loan.
The main triggers for creatng a business were unemployment (32.9%), new idea (31.5%) and
overall satisfaction (27.2%). Moreover, the motivations of keeping running a business
are earning much money (33.7%), overall satsfacton (25.1%) and the market opportunites
(22.4%).
The main hindrances to new start-ups are related to lack of capital (58.8%), insufcient skills
(58.8%) and lack of collateral (29.4%). These barriers are, most of the tme, encountered by
young people, and partcularly those from secondary educaton and Kigali City.
In relation to above, the respondents issued a number of suggestions to promote
entrepreneurship. Among them, they mentoned the establishment of a regular monitoring
especially at the start-up stage (30.0%), regular trainings at annual basis (18.5%), advocacy to
the fnancial insttutons to facilitate obtaining loan (13.6%) and fnancial assistance to start a
business (13.5%).
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Entrepreneurship Impact Assessment Report
1.1 Overview
Since 2009, Rwanda Development Board (RDB), through Human Capital and Institutional
Development (HCID) Department has been providing entrepreneurship trainings to the
targeted group composed of youth, women and potental entrepreneurs.
The trainings are organized in the whole country to enable the recipients not only to acquire
the entrepreneurship skills, but also to encourage them to be entrepreneurs and to uplif their
living conditons. This survey therefore aims at monitoring the outcome of these trainings.
1.2 Objectives
The activity aims at monitoring and evaluating the impact of entrepreneurship trainings
conducted by RDB through HCID Department from 2009 to 2011 for future planning. However,
the following specifc objectves should be achieved:
a. Examine the trainings’ contributon to the increase of entrepreneurship skills;
b. Examine the trainings contributon to the increase of SMEs start-ups, growth and job
creaton;
c. Identfy the existng constraints and gaps in terms of business startups and management;
d. Formulate the recommendatons.
1.3 Design and methodology
The survey was natonal and carried out on appropriately selected sectors in all the 4 provinces
of the country and City of Kigali. To enable the potental entrepreneurs to have the necessary
time to think, start and run their business, the survey covered the beneficiaries of
entrepreneurship program of 2011.
The simple random sampling method, with two levels, was used. At the frst level, 12 districts
were selected. At the second level, 67 sectors were selected. Then, all trainees of the selected
sector were included in the sample.
1.0 INTRODUCTION
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Entrepreneurship Impact Assessment Report
Based on a population of 4,000 trainees in 2011, with a margin of error of 5%, a
confidence level of 99% and a response distribution of 0.5; the Raosoft Sample Size
Calculator, the sample size for this baseline survey is 570.
However, 808 trainees were sampled to take into consideraton the no-respondents
(see table 1).
Table 1: Sampling Table
1.4 Report structure
This report was done by the HCID team under the supervision of Head of Department. It
presents the findings of entrepreneurship training impact assessment in 3 main modules.
The first module is related to the description of the population and the contribution of
trainings to the increase of entrepreneurship skills. It reviews the age, the last occupation
before trainings, the education level and the profession of a trainee.
The second module covers the start-ups issues. It describes the project preparation
and project conversion. It tries not only to identify the triggers and motivations of
start-ups, but also to assess the amount of invested capital and job creation. It ends by an
overview of institutions participating in entrepreneurship.
The third module explores the determinants of business preparation and business
conversion.
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Province District Number of sectors selected Number of trainees
Kigali city
Gasabo 7 45
Kicukiro 5 53
Southern
Gisagara 6 112
Huye 6 56
Muhanga 5 56
Western
Karongi 4 145
Rutsiro 2 80
Rubavu 5 70
Northern
Gakenke 4 45
Gicumbi 10 45
Eastern
Nyagatare 11 50
Rwamagana 6 51
Total 67 808
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Entrepreneurship Impact Assessment Report
2.1 Description of the population
The majority of trainees are male (65.5%), between 20 and 35 years old (88.5%) and single
(58.4%).
Figure 1: Trainees by age group (%)
Most of them atended second level of secondary school (42.5%), primary school (26.0%) or
O’ level (13.7%). According to the European Commission, ‘Educaton should play a key role in
this process. “Investng in entrepreneurship educaton is one of the highest return investments
that could be made. Surveys conducted suggest that between 15% and 20% of students who
partcipate in a minicompany program in secondary school will later start their own company,
a fgure that is about three to fve tmes that for the general populaton’.
However, Stakeholders generally agree that the educaton system, in sub-Saharan African,
tends to focus on theoretcal educaton and harnessing skills most useful in corporate frms,
failing to offer more practical curricula that can adequately prepare youth to work in
entrepreneurial enterprises. While 86% of colleges and universites in Sub-Saharan Africa
ofer a course in entrepreneurship, Afro-entrepreneurs overwhelmingly respond that there is
an inadequate focus within schools and tertary insttutons on the practcal skills required to
start, manage or work in entrepreneurial ventures.
Figure 2: Trainees by education level (%)
2.0 FINDINGS
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Entrepreneurship Impact Assessment Report
Only 14% of Afro-entrepreneurs believe that primary and secondary schools devote
enough time to teaching entrepreneurship. Colleges and universities fare better, but they
still could offer more practical aspects of entrepreneurship in the curricula. In addition,
just 25% of Afro-entrepreneurs agree that colleges and universities devote enough time
to teaching entrepreneurship.
Formal education, including attitudes and behaviors, plays a role in entrepreneurship. The
lack of a basic business culture in most SMEs, - evidenced by traits such as procrastination,
poor client management and failing to meet deadlines - may be attributed to the fact that
few formally educated employees have worked at entrepreneurial ventures.
Such employee challenges in most small businesses reduce their ability to retain
long-term clients or acquire new ones. In terms of profession, the trainees described
themselves as having skills in business (31.5%), agriculture (22.5%), technical activities
(16.7%) or in education (12.7%).
Figure 3: Trainees by profession (%)
Before attending the trainings, the trainees were in agriculture (36.3%), business (24.8%),
studying (16.2%) or in teaching (13.0%).
Table 2: Trainees by last occupation (%)
Occupaton Percentage
Technical 2.6
Employees 7.1
Social work 13.0
Student 16.2
Business 24.8
Agriculture 36.3
Total 100.0
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2.2 Business plan trainings
The trainees acquired various knowledge related to business plan development. The
trainees were asked to rate different chapters out of 100 according to the understanding
they got. The average for various chapters ranges from 67.0 to 78.6. All chapters were well
understood, except financial study, probably because of a certain mathematical level it
requires.
Most of the trainees appreciated how the trainings were organized. They stated to have
acquired a lot, especially those who had basics in accounting. Some of them helped others
in business plan and there were even those who earned money by helping others.
After trainings, there was a shift in mindsets favorable to entrepreneurship. The most
i mportant change was the removal of fear for starting a business (68.6%) and the
business procedural understanding (53.4%).
Figure 4: Changes occurred after trainings (%)
Other changes have occurred. Here are some declarations of the trainees:
Before entrepreneurship trainings, I thought:
• I could only be a farmer;
• I had to be an employee all my life and wait for the salary pay at the end of the month;
• An entrepreneur is a tycoon who lives in big city;
• I was simly afraid by hearing the term entrepreneurship.
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Entrepreneurship Impact Assessment Report
After the trainings,
• I understand it is possible to restart after failure;
• I campaign for entrepreneurship and help others in business plan;
• I encourage other not to be afraid of starting;
• I understand it’s possible to start with a small capital, progress and gain a lot of money;
• I’m confident to be rich and striving for self-reliance;
• I started to work with financial institutions, to apply for a loan and to invest;
• I’m no longer waiting for the Government employment;
• I’m no longer afraid of recruiting an employee;
• The trainings opened my eyes;
• I am open minded and objective oriented;
• I’m no longer afraid of getting supplied with expensive goods;
• I’m aware of cooperative role and interacting with them;
• I know how to learn from competitors and mistakes;
• I am able to differentiate incomplete from complete projects;
• I improved in customer care, saving and money management;
• I know every business is possible;
• I highly value my job of entrepreneurship;
• I started my business;
• It’s more profitable to be entrepreneur than an employee.
These kind of trainings raised awareness of applying for a loan, even though the financial
institutions remained a mystery for the majority of the trainees. The saving culture is
indeed recent for many Rwandans. The financial institutions have begun a campaign for
the saving culture, but some applicants are still denied a loan because their bank account
movements are not active.
One of the objectives of the trainings is to sensitize and encourage the beneficiaries to
join cooperatives. Before the trainings, 45.2% of trainees were members of cooperatives.
They were 69.6% after trainings. However, some cooperatives failed either because
their members went to pursue studies, found employment far from the original place or
because of embezzlement.
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Entrepreneurship Impact Assessment Report
2.3 Startups
The main objective of these trainings is to contribute to the increase of SMEs start-ups,
growth and job creation. The impact assessment will then focus not only on the prepared
and converted projects, but also on the jobs created.
According to the US Department of State report (Principles of enterpreneurship, 2000),
most economists today agree that entrepreneurship is a necessary ingredient for
stimulating economic growth and empl oyment opportunities in all societies. In the
developing world, successful small busi nesses are the pri mary engi nes of j ob
creation, income growth, and poverty reduction.
There is no one definitive profile of an entrepreneur. Successful en¬trepreneurs come
in various ages, income levels, gender, and race. They differ in education and experience.
But research indicates that most successful entrepreneurs share certain personal
attri butes, including: creativity, dedication, determination, flexibility, leadership,
passi on, sel f-confi dence, and smarts (common sense joined to knowledge and
experience).
The same report states that entrepreneurship is vital for developed and developing
economies. Small business creates jobs (75% of new jobs in USA), generates social
welfare, decentralizes economic power, gives people stake in the future, innovates and
produces special goods and services.
More so, small technologies produce nearly 13 times more patents per employee than
large firms in USA.
The following pages assess the impact of different initiatives that have been undertaken
since 2009. There is an emphasis on the prepared projects, their conversion, the jobs
created and the capital invested.
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Entrepreneurship Impact Assessment Report
2.3.1 Project preparation
The Government of Rwanda i s stri vi ng to create an envi ronment conduci ve
for ent r epr eneurship and to change the citizen mindsets from being job seekers to
job creators. It is in this context that RDB has initiated entrepreneurship trainings.
That initiative is now bearing fruits. For the beneficiaries of RDB trainings, 90.8%
prepared at least one project, 10.5% two and 1.0% three projects. Male (94.8%) are more
likely to try starting a business than female (84.1%).
Figure 5: Prepared projects by sex (%)
Kigali City lags behind other provinces in startups because many businesses are prepared
in livestock and crop production, which are often less practiced in towns.
(see figure 6)
Figure 6: Prepared projects by province (%)
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Entrepreneurship Impact Assessment Report
Most of businesses are prepared in rearing domestic animals (27.7%) and trade of crop
products (15.6%). In addition, 47.8% of projects are related to livestock and crop
production (see table 3). This creates confusion between an activity aiming at
consumption and a real business.
Table 3: Prepared projects by economic activity (%)
Economic actvity Percentage
Crop producton 9.7
Agriculture products oriented to business 10.4
Rearing Cows 10.6
Other domestc animals 17.1
Trade of crop products 15.6
Commercial of domestc animals 1.3
Bar and restaurant 7.4
Haircut 3.2
Transformaton 2.8
Technical 8.3
Services 11.2
Transport 2.3
Total 100.0
Those who did not prepare a project declared to lack the enough capital (38.3%), to still
think of doing it (31.9%), to pursue their studies (17.0%), to have another occupation
(12.8%) or to lack collateral to secure a loan (10.6%).
Table 4: Reasons for not preparing a project (%)
Reason Percentage
Lack of capital 38.3
Not ready 31.9
Studying 17.0
Other occupaton 12.8
Lack of collateral 10.6
Fear of failure 8.5
Don’t like 4.3
No idea of valuable project 4.3
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Entrepreneurship Impact Assessment Report
As age increases, the percentage of prepared projects also increases. This confirms
the difficulties stated by youth in business creation. Many have indeed lacked capital
(especially those who just completed secondary school), don’t have access to loan
because of the problem of lack of collateral and some haven’t yet inherited from
their parents. Moreover, only 88.3% of unmarried persons managed to prepare a project
against 94.4% for married ones.
Figure 7: Prepared projects by age group (%)
Furthermore, those who had a Diploma Degree or attended scientific studies were less
interested in preparing a project. Some of them are pursuing their studies or have found
another occupation. The proactiveness, in terms of project preparation, are the S4 – S6
(37.9%) but they also represent 42.4% of the trainees (see table 5 and figure 2)).
Table 5: Prepared projects by level of education (%)
Level of educaton Percentage
P1 - P8 24.9
S1 - S3 + TVET 12.7
S4 - S6 37.9
Diploma 8.6
Bachelor 7.0
Total 91.0
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Entrepreneurship Impact Assessment Report
In general, 65.2% of the trainees prepared and implemented their projects, 18.9% did not
implement their projects, 9.2% did not prepare any project, and 5.7% implemented them
but failed while 1.0% suspended it.
Figure 8: Trainees by stage in business (%)
In addition, some of the projects were submitted to the banks (3.9%) for loan or to the
District office in charge of youth (1.4%) for financial assistance. The problem is that the
applicants did not receive any responses to their requests. More communication should
remedy this situation.
Figure 9: Prepared projects by stage of implementation (%)
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Entrepreneurship Impact Assessment Report
2.3.2 Project conversion
The conversion of the projects is a key issue. Some prepared projects, indeed, are not
converted to busi nesses essenti al l y because of the l ack of capi tal . Thi s dri ves
the entrepreneurs to submit their projects to financial institutions for loan, to the District
or Donors for financial assistance. Because of the limited capacity to satisfy all requests,
some projects have not been implemented.
Despite the above hindrances, 71.7% of the prepared projects have been converted. In
other words, 65.2% of trainees created a business. Male (74.4%) are more likely to
implement their projects than female (66.7%). These figures are consistent with the
financial institution statements where male represent about three - quarters of the loan
applicants.
Textile trading in Gisagara district
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Entrepreneurship Impact Assessment Report
All projects prepared in commercial domestic animals were implemented, but their number
is too small to be generalized. Other domains with high conversion rates are transport
(83.3%), crop production (80.5%) or trading of crop products (79.3%).
Figure 10: Stage of prepared projects by sex (%)
However, only 40.0% of the projects prepared in transformaton have been converted. Those
projects require a huge amount of capital which entrepreneurs don’t always have; neither do
the fnancial insttutons want to take such risk by funding such businesses at start-up stage.
Other domains with low conversion rates are bar and restaurants (64.1%), rearing
domestc animals (65.6%) and services (66.1%).
Even though failure rate is averagely rare (6.4%), it is high for bar and restaurants (12.8%), crop
producton (9.8%), agribusiness (9.3%) and rearing domestc animals (8.9%).
Figure 11: Converted projects by economic activity (%)
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Entrepreneurship Impact Assessment Report
Table 6: Businesses created by economic activity (%)
Economic actvity Percentage
Crop producton 8.9
Agribusiness 10.5
Breeding cows 10.8
Other domestc animals 15.9
Trading of crop products 17.5
Commercial of domestc animals 1.9
Bar and Restaurant 6.7
Hair cut 3.8
Transformaton 1.6
Technical 9.2
Services 10.5
Transport 2.7
Total 100.0
46.1% of the created businesses are related to agriculture (see table 6). This is consistent
with their proportion (47.8%) in prepared projects. Services and trading crop products
also have a good share in new start-ups. Female respectively represent 34.5% and 30.6%
of trainees and new entrepreneurs.
Small and Medium Enterprise in Rwamagana District
For the businesses that failed, the causes are various. However, the main causes were
insufficient capital (20.0%), bad weather (17.1%), robbery (17.1%), poor management
(17.1%), disease which killed the animal (14.3%) and the pursuit of studies (8.6%).
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Entrepreneurship Impact Assessment Report
Age is an important explanatory variable of converting projects. As the age increases, the
rate of conversion also increases to reach its climax at 36-43 years old with a conversion
rate of 91.2%. At this age group, people have already saved sufficient capital to start a
business or collateral to secure the loan requested.
Figure 12: Conversion by age group (%)
Eastern province outperformed other provinces in converting projects. Eastern province
converted 80.3% of its projects while Kigali City only implemented 48.9% of its projects.
The rate of non implemented projects (42.6%) in Kigali City is also alarming as well as rate
of failed projects (10.9%) in Southern province (see table 6).
Table 7: Stage of prepared projects by province (%)
Province Implemented Not implemented Failed Suspended
Kigali city 48.9 42.6 6.4 2.1
Southern 68.0 19.5 10.9 1.6
Western 73.9 21.8 3.4 0.9
Northern 79.2 15.8 5.0
Eastern 80.3 14.1 4.2 1.4
Total 71.9 20.8 6.2 1.1
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Entrepreneurship Impact Assessment Report
Small and Medium Enterprise in Huye District.
Figure 13: Conversion by province (%)
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According to the table 8, some businesses are often encountered in specific provinces than in
others. Rearing cows, trading of crop products and services in Kigali City; rearing domestic
animals, agribusiness and services in Southern province; rearing domestic animals, trading and
production of crop products in Western province; trading of crop products and rearing
domestic animals in Northern province; trading of crop products, agribusiness, bar and
restaurant in Eastern province.
Table 8: Created businesses by economic activity and province (%)
Economic actvity
Kigali
City Southern Western Northern Eastern Total
Crop producton 8.0 5.0 16.3 8.8 4.8 8.9
Agribusiness 8.0 18.0 4.3 5.5 15.9 10.5
Breeding cows 28.0 8.0 8.7 13.2 7.9 10.8
Other domestc animals 8.0 19.0 17.4 18.6 7.9 15.9
Trading of crop products 16.0 12.0 16.3 23.1 20.6 17.5
Commercial of domestc
animals 4.0 1.0 2.2 1.1 3.2
1.9
Bar and Restaurant 4.0 5.0 8.7 2.2 14.3 6.7
Hair cut 6.0 4.3 4.4 3.8
Transformaton 4.0 2.0 2.2 1.6 1.6
Technical 7.0 13.1 8.8 11.1 9.2
Services 16.0 16.0 5.4 7.7 11.1 10.5
Transport 4.0 1.0 1.1 6.6 1.6 10.5
Total 100.0 100.0 100.0 100.0 100.0 100.0
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Entrepreneurship Impact Assessment Report
In general, trading of crop products (17.5%) and rearing of domestic animals (15.9%) are
encountered in most of provinces.
The once married converted more projects (81.1%) than the single ones (64.8%) even
though, they faced almost the same failure rate.
Figure 14: Stage of prepared projects by marital status (%)
It seems that as the level of education increases, the rate of implementation decreases.
Many reasons could explain this. Firstly because most of the graduates are young and
don’t have either capital or collateral.
Secondly, some of the graduates preferred to pursue their studies rather creating a
business or had another occupation. Last but not least, most of the graduates are still
seeking for an employment or a job to build up capital.
Figure 15: Stage of prepared projects by level of education (%)
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The trainees who already had a business (83.3%) converted more projects than others. Those
who had social (48.6%) and educaton (64.7%) as profession are less likely to implement their
projects. The social profession also has a high rate of failure (18.9%).
The projects were not converted into businesses either because the trainee lacked the capital
(38.8%), was at the preparaton stage (36.9%) or did not have collateral to secure the loan
applicaton (12.6%).
Table 9: Failure for project conversion (%)
Reason of no conversion Percentage
Lack of capital 38.8
Projects in preparaton 36.9
Lack of collateral 12.6
Needs of a lot of money 3.9
Submited to the bank 2.9
Submited to the District 2.9
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2.3.3 Triggers and motivations for startups
Most of entrepreneurs started their businesses because they were unable to find a wage
employment (38.6%). This demonstrates that entrepreneurship is a new concept for
Rwandans. After studies, the first choice is seeking for a wage employment. Even some
trainees who did not attend school declared to have started their own business because
they could not find salaried employment. In addition, only 3.9% of the entrepreneurs took
over their parent’s businesses.
The respondents stated other various triggers. They started a business due to the
need of uplifting the living conditions (7.5%),implementing the entrepreneurship
trainings (6.4%), implementing theoretical lessons (1.7%), fructifying available capital
(0. 9%), preparing better future, self-reliance, providing jobs to the family, gaining
independence from employers. Others declared the trigger was the loss of employment
(2.1%), availability of the market (1.5%), the profitability of a business compared to crop
production (1.1%), insufficient salary (0.9%), encouragement from other enterprenuers
and friends, observing a neighbouring thriving business, support from BDF. It is important
to highlight the role played by other entrepreneurs and family in supporting the new
entrepreneurs. Some businessmen expressed gratitude to their peers who encouraged
them not to be afraid of business and incited them just to try. Family and relatives
invited the future entrepreneurs to think how to uplift their living conditions and to
prepare the future. They even sometimes provided financial assistance.
Figure 16: Triggers of starting a business (%)
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Likewise, the respondents were asked their motivations in everyday running business.
Most of them were interested in earning much money (45.7%). Others stated they had an
overall satisfaction in running the business (32.2%) or the fact that their business is
thriving because of availability of the market (30.4%).
Figure 17: Motivations of running a business (%)
There are other various interesting motivations such as having a profitable business
(5.7%), uplifting the living conditions (5.1%), self-reliance (5.1%), always having money
(4.5%), helping others in finding jobs (3.6%) or catering for the family (2.7%).
Each entrepreneur met was proud of having an employment, solving his own small
problems, paying school fees, regaining self-esteem, being with others,contributing to the
national development or avoiding begging.
A cooperative of literate people in Karongi District started various businesses such as
coffee plantation, bee keeping and handcraft to serve as an example to the youth
and to demonstrate to them the availability of opportunities to uplift their living
conditions. That cooperative benefited from various incentive measures of the local
authorities such as land and handcraft showroom.
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Bee keeping in Karongi District.
Handcraft showroom in Karongi District.
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In Rubavu District, an entrepreneur is thriving in quarrying and selling sand. He can load
70 trucks a week. One truck worths 20,000 Rwf in summer (sun season) and 8,000 Rwf in
winter (rain season). He employs 40 people (many of them are women) earning 3,000 Rwf
from 7h to 12h or 5,000 Rwf from 7h to 17h. Most of the employees bought cows, goats
or pigs from their wages. Some employees also saved capital to start their own business
in the near future.
Beneficiary of entereprenuership training in Gicumbi District
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Quarrying and selling sand in Rubavu District.
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2.4 Capital invested and jobs created
The respondents of this study received entrepreneurship trainings in 2011. As
forementioned, 65.2% of them created a business. However, the amount of invested
capital revealed that the businesses created are very small (44.5% of them were created
with a capital less than one hundred thousands Rwf). The quartiles indicate that 25% of
the businesses cover capital less than 44,500 Rwf, half of them a capital less than 104,000
Rwf while three fourths were created with less than 401,000 Rwf. Only about 10.0% of
the businesses were started with more than 1 million Rwf (see table 10). Most of the
businesses with higher capital value are cooperatives.
Table 10: Capital invested (in thousands Rwf)
Capital (in thousands Rwf) Percentage
3.5 - 10 4.7
10 - 15 4.3
15 - 20 5.1
20 - 30 4.3
30 - 40 4.3
40 - 50 5.6
50 - 100 16.2
100 - 150 11.1
150 - 200 6.0
200 - 300 8.1
300 - 500 9.8
500 - 750 8.1
750 - 1000 2.6
1000 - 1500 3.8
1500 - 2000 3.0
2000 - 3500 2.6
3500 and more 0.4
Total 100.0
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The first source of the capital is personal saving (61.9%). The startups were also financed
by property sale (20.6%) as well as family’ assistance (20.3%). Only 24.0% of businesses
benefited from the bank loans.
Figure 18: Origin of capital (%)
Ot her s our ces of capi t al ar e t he s al e of crop product s ( 2. 5%) , t he s har e of
cooperat i ve/ tontine members (1.7%), the salary (1.7%). Some used training allowance
(0.6%) or competition award (0.6%) to start a business.
According to the respndents, 93.9% of businesses are thriving, only 6.1% of them are
stagnating. The soar of businesses is demonstrated by the fact that the present worth of
businesses is about three times of the starting capital. The current average worth of
business is now 1,606,675 Rwf from 421,283 Rwf, the first quartile is 157,875 Rwf while
the second and third quartiles are respectively 500,000 Rwf and 1,282,500 Rwf.
At starting, 90% of businesses worthed less than 1 million Rwf, that percentage
corresponds now to 3 million Rwf.
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Decoration business in Rwamagana District.
It is evident that such entrepreneurs are very optimistic. According to their vision, their
capital, for the next five years, would be about four times of the present worth.
The mean would be 4,756,345 Rwf, the first quartile would amount 800,000 Rwf, the
second and the third quartiles respectively 2,500,000 Rwf and 5,000,000 Rwf. On top of
that, the capital value of 10% of the businesses would be more than 10 million Rwf.
In the next five years, most of the entrepreneurs expect to expand their businesses. Some
of them would have recruited more employees, built their own shop, added new
products, increased capital, shifted from informal to formal sector. Others would need
however more financial support and training to achieve their objectives.
Even though there is a reasonable growth, only 57.5% of entrepreneurs declared that their
businesses have increased according to their plan. 42.5% others stated various hurdles
that hindered the achievement of their objectives. Among them, they cited insufficient
capital, clients and skills, the use of the capital for other purposes, bad weather, electricity
problem, high costs of supplying resulting in high prices that clients can’t afford, paying
high interests and the fact that the employee did not care enough about the business as
the owner would have.
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Enterprenuership beneficiary in Huye District
In terms of employment, the entrepreneurs were asked if, during the survey period, they
had employees. 252 out of 335 existing businesses created jobs. Most of them (68.7%)
created less than 4 jobs. In total, 1073 jobs were created (see table 10). The cooperatives
played a key role in this process. 19 cooperatives identified had 296 members/jobs.
Nevertheless, it is very difficult to assess the sustainability of these jobs because many of
them did not last more than one day.
Handcraft showroom in Karongi District.
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In relation to the above, about 25100 jobs were created by the entrepreneurship program
during the period 2009/2011, because at least 4,000 people received trainings every year.
As from 513 trainees sampled, 1073 jobs were created, the total number of jobs created
is estimated at (1073/513)*12000 = 25100 jobs.
Table 11: Jobs created
Number of jobs created Frequency Total jobs created Percentage
1 69 69 27.4
2 63 126 25.0
3 41 123 16.3
4 23 92 9.1
5 10 50 4.0
6 8 48 3.2
7 4 28 1.6
8 6 48 2.4
9 - 12 9 92 3.6
15 - 20 13 219 5.2
22 - 28 4 98 1.6
40 2 80 0.8
Total 252 1073 100.0
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2.5 Districts, sectors, BDC and financial institution contribution to
Districts and Sectors play a key role in entrepreneurship. They liaise between the RDB
services and the beneficiaries of the trainings. They indeed select them for trainings,
ensure thei r fol l ow- up and provi de other necessar y support to ensure the
i mpl ementation of the trainings a reality.
The District and Sector Youth Officers were asked which activities attract more Youth
when they decide to create a business. Breeding of domestic animals (73.5%), crop
production (52.9%) and retail (44.1%) are the main attractions for youth businesses (see
figure 20). Those activities are spread in the whole country with predominance of crop
production in Gasabo, Huye, Rubavu, Nyagatare and breeding of pets in Huye.
Figure 19: Attractions of youth in business (%)
entrepreneurship
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Districts and Sectors also participated in orgainizing trainings (50.0%), sensitization for
creating and joining cooperatives (32.4%), advocating to the financial institutions and
donors to obtain funds (17.6%), sensitization for creating a small businesses as it is (8.8%),
searching for successful businesses to serve as an example (8.8%), meeting and discussing
with youth (8.8%) and providing advice in business plan (5.9%). When people indeed join
a cooperative, it is more easier to reach and advocate for them.
Figure 20: Services offered by Districts and Sectors (%)
The Business Development Centers (BDCs) enable the potential entrepreneurs to have
access of various services provided by RDB. They are located in each of the Districts of
the country. They operate on the Private-Public-Partnership (PPP) model in which the
Government retains ownership of BDC’s assets and the operator assumes responsibility of
all services. However, the Government participates in 30% of the cost of provided services.
They provided services related to entrepreneurship development, business registration,
facilitation to access to finance, export development, IT services, tax advisory services,
training and business advice and counseling.
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The financial institutions are one of the most important stakeholders in entrepreneurship
program by funding the projects. It is in that context, 62 banks and micro finances were
asked their opinion about the access to finance. SACCOs and Banque Populaire du Rwanda
respectively represent 77.3% and 11.3% of the respondents.
Last year, 42.6% of financial institutions received between 150 and 700 loan applications
related to small businesses (with a capital less than 2 million). Most of the financial
institutions (29.8%) received between 51 and 100 loan applications (see table 12).
Table 12: Loan applications received
Number of loan applicatons Percentage of the banks
15 - 50 10.6
51 - 100 29.8
101 - 150 17.0
151 -200 23.4
201 - 300 6.4
301 - 700 12.8
Total 100.0
SACCOs are more likely to receive and fund more loan applications related to small
projects than other financial institutions, which is consistent with their mission. 28.9% of
the financial institutions funded between 80 and 90% of the loan applications received
(see table 13). Some of them (22.2%) even declared to fund all loan requests.
Table 13: Loan applications funded
Percentage funded Percentage of the banks
30 - 40 6.7
50 - 60 6.7
61 - 70 13.2
71 - 80 15.6
81 - 90 28.9
91 - 95 6.7
96 -100 22.2
Total 100.0
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2.6 Other institutions participating in entrepreneurship and their contribution
The Government of Rwanda is doing everything possible not only to upgrade and
strengthen entrepreneurship, but also to enable all institutions and to mobilize Non
Governmental Organizations (NGOs) operating in Rwanda to participate in this great
initiative.
It is in this context that, The Rwanda Development Board (RDB), at the top, and various other
organizatons started to organize a lot of actvites ranging from entrepreneurship awareness
campaign to fnancial support and entrepreneurship trainings (see table 14).
Table 14: Institutions that participated in entrepreneurship (%)
Insttuton Percentage
RDB 28.3
Sectors 12.9
Financial insttutons 9.9
Districts 6.4
Natonal Youth Council 4.7
Local authorites 4.5
Friends 3.7
Ministries 3.3
Cooperatve 1.6
BDF 1.4
Family support 1.4
PSF 1.4
RCA 1.2
Family 1.2
Hanga umurimo 1.0
World Vision 0.8
The financial institutions, mainly SACCOs, play a key role in this process by granting loans
to entrepreneurs. However, some of them are facing liquidity problem because of the high
number of the applications.
Districts have been of great importance by assisting RDB on the field. They indeed selected
the trainees and ensured their follow-up. They also provide advice, agronomist and
veterinary services to entrepreneurs.
Sectors are more close to the population than Districts. That’s why they are considered by
trainees as the most active on the field. Moreover, they ensured security of property and
sometimes issued land to enable youth cooperatives to start and operate.
Many other institutions namely the National Youth Council, different Ministries, the cells,
the Business Development Fund (BDF), Private Sector Federation (PSF), Rwanda
Cooperative Agency (RCA), Hanga Umurimo and National Women Council participated, at
different levels, to ensure the success of this great initiative.
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Some NGOs such as World Vision, International Fertilizer Development Center (IFDC),
Adventst Development Relief Agency (ADRA), Rwanda Agro-Dealer Development (RADD),
IREX (USAID), DUHOZANYE Associaton delivered various support to young entrepreneurs.
Some of them rewarded the winners of the competition which enabled them to start a
business. Others issued carpentry materials and helped in the creation of small income
generatng projects (see table 15).
Table 15: Assistance obtained from institutions (%)
Type of assistance Percentage
Training 39.0
Advice 15.6
Loan 9.4
Veterinary service 2.3
Financial support 1.9
Documents 1.8
Security 1.8
Collateral 1.4
Land 1.2
Advocacy 1.0
Modern seeds 1.0
Study tour 1.0
Material 0.8
Fertlizer 0.8
Follow-up 0.6
Agronomist service 0.6
It is worth highlighting that the role played by the cooperative, friends, the family and
other entrepreneurs in advising, encouraging and supporting financially and morally the
new entrepreneurs to achieve their dreams.
This is consistent with the OMIDYAR NETWORK report about which ‘the entrepreneurs
are best assisted either by other entrepreneurs or by established functional or industry
experts who possess appropriate and relevant expertise”
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Exercise session in groups during trainings
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2.7 Challenges to the creation and management of businesses
The financial institutions as well as the potential entrepreneurs face a certain number of
challenges related to the financing and the implementation of business projects.
In relation to business preparation, the potential entrepreneurs cited not to be ready for
starting (51.9%) or to have found another occupation (22.2%) to justify the absence of any
reactions to trainings.
The trainees who prepared a project but did not implement it mentioned that it was due
to lack of capital (58.8%), insufficient skills (58.8%) as well as lack of collateral to secure
the loan application (38.7%). Either the applicant doesn’t have it at all, either it is
insufficient or when BDF is ready to provide 75% of collateral, the applicant is unable to
find the remaining 25%. Apart from lack of capital and collateral, the youth, in Kigali City,
can’t proceed to livestock or crop production as their counterparts in rural areas.
Figure 21: Constraints to business implementation (%)
Moreover, financial institutions are reluctant to trust unmarried people and some SACCOs
haven’t yet signed an agreement with BDF. So far, 340 SACCOs have done it.
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According to managers of financial institutions, some loan applications were rejected
because of the lack of collateral (38.7%), insufficient capacity of repayment (30.6%), loan
records (17.7%), insufficient savings of the applicant (17.7%) or insufficient liquidity of the
bank (14.5%).
Figure 22: Reasons for loan denial (%)
To overcome this challenge of lack of collateral, some banks ask the loan applicants to
modify their projects accordingly or to seek help of friends.
Only 4.8% of SACCOs declared they didn’t encounter a collateral problem, either because
the applicants had it, or due to the help of BDF. Other banks (BPR) stated that those who
have no collateral don’t dare to apply for loan.
There were also cases where one collateral had been issued to several banks, which arises
a lot of problems in case of aunction.
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In addition, the projects were poorly prepared. That’s why SACCOs drafted a form to be
filled in by loan applicants instead of financial study document. The help of Proximity
Business Advisors (Proba) was also playing a great role.
Also, some financial institutions are reluctant to fund new start-ups. They urge the applicant
first to start a business and seek for loan later when his business is proven operating.
However, according to SACCOs managers, the biggest challenge in business management
was the loan deviation (41.9%) at different levels. It occurred when a loan was used
differently from its initial purpose. It usually happens when the applicant operates one
withdraw. The consequences are often failure and no repayment of the loan (see table 16).
Table 16: Challenges in business management (%)
Challenge Percentage
Project deviaton 41.9
Insufcient skills 6.5
Poor management 4.8
The applicants argued that they deviated from the loan purpose when the amount
delivered by the bank was less than their requests. So, they found themselves in the
situation where they were unable to implement the proposed project and imagined
another one according to the amount obtained.
Other challenges are insufcient skills in business management, the confusion between a loan
and a fnancial assistance and the mixture of personal and business actvites. The confusion
between loan and Government support or VUP occurred especially when the loan was
delivered to a group of people or without documents. However, 11.3% of SACCOs declared
the management was good and 1.6% stated there was an improvement in dealing with
loan applicants and enterprenuers. The fnancial insttutons overcome these challenges by
frequent visits, discussions, advice and by delivering the loan in installments according to the
business plan issued by the applicant.
They al so sei zed di fferent opportuni ti esopportuni ti es to meet thei r cl i ents
(meeti ngs organized by the local authorities, communal works, at the markets).
In addition, all financial institutions pledged to regularly conduct awareness campaign for
their activities.
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In terms of loan depreciation, the financial institutions adopt two different behaviors in
case of no payment: counseling and discussion for SACCOs and auction for other banks.
Table 17: Challenges to loan depreciation (%)
Challenges Percentage
No repayment 35.5
Delays 30.6
Confusion 6.5
Deviaton 4.8
Repayment difcult in crop producton 3.2
35.5% of the banks faced indeed the problem of loan payment and 30.6% of them
encountered delays in payment (see table 17).
However, the percentage of applicants who did not repay their loan was estimated less
than 5% in average. There were delays, but finally the loan applicants paid after
discussions and counselingcounselingcounseling of the SACCOs managers.
The loan deviation, bad weather in crop production, mismanagement and bankruptcy
were also cited as the origin of no payment of the loan.
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2.8 Suggestions from respondents to improve entrepreneurship program
The entrepreneurship program was launched by Government of Rwanda to help especially
Youth and Women to be job creators, not job seekers. Creating venture demands to be a risk
taker, because failure is possible. It fortunately provides immense joy when success occurs
not only for the entrepreneur by generating income and uplifting the living conditions, but
also for the country economy by creating new jobs and wealth.
Likewise, to see their dreams becoming realities, the recipients of entrepreneurship
trainings emitted valuable suggestions aiming at improving the program. Four top of them
are related to the increase of follow-up (30.0%), the consideration of revision and regular
trainings (18.5%), the advocacy to the financial institutions (13.6%) and the financial
support (13.5%) at start-up stage (see table 18).
Table 18: Suggestions to improve entrepreneurship (%)
Suggeston Percentage
Follow-up 30.0
Regular trainings 18.5
Advocacy to the fnancial insttutons 13.6
Financial support 13.5
Increase training duraton 7.2
Help in obtaining collateral 4.3
Comprehensive business plan 2.7
Increase advisory service 1.8
Consider proximity for trainee venues 1.6
Issuing certfcate 1.4
Specialize trainings 1.0
In addition, the trainees declared that one training session was not sufficient to have a
comprehensive business plan. So, they suggested a possible revision of training on annual
basis.
They would like to receive trainings related to their projects such as piggery, bee keeping,
bakery, carpentry, customer care, computer literacy, food conservation, bar, restaurant
and hotel management, the use of fertilizers, mushroom production, marketing, poultry,
hairdressing saloon, soap production, production of plums, development of egg incubation,
juice production, up scaling the business or the management of big businesses.
Some respondents expressed the desire to get a comprehensive business plan to be able
to prepare their projects without a help of someone. Many of them want to understand
the financial institution functioning and how to obtain a loan easily.
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The most important concern is however related to stakeholders such as district youth
office and the financial institutions. The respondents who don’t have capital for starting
a business are encouraged to submit their projects to district youth office for help.
Nevertheless, sometimes they do not receive any response to their applications.
The same for financial institutions. The trainees are worried about not getting loans even
when they have collateral. Appropriate communication should remedy to that situation.
Even if the request is not satisfied, the decision should be notified to the applicant. Often
the BDF staff was being obliged to inform the applicant that his loan application was
accepted.
Due to those hindrances, the trainees would like to benefit from the RDB advocacy to the
financial institutions. Considering proximity for trainee venues could also prevent from
making long journey, sometimes under rain or sunshine and facilitate to revise exercises.
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3.0 THE DETERMINANTS OF ENTREPRENEURSHIP
After the entrepreneurship training, many of the trainees prepared business projects
and others succeeded in implementing them. However, some of them failed while others
suspended the business activities because of pursuing studies. This chapter highlights the
determinants of business preparation, implementation and failure.
3.1 The determinants of project preparation
The trainings raised entrepreneurship awareness among the recipients. Many of them
understood it was possible to start a business even with small amount of money and grow.
The employees realized they had a huge capacity and ability to make additional money
besides their salary and the job seekers apprehended it was no longer necessary to wait
for employment but it was worth creating their own business.
So, 90.8% of the trainees prepared at least one business projects. Male (94.8%) out
numbered female (84.1%) in doing so. Among the provinces, the Western (92.2%) and
Southern (92.2%) are on the top. Many of the prepared business are related to livestock
(27.7%), crop production (20.1%) or trade of crop products (15.6%). Due to these differences,
it is worth examining if there are any variables explaining the project preparation. It is in
this context that sex, age, resident province, marital status, level of education, profession
and last occupation before entrepreneurship trainings were considered.
The most important determinant of the business preparation is the last occupation of the
trainee before entrepreneurship trainings. A crop producer, a business owner or a student
has respectively 21.1, 10.2 and 4.9 times more chance of preparing a business than a
technician. This result is consistent with the proportion of prepared businesses related
to livestock and crop production. 47.8% of prepared projects are indeed related to those
economic activities. Any activity undertaken in these areas (rearing a pig, growing maize)
was actually considered as a business. Nevertheless, there is no difference between a
technician, a teacher or a social worker in terms of business preparing. The second variable
explaining the project preparation is the sex. A male has 4.3 times more chance to prepare
a project than a female. The variable age also indicates that any time an individual gets
older by a year, the chance to prepare a business increases by 0.122. This demonstrates
that the younger the person, the less he is likely to prepare a project. The reasons are lack
of capital or collateral to secure the loan applied for.
However, the available data did not demonstrate the role of resident province, marital
status, level of education and profession of the trainee in project preparation. In other
words, the trainees of all provinces, marital status, levels of education and professions
prepared the projects at the same level. Nevertheless, some of those variables are
correlated to the variables in the model (age and marital status for example). In addition,
this model explains only between 10.3% and 21.8% of the project preparation.
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3.2 The determinants of project conversion
Preparing a business is a good step to start an enterprise, but converting it is the best
achievement. Some trainees did not convert their business due to various reasons. The
three top hindrances are lack of capital (58.8%), insufficient skills (58.8%) and the problem
of lack of collateral (38.7%).
In general, 71.6% of the prepared projects have been converted. In other words, 65.2%
of trainees created a business. According to the economic activity, the high conversions
are related to transport (83.3%), haircut salon (82.4%) and crop production (80.5%). The
traders of domestic animals converted all their projects but their number is too small to
be generalized. The level of education also played a non negligible role. Only 61.8% of the
holders of Bachelor’s Degree converted their projects while this proportion is 82.8% for
the trainees who attended only primary school. This could be explained by the fact the
latter category mostly prepared the projects related to livestock and crop production.
The Eastern and Northern provinces respectively converted 80.3% and 79.2% of their
projects while this proportion fell at 48.9% in Kigali City. In terms of age, the 36-43 and
20-24 years old converted respectively 91.2% and 65.9% of their projects.
In relation to the above, it is worth wondering if any set of variables could explain the
conversion of the prepared projects. To do so, the variables sex, age, resident province,
marital status, level of education, profession and the last occupation of the trainee before
entrepreneurship trainings were taken into account.
All provinces outperformed Kigali City in terms of project conversion. Most of the
businesses are indeed created in economic activities which are less practiced in town
(livestock and crop production). In terms of project preparation, there is no difference
between provinces. But when it comes to the phase of implementation the difference
appears, Kigali City dragging behind others.
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The level of education demonstrates that those who attended the University (Bachelor’s
Degree holders) are less likely to convert their projects. The trainee who attended primary
school, O’ level or secondary school has respectively 9.4, 6.7 and 3.9 times more chance
to implement their projects than the Bachelor’s Degree holders.
In relation to the profession, the technicians who were less likely to prepare a business
are more active in converting them. So, a technician, a scientific and a business holder has
respectively 6.1, 5.2 and 3.6 times more chance to convert his/her project than a teacher
Finally, the more an individual is older, the more he/she is likely to convert his/her project.
This phenomenon has been early explained by the fact that the young people lack capital or
collateral. Most of the Bachelor’s Degree holders are also young. It is also worth indicating
this model explains only between 13.7% and 22.1% of the project conversion.
Contrary to what has been said about project preparation, the last occupation of the
trainee before trainings doesn’t play any role in conversion according to the data. The
trainees of all occupations converted their projects at the same level. The same is true for
sex and marital status even though the latter is highly correlated with age.
To sum it up, the variable age plays a key role in entrepreneurship. The more an individual
is older, the more he/she is likely to create a business. The reasons are well known. The
Youth has neither a capital nor collateral to secure a loan requested. Some of them are
fresh from school and are job seekers; others are waiting to inherit from their parents or
to get the first job to constitute a capital.
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3.3 The determinants of bankruptcy
Few cases of bankruptcy were identified as it was not the objective of the study. Only 5.7%
and 1.0% declared respectively failure and suspension. For that reason, it was not possible
to identify the determinants of bankruptcy. However, it is still important to highlight it.
According to the European commission report (Enterprenuership 2020 Action Plan:
Reigniting the enterprenurial spirit in Europe, January 2013), business failure, like business
creation, is part of a dynamic, healthy market. Evidence shows that by far the majority
(96%) of bankruptcies is due to a string of late payments or other objective problems. They
are, in other words ‘honest failures’, without any fraud by the entrepreneur. Entrepreneurs
are nevertheless treated by many bankruptcy laws as if they were fraudulent, having to go
through complex procedures before they can be discharged. Even after a discharge, those
whose businesses got bankrupt sometimes are stigmatized and have difficulties financing
a new enterprise. Therefore, many potential entrepreneurs simply give up and do not
consider trying again.
Yet research shows that ‘second starters’ are more successful and survive longer than average
start-ups; they grow faster and employ more workers. Thus, a failure in entrepreneurship
should not result in a “life sentence” prohibiting any future entrepreneurial activity but
should be seen as an opportunity for learning and improving.
It is therefore urgent to ensure a follow-up to the entrepreneurs, especially at the start-up
stage to prevent the bankruptcies by counseling, restructuring, providing advisory services
to bankrupt entrepreneurs and developing programs for second starters.
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CONCLUSION AND RECOMMENDATIONS
The entrepreneurship program has been introduced in developing economies very
recently. It is however taking a considerable importance in the society, particularly among
the young people due to the increasing unemployment they are facing.
Likewise, the Governments are paying a great attention to the entrepreneurship programme
because it doesn’t only create wealth and jobs, but also enables people to uplift the living
conditions, decentralize economic power and give people a stake in the future,
especially in Sub-Saharan African economies dominated by the informal sector.
In Rwanda, the entrepreneurship trainings raised a huge enthusiasm and interest. It is as if
people were waiting for it. It is regarded as a new opportunity to catering for one’s welfare
and the family. Due to the awareness campaign and the trainings, a non-negligible number
of businesses were created.
However, for the entrepreneurship to enter in Rwandan mindsets, the following initiatives
should be undertaken:
1. Introduce entrepreneurship culture courses in educational system from primary
school: The majority is still Rwandan pupils who don’t attend schools beyond the
primary level. That’s why it is important to start the initiative of entrepreneurship
courses from that level, by teaching the simple principles of saving, good behaviors,
attitudes and culture required for a true entrepreneur. Furthermore, the more the
qualities are imparted to children at young age, the more they are easily mastered and
integrated into the everyday life.
2. Decentralize business award to District level: RDB has started to award the best
performer in different categories at national level. Although the initiative is helpful in
many ways, it remains unknown of the public particularly in rural areas. That’s why it
would be interesting to establish a system of awards at smaller scale to motivate small
entrepreneurs. Specific criteria would be set up to only allow the small businesses to
compete.
3. Ensure proper traceability of trainees: The office in charge of youth and cooperatives
in different Districts of the country plays a key role in the entrepreneurship process
by collaborating with RDB to organize the trainings. To optimize their monitoring, the
District youth office should have the complete list of trainees to facilitate their work
on the field and advocate for the loan application to financial institutions. Moreover,
this traceability would enable the follow-up of trainees.
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Entrepreneurship Impact Assessment Report
4. Urge the trainees to create the off-farm jobs, especially in Kigali City: This study
demonstrated that most of the businesses were created in agriculture, while one of
the pillars of EDPRSII is to create off-farm jobs. Therefore, some financial institutions
are reluctant to fund the businesses related to agriculture because of the bad weather
those businesses are susceptible to face. So, it is wise to urge the trainees to shift
their businesses from agriculture to off-farm. To do so, Kigali City presents many
opportunities.
5. Extend the entrepreneurship skills to elders: So far, trainings have targeted especially
youth and women. As the global population, the median age of the Rwandan population
is expected to rise for coming decades and people will live longer and healthier. So, a
growing cohort of well-educated, highly experienced adults and having their know-how
and skills will retire. Engaging them in both business creation and in supporting new
and existing entrepreneurs will maximize the wealth of experience they possess that
can be lost on retirement, cultivate intergenerational learning and ensure knowledge
transfer. That’s why it is worth considering the elders in entrepreneurship trainings.
As a conclusion, it is worth highlighting the following points:
a) Strengths:
• The trainings have raised an awareness for entrepreneurship;
• Undeveloped formal sector enables small business to pursue their opportunities
without being blocked by larger companies;
• Easy registration of business.
b) Weakness:
• Lack of knowledge among existing and aspirant entrepreneurs restricts them from
taking calculated risks to start and stretch their business (fear of failure);
• Market opportunities are very limited and the cross border trade not developed.
c) Opportunities:
• Contribution to skills development and service delivery;
• Contribution to job creation and uplifting the living conditions.
d) Threats:
• Failure of trainees to obtain a loan to start a business may discourage others to attend;
• Weak entrepreneurial culture associated with stigma for people who failed may
discourage potential entrepreneurs to start a business.
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A. PROFESSIONS
1. SCIENTIFIC: Accounting, economy, finance, management, mathematics, chemistry,
ICT, biology;
2. SOCIAL WORK: Social work, administration, clinical psychological, secretariat, hotel,
journalism, languages;
3. TECHNICAL: Electronic, electricity, architecture, veterinary, agronomy, masonry,
carpentry, plumbing, mechanics;
4. EDUCATION: Teacher
5. BUSINESS: Tailoring, haircut, trade, bar, photography, transport, handcraft,
self-employed, entrepreneur;
6. AGRICULTURE: Crop production, livestock.
APPENDICES
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B. OCCUPATIONS
1. TECHNICAL: Veterinary, agronomy, journalism, nursery.
2. EMPLOYEES: Cleaning, security guard, waiter, receptionist, hotel, employee,
secretariat, soldier;
3. STUDENT: Student;
4. EDUCATION: Teacher;
5. BUSINESS: Tailoring, self-employed, haircut, trade, transport, handcraft, welding,
carpentry, masonry, electricity, photography;
6. AGRICULTURE: Crop production, livestock, honey production.
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C. ECONOMIC ACTIVITIES
1. CROP PRODUCTION: Beans, cassava;
2. AGRIBUSINESS: Agriculture oriented to the market products (Rice, coffee, pineapple,
mushroom, bee keeping, maize);
3. LIVESTOCK: Cows and small domestic animals
4. SMALL DOMESTIC ANIMALS : Piggery, poultry, goat, rabbit;
5. TRADE OF AGRICULTURE PRODUCTS;
6. TRADE OF DOMESTIC ANIMAL: Trade of cows and small domestic animals;
7. BAR AND RESTAURANT;
8. HAIRCUT: Hairdressing
9. TRANSFORMATION: (Liquid soap, maize fuel, bakery, animal food, mayonnaise);
10. TECHNICAL: Masonry, carpentry, welding, mechanics, brick fabrication;
11. SERVICES: Tailoring, Tigo cash, MTN money, cybercafé, handcraft, cloth trade, studio
photo, decoration, stationery, design;
12. TRANSPORT: Motorist, bicyclist.
D. LIST OF ACRONYMS
1. BDF: Business Development Fund;
2. HCID: Human Capital and Institutional Development;
3. SMEs: Small and Medium Enterprises;
4. PSF: Private Sector Federation;
5. RCA: Rwanda Cooperative Agency;
6. RDB: Rwanda Development Board;
7. SACCOs: Saving And Credit Cooperatives;
8. PROBAs : Proximity Business Advisors
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BIBLIOGRAPH
1. Action Coach, Essential characteristics of an entrepreneur.
2. ASPIRA/Morgan Stanley Entrepreneurial leadership initiative, What is
entrepreneurship?
3. European Commission, Entrepreneurship 2020 Action plan: Reigniting the
entrepreneurial spirit in Europe, January 2013;
4. Gompers P. and al, Performance Persistence in entrepreneurship, Harvard Business
School, July 2008;
5. Kauffmann, Anatomy of entrepreneur: Are successful women entrepreneurs different
from men?, May 2010;
6. OECD, Measuring entrepreneurship: A collection of indicators, 2009;
7. OMIDYAR NETWORK, Accelerating entrepreneurship in Africa: Understanding Africa’s
challenges to creating opportunity-driven entrepreneurship;
8. Saras D. Sarasvathy, What makes entrepreneur entrepreneurial? June 2001;
9. U.S. Department of State. Principles of entrepreneurship, 2000.
50
P.O Box 6239, Kigali, Rwanda
email: [email protected] / website: www.rdb.rw
doc_811787435.pdf
During on this brief explanation define entrepreneurship impact assessment report april 2014.
ENTREPRENEURSHIP
IMPACT ASSESSMENT
REPORT
April 2014
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Entrepreneurship Impact Assessment Report
3
Entrepreneurship Impact Assessment Report
Entrepreneurship
Impact Assessment Report
April 2014
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Entrepreneurship Impact Assessment Report
CONTENTS
LIST OF TABLES.......................................................................................................................iii
LIST OF FIGURES.....................................................................................................................iv
ACKNOWLEGEMENTS.............................................................................................................v
EXECUTIVE SUMMARY............................................................................................................vi
1.0 INTRODUCTION.................................................................................................................1
1.1 Overview.......................................................................................................................... 1
1.2 Objectves.........................................................................................................................1
1.3 Design and methodology..................................................................................................1
1.4 Report structure...............................................................................................................2
2.0 FINDINGS..........................................................................................................................3
2.1 Descripton of the populaton..........................................................................................3
2.2 Business plan trainings 5
2.3 Startups 7
2.3.1 Project preparaton 8
2.3.2 Project conversion 12
2.3.3 Triggers and motvatons of startups 20
2.4 Capital invested and jobs created 24
2.5 Districts, Sectors, BDC and fnancial insttuton contributon to entrepreneurship 29
2.6 Other insttutons partcipatng in entrepreneurship and their contributon 32
2.7 Challenges to the creaton and management of businesses 35
2.8 Suggestons from respondents to improve entrepreneurship program 39
3.0 THE DETERMINANTS OF ENTREPRENEURSHIP 41
3.1 The determinants of project preparaton 41
3.2 The determinants of project conversion 42
3.3 The determinants of bankruptcy 44
CONCLUSION AND RECOMMENDATIONS 45
APPENDICES 47
A.PROFESSIONS 47
B. OCCUPATIONS 48
C. ECONOMIC SECTORS 49
D. LIST OF ACRONYMS 49
BIBLIOGARPH 50
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Entrepreneurship Impact Assessment Report
LIST OF TABLES
Table 1: Sampling table 2
Table 2: Trainees by last occupaton (%) 4
Table 3: Prepared projects by economic actvity (%) 9
Table 4: Reasons for not preparing a project (%) 9
Table 5: Prepared projects by level of educaton (%) 10
Table 6: Businesses created by economic actvity (%) 14
Table 7: Stage of prepared projects by province (%) 15
Table 8: Created businesses by economic actvity and province (%) 17
Table 9: Failure for project conversion (%) 19
Table 10: Capital invested (in thousands Rwf) 24
Table 11: Jobs created 28
Table 12: Loan applicatons received 31
Table 13: Loan applicatons funded 31
Table 14: Insttutons that partcipated in entrepreneurship (%) 32
Table 15: Assistance obtained from insttutons (%) 33
Table 16: Challenges in business management (%) 37
Table 17: Challenges to loan depreciaton (%) 38
Table 18: Suggestons to improve entrepreneurship (%) 39
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Entrepreneurship Impact Assessment Report
LIST OF FIGURES
Figure 1: Trainees by age group (%) 3
Figure 2: Trainees by educaton level (%) 3
Figure 3: Trainees by profession (%) 4
Figure 4: Changes occurred afer trainings (%) 5
Figure 5: Prepared projects by sex (%) 8
Figure 6: Prepared projects by province (%) 8
Figure 7: Prepared projects by age group (%) 10
Figure 8: Trainees by stage in business (%) 11
Figure 9: Prepared projects by stage of implementaton (%) 11
Figure 10: Stage of prepared projects by sex (%) 13
Figure 11: Converted projects by economic actvity (%) 13
Figure 12: Conversion by age group (%) 15
Figure 13: Conversion by province (%) 16
Figure 14: Stage of prepared projects by marital status (%) 18
Figure 15: Stage of prepared projects by level of educaton (%) 18
Figure 16: Triggers of startng a business (%) 20
Figure 17: Motvaton of running a business (%) 21
Figure 18: Origin of capital (%) 25
Figure 19: Atractons of youth in business (%) 29
Figure 20: Services ofered by Districts and Sectors (%) 30
Figure 21: Constraints to business implementaton (%) 35
Figure 22: Reasons for loan denial (%) 36
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Entrepreneurship Impact Assessment Report
This study was commissioned by the Rwanda Development Board through its Human Capital
and Insttutonal Development (HCID) Department.
Special thanks go to the M&E team of HCID for its contribution in the designing of the
methodology and the questonnaire, as well as their invaluable inputs to the process.
To the respondents who were willing to provide the informaton from which this report was
produced.
The team of enumerators and data entry must also be thanked for efficient and
professionalism in conductng the interviews.
We would not, of course, have had the data on which the report is based without the local
government authorites, public and private insttutons, throughout Rwanda, which took their
tme to partcipate in this process.
ACKNOWLEDGMENT
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Entrepreneurship Impact Assessment Report
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T
his study aimed at assessing the impact of RDB’s entrepreneurship trainings in increasing
start-ups, growth and job creaton from 2009 to 2011. The fndings demonstrated a positve
contributon to awareness and new start-ups.
Before trainings, people did not know they could commence a business, however small it may
be, grow it and reach a business of their dream. They were not aware that it is possible to have
a business as well as a wage employment. They thought to be an entrepreneur one must have
a lot of money and live in urban areas.
The entrepreneurship trainings shifed the mindset towards more aggressive initatves. The
trainees not only were no longer afraid of entrepreneurship, but also prepared and converted
their projects. It is in that context, 65.2% of trainees created their businesses and 25,100 jobs
although those jobs were mainly temporary.
Most of the businesses are related to livestock (26.7%), crop producton (19.4%), trading of
crop products (17.5%) and services (10.5%). Male (74.4%) are more dynamic than female
(66.7%) in creatng a business. In additon, the age is regarded as an important explanatory
variable of business creation. As age increases, the rate of converted projects also
increases. This phenomenon could be explained by the obstacles encountered by youth in
startng a business such as lack of capital and collateral as well. Furthermore, the financial
institutions are reluctant to trust unmarried person; which is the status of the bulk of youth.
Nevertheless, the microfnance insttuton managers, mainly SACCOs, declared 73.4% of them
funded at least 70.0% of the loan requests. Among the reasons to reject a loan applicaton
include the lack of collateral (38.7%), insufcient repayment capacity (30.6%), loan repayment
(17.7%), insufcient saving (17.7%) and insufcient bank liquidity (14.5%).
However, some fnancial insttutons encountered some challenges such as deviaton of loan
purpose (41.9%), incapacity of repayment (35.5%), poorly prepared projects (32.3%) and
delays in repayment (30.6%), even though the number of cases for each bank is low.
vi
EXECUTIVE SUMMARY
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Entrepreneurship Impact Assessment Report
Eastern (80.3%) and northern (79.2%) provinces converted more prepared projects than
others, especially Kigali City which converted only 48.9% of its prepared projects. This is due to
the fact that most of the businesses are created in livestock and crop producton while those
actvites are ofen impassable in towns.
However, the created businesses are mainly small. The average of the invested capital exceeds
hardly 420,000 Rwf. 90% of them have been created with a capital less than 1 million Rwf.
The source of funds is mainly personal saving (61.9%), property sale (20.6%), family assistance
(20.3%). Only 24.0% of the entrepreneurs benefted from the bank loan.
The main triggers for creatng a business were unemployment (32.9%), new idea (31.5%) and
overall satisfaction (27.2%). Moreover, the motivations of keeping running a business
are earning much money (33.7%), overall satsfacton (25.1%) and the market opportunites
(22.4%).
The main hindrances to new start-ups are related to lack of capital (58.8%), insufcient skills
(58.8%) and lack of collateral (29.4%). These barriers are, most of the tme, encountered by
young people, and partcularly those from secondary educaton and Kigali City.
In relation to above, the respondents issued a number of suggestions to promote
entrepreneurship. Among them, they mentoned the establishment of a regular monitoring
especially at the start-up stage (30.0%), regular trainings at annual basis (18.5%), advocacy to
the fnancial insttutons to facilitate obtaining loan (13.6%) and fnancial assistance to start a
business (13.5%).
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Entrepreneurship Impact Assessment Report
1.1 Overview
Since 2009, Rwanda Development Board (RDB), through Human Capital and Institutional
Development (HCID) Department has been providing entrepreneurship trainings to the
targeted group composed of youth, women and potental entrepreneurs.
The trainings are organized in the whole country to enable the recipients not only to acquire
the entrepreneurship skills, but also to encourage them to be entrepreneurs and to uplif their
living conditons. This survey therefore aims at monitoring the outcome of these trainings.
1.2 Objectives
The activity aims at monitoring and evaluating the impact of entrepreneurship trainings
conducted by RDB through HCID Department from 2009 to 2011 for future planning. However,
the following specifc objectves should be achieved:
a. Examine the trainings’ contributon to the increase of entrepreneurship skills;
b. Examine the trainings contributon to the increase of SMEs start-ups, growth and job
creaton;
c. Identfy the existng constraints and gaps in terms of business startups and management;
d. Formulate the recommendatons.
1.3 Design and methodology
The survey was natonal and carried out on appropriately selected sectors in all the 4 provinces
of the country and City of Kigali. To enable the potental entrepreneurs to have the necessary
time to think, start and run their business, the survey covered the beneficiaries of
entrepreneurship program of 2011.
The simple random sampling method, with two levels, was used. At the frst level, 12 districts
were selected. At the second level, 67 sectors were selected. Then, all trainees of the selected
sector were included in the sample.
1.0 INTRODUCTION
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Entrepreneurship Impact Assessment Report
Based on a population of 4,000 trainees in 2011, with a margin of error of 5%, a
confidence level of 99% and a response distribution of 0.5; the Raosoft Sample Size
Calculator, the sample size for this baseline survey is 570.
However, 808 trainees were sampled to take into consideraton the no-respondents
(see table 1).
Table 1: Sampling Table
1.4 Report structure
This report was done by the HCID team under the supervision of Head of Department. It
presents the findings of entrepreneurship training impact assessment in 3 main modules.
The first module is related to the description of the population and the contribution of
trainings to the increase of entrepreneurship skills. It reviews the age, the last occupation
before trainings, the education level and the profession of a trainee.
The second module covers the start-ups issues. It describes the project preparation
and project conversion. It tries not only to identify the triggers and motivations of
start-ups, but also to assess the amount of invested capital and job creation. It ends by an
overview of institutions participating in entrepreneurship.
The third module explores the determinants of business preparation and business
conversion.
2
Province District Number of sectors selected Number of trainees
Kigali city
Gasabo 7 45
Kicukiro 5 53
Southern
Gisagara 6 112
Huye 6 56
Muhanga 5 56
Western
Karongi 4 145
Rutsiro 2 80
Rubavu 5 70
Northern
Gakenke 4 45
Gicumbi 10 45
Eastern
Nyagatare 11 50
Rwamagana 6 51
Total 67 808
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Entrepreneurship Impact Assessment Report
2.1 Description of the population
The majority of trainees are male (65.5%), between 20 and 35 years old (88.5%) and single
(58.4%).
Figure 1: Trainees by age group (%)
Most of them atended second level of secondary school (42.5%), primary school (26.0%) or
O’ level (13.7%). According to the European Commission, ‘Educaton should play a key role in
this process. “Investng in entrepreneurship educaton is one of the highest return investments
that could be made. Surveys conducted suggest that between 15% and 20% of students who
partcipate in a minicompany program in secondary school will later start their own company,
a fgure that is about three to fve tmes that for the general populaton’.
However, Stakeholders generally agree that the educaton system, in sub-Saharan African,
tends to focus on theoretcal educaton and harnessing skills most useful in corporate frms,
failing to offer more practical curricula that can adequately prepare youth to work in
entrepreneurial enterprises. While 86% of colleges and universites in Sub-Saharan Africa
ofer a course in entrepreneurship, Afro-entrepreneurs overwhelmingly respond that there is
an inadequate focus within schools and tertary insttutons on the practcal skills required to
start, manage or work in entrepreneurial ventures.
Figure 2: Trainees by education level (%)
2.0 FINDINGS
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Entrepreneurship Impact Assessment Report
Only 14% of Afro-entrepreneurs believe that primary and secondary schools devote
enough time to teaching entrepreneurship. Colleges and universities fare better, but they
still could offer more practical aspects of entrepreneurship in the curricula. In addition,
just 25% of Afro-entrepreneurs agree that colleges and universities devote enough time
to teaching entrepreneurship.
Formal education, including attitudes and behaviors, plays a role in entrepreneurship. The
lack of a basic business culture in most SMEs, - evidenced by traits such as procrastination,
poor client management and failing to meet deadlines - may be attributed to the fact that
few formally educated employees have worked at entrepreneurial ventures.
Such employee challenges in most small businesses reduce their ability to retain
long-term clients or acquire new ones. In terms of profession, the trainees described
themselves as having skills in business (31.5%), agriculture (22.5%), technical activities
(16.7%) or in education (12.7%).
Figure 3: Trainees by profession (%)
Before attending the trainings, the trainees were in agriculture (36.3%), business (24.8%),
studying (16.2%) or in teaching (13.0%).
Table 2: Trainees by last occupation (%)
Occupaton Percentage
Technical 2.6
Employees 7.1
Social work 13.0
Student 16.2
Business 24.8
Agriculture 36.3
Total 100.0
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Entrepreneurship Impact Assessment Report
2.2 Business plan trainings
The trainees acquired various knowledge related to business plan development. The
trainees were asked to rate different chapters out of 100 according to the understanding
they got. The average for various chapters ranges from 67.0 to 78.6. All chapters were well
understood, except financial study, probably because of a certain mathematical level it
requires.
Most of the trainees appreciated how the trainings were organized. They stated to have
acquired a lot, especially those who had basics in accounting. Some of them helped others
in business plan and there were even those who earned money by helping others.
After trainings, there was a shift in mindsets favorable to entrepreneurship. The most
i mportant change was the removal of fear for starting a business (68.6%) and the
business procedural understanding (53.4%).
Figure 4: Changes occurred after trainings (%)
Other changes have occurred. Here are some declarations of the trainees:
Before entrepreneurship trainings, I thought:
• I could only be a farmer;
• I had to be an employee all my life and wait for the salary pay at the end of the month;
• An entrepreneur is a tycoon who lives in big city;
• I was simly afraid by hearing the term entrepreneurship.
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After the trainings,
• I understand it is possible to restart after failure;
• I campaign for entrepreneurship and help others in business plan;
• I encourage other not to be afraid of starting;
• I understand it’s possible to start with a small capital, progress and gain a lot of money;
• I’m confident to be rich and striving for self-reliance;
• I started to work with financial institutions, to apply for a loan and to invest;
• I’m no longer waiting for the Government employment;
• I’m no longer afraid of recruiting an employee;
• The trainings opened my eyes;
• I am open minded and objective oriented;
• I’m no longer afraid of getting supplied with expensive goods;
• I’m aware of cooperative role and interacting with them;
• I know how to learn from competitors and mistakes;
• I am able to differentiate incomplete from complete projects;
• I improved in customer care, saving and money management;
• I know every business is possible;
• I highly value my job of entrepreneurship;
• I started my business;
• It’s more profitable to be entrepreneur than an employee.
These kind of trainings raised awareness of applying for a loan, even though the financial
institutions remained a mystery for the majority of the trainees. The saving culture is
indeed recent for many Rwandans. The financial institutions have begun a campaign for
the saving culture, but some applicants are still denied a loan because their bank account
movements are not active.
One of the objectives of the trainings is to sensitize and encourage the beneficiaries to
join cooperatives. Before the trainings, 45.2% of trainees were members of cooperatives.
They were 69.6% after trainings. However, some cooperatives failed either because
their members went to pursue studies, found employment far from the original place or
because of embezzlement.
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2.3 Startups
The main objective of these trainings is to contribute to the increase of SMEs start-ups,
growth and job creation. The impact assessment will then focus not only on the prepared
and converted projects, but also on the jobs created.
According to the US Department of State report (Principles of enterpreneurship, 2000),
most economists today agree that entrepreneurship is a necessary ingredient for
stimulating economic growth and empl oyment opportunities in all societies. In the
developing world, successful small busi nesses are the pri mary engi nes of j ob
creation, income growth, and poverty reduction.
There is no one definitive profile of an entrepreneur. Successful en¬trepreneurs come
in various ages, income levels, gender, and race. They differ in education and experience.
But research indicates that most successful entrepreneurs share certain personal
attri butes, including: creativity, dedication, determination, flexibility, leadership,
passi on, sel f-confi dence, and smarts (common sense joined to knowledge and
experience).
The same report states that entrepreneurship is vital for developed and developing
economies. Small business creates jobs (75% of new jobs in USA), generates social
welfare, decentralizes economic power, gives people stake in the future, innovates and
produces special goods and services.
More so, small technologies produce nearly 13 times more patents per employee than
large firms in USA.
The following pages assess the impact of different initiatives that have been undertaken
since 2009. There is an emphasis on the prepared projects, their conversion, the jobs
created and the capital invested.
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Entrepreneurship Impact Assessment Report
2.3.1 Project preparation
The Government of Rwanda i s stri vi ng to create an envi ronment conduci ve
for ent r epr eneurship and to change the citizen mindsets from being job seekers to
job creators. It is in this context that RDB has initiated entrepreneurship trainings.
That initiative is now bearing fruits. For the beneficiaries of RDB trainings, 90.8%
prepared at least one project, 10.5% two and 1.0% three projects. Male (94.8%) are more
likely to try starting a business than female (84.1%).
Figure 5: Prepared projects by sex (%)
Kigali City lags behind other provinces in startups because many businesses are prepared
in livestock and crop production, which are often less practiced in towns.
(see figure 6)
Figure 6: Prepared projects by province (%)
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Entrepreneurship Impact Assessment Report
Most of businesses are prepared in rearing domestic animals (27.7%) and trade of crop
products (15.6%). In addition, 47.8% of projects are related to livestock and crop
production (see table 3). This creates confusion between an activity aiming at
consumption and a real business.
Table 3: Prepared projects by economic activity (%)
Economic actvity Percentage
Crop producton 9.7
Agriculture products oriented to business 10.4
Rearing Cows 10.6
Other domestc animals 17.1
Trade of crop products 15.6
Commercial of domestc animals 1.3
Bar and restaurant 7.4
Haircut 3.2
Transformaton 2.8
Technical 8.3
Services 11.2
Transport 2.3
Total 100.0
Those who did not prepare a project declared to lack the enough capital (38.3%), to still
think of doing it (31.9%), to pursue their studies (17.0%), to have another occupation
(12.8%) or to lack collateral to secure a loan (10.6%).
Table 4: Reasons for not preparing a project (%)
Reason Percentage
Lack of capital 38.3
Not ready 31.9
Studying 17.0
Other occupaton 12.8
Lack of collateral 10.6
Fear of failure 8.5
Don’t like 4.3
No idea of valuable project 4.3
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As age increases, the percentage of prepared projects also increases. This confirms
the difficulties stated by youth in business creation. Many have indeed lacked capital
(especially those who just completed secondary school), don’t have access to loan
because of the problem of lack of collateral and some haven’t yet inherited from
their parents. Moreover, only 88.3% of unmarried persons managed to prepare a project
against 94.4% for married ones.
Figure 7: Prepared projects by age group (%)
Furthermore, those who had a Diploma Degree or attended scientific studies were less
interested in preparing a project. Some of them are pursuing their studies or have found
another occupation. The proactiveness, in terms of project preparation, are the S4 – S6
(37.9%) but they also represent 42.4% of the trainees (see table 5 and figure 2)).
Table 5: Prepared projects by level of education (%)
Level of educaton Percentage
P1 - P8 24.9
S1 - S3 + TVET 12.7
S4 - S6 37.9
Diploma 8.6
Bachelor 7.0
Total 91.0
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In general, 65.2% of the trainees prepared and implemented their projects, 18.9% did not
implement their projects, 9.2% did not prepare any project, and 5.7% implemented them
but failed while 1.0% suspended it.
Figure 8: Trainees by stage in business (%)
In addition, some of the projects were submitted to the banks (3.9%) for loan or to the
District office in charge of youth (1.4%) for financial assistance. The problem is that the
applicants did not receive any responses to their requests. More communication should
remedy this situation.
Figure 9: Prepared projects by stage of implementation (%)
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2.3.2 Project conversion
The conversion of the projects is a key issue. Some prepared projects, indeed, are not
converted to busi nesses essenti al l y because of the l ack of capi tal . Thi s dri ves
the entrepreneurs to submit their projects to financial institutions for loan, to the District
or Donors for financial assistance. Because of the limited capacity to satisfy all requests,
some projects have not been implemented.
Despite the above hindrances, 71.7% of the prepared projects have been converted. In
other words, 65.2% of trainees created a business. Male (74.4%) are more likely to
implement their projects than female (66.7%). These figures are consistent with the
financial institution statements where male represent about three - quarters of the loan
applicants.
Textile trading in Gisagara district
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All projects prepared in commercial domestic animals were implemented, but their number
is too small to be generalized. Other domains with high conversion rates are transport
(83.3%), crop production (80.5%) or trading of crop products (79.3%).
Figure 10: Stage of prepared projects by sex (%)
However, only 40.0% of the projects prepared in transformaton have been converted. Those
projects require a huge amount of capital which entrepreneurs don’t always have; neither do
the fnancial insttutons want to take such risk by funding such businesses at start-up stage.
Other domains with low conversion rates are bar and restaurants (64.1%), rearing
domestc animals (65.6%) and services (66.1%).
Even though failure rate is averagely rare (6.4%), it is high for bar and restaurants (12.8%), crop
producton (9.8%), agribusiness (9.3%) and rearing domestc animals (8.9%).
Figure 11: Converted projects by economic activity (%)
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Table 6: Businesses created by economic activity (%)
Economic actvity Percentage
Crop producton 8.9
Agribusiness 10.5
Breeding cows 10.8
Other domestc animals 15.9
Trading of crop products 17.5
Commercial of domestc animals 1.9
Bar and Restaurant 6.7
Hair cut 3.8
Transformaton 1.6
Technical 9.2
Services 10.5
Transport 2.7
Total 100.0
46.1% of the created businesses are related to agriculture (see table 6). This is consistent
with their proportion (47.8%) in prepared projects. Services and trading crop products
also have a good share in new start-ups. Female respectively represent 34.5% and 30.6%
of trainees and new entrepreneurs.
Small and Medium Enterprise in Rwamagana District
For the businesses that failed, the causes are various. However, the main causes were
insufficient capital (20.0%), bad weather (17.1%), robbery (17.1%), poor management
(17.1%), disease which killed the animal (14.3%) and the pursuit of studies (8.6%).
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Age is an important explanatory variable of converting projects. As the age increases, the
rate of conversion also increases to reach its climax at 36-43 years old with a conversion
rate of 91.2%. At this age group, people have already saved sufficient capital to start a
business or collateral to secure the loan requested.
Figure 12: Conversion by age group (%)
Eastern province outperformed other provinces in converting projects. Eastern province
converted 80.3% of its projects while Kigali City only implemented 48.9% of its projects.
The rate of non implemented projects (42.6%) in Kigali City is also alarming as well as rate
of failed projects (10.9%) in Southern province (see table 6).
Table 7: Stage of prepared projects by province (%)
Province Implemented Not implemented Failed Suspended
Kigali city 48.9 42.6 6.4 2.1
Southern 68.0 19.5 10.9 1.6
Western 73.9 21.8 3.4 0.9
Northern 79.2 15.8 5.0
Eastern 80.3 14.1 4.2 1.4
Total 71.9 20.8 6.2 1.1
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Small and Medium Enterprise in Huye District.
Figure 13: Conversion by province (%)
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According to the table 8, some businesses are often encountered in specific provinces than in
others. Rearing cows, trading of crop products and services in Kigali City; rearing domestic
animals, agribusiness and services in Southern province; rearing domestic animals, trading and
production of crop products in Western province; trading of crop products and rearing
domestic animals in Northern province; trading of crop products, agribusiness, bar and
restaurant in Eastern province.
Table 8: Created businesses by economic activity and province (%)
Economic actvity
Kigali
City Southern Western Northern Eastern Total
Crop producton 8.0 5.0 16.3 8.8 4.8 8.9
Agribusiness 8.0 18.0 4.3 5.5 15.9 10.5
Breeding cows 28.0 8.0 8.7 13.2 7.9 10.8
Other domestc animals 8.0 19.0 17.4 18.6 7.9 15.9
Trading of crop products 16.0 12.0 16.3 23.1 20.6 17.5
Commercial of domestc
animals 4.0 1.0 2.2 1.1 3.2
1.9
Bar and Restaurant 4.0 5.0 8.7 2.2 14.3 6.7
Hair cut 6.0 4.3 4.4 3.8
Transformaton 4.0 2.0 2.2 1.6 1.6
Technical 7.0 13.1 8.8 11.1 9.2
Services 16.0 16.0 5.4 7.7 11.1 10.5
Transport 4.0 1.0 1.1 6.6 1.6 10.5
Total 100.0 100.0 100.0 100.0 100.0 100.0
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In general, trading of crop products (17.5%) and rearing of domestic animals (15.9%) are
encountered in most of provinces.
The once married converted more projects (81.1%) than the single ones (64.8%) even
though, they faced almost the same failure rate.
Figure 14: Stage of prepared projects by marital status (%)
It seems that as the level of education increases, the rate of implementation decreases.
Many reasons could explain this. Firstly because most of the graduates are young and
don’t have either capital or collateral.
Secondly, some of the graduates preferred to pursue their studies rather creating a
business or had another occupation. Last but not least, most of the graduates are still
seeking for an employment or a job to build up capital.
Figure 15: Stage of prepared projects by level of education (%)
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The trainees who already had a business (83.3%) converted more projects than others. Those
who had social (48.6%) and educaton (64.7%) as profession are less likely to implement their
projects. The social profession also has a high rate of failure (18.9%).
The projects were not converted into businesses either because the trainee lacked the capital
(38.8%), was at the preparaton stage (36.9%) or did not have collateral to secure the loan
applicaton (12.6%).
Table 9: Failure for project conversion (%)
Reason of no conversion Percentage
Lack of capital 38.8
Projects in preparaton 36.9
Lack of collateral 12.6
Needs of a lot of money 3.9
Submited to the bank 2.9
Submited to the District 2.9
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2.3.3 Triggers and motivations for startups
Most of entrepreneurs started their businesses because they were unable to find a wage
employment (38.6%). This demonstrates that entrepreneurship is a new concept for
Rwandans. After studies, the first choice is seeking for a wage employment. Even some
trainees who did not attend school declared to have started their own business because
they could not find salaried employment. In addition, only 3.9% of the entrepreneurs took
over their parent’s businesses.
The respondents stated other various triggers. They started a business due to the
need of uplifting the living conditions (7.5%),implementing the entrepreneurship
trainings (6.4%), implementing theoretical lessons (1.7%), fructifying available capital
(0. 9%), preparing better future, self-reliance, providing jobs to the family, gaining
independence from employers. Others declared the trigger was the loss of employment
(2.1%), availability of the market (1.5%), the profitability of a business compared to crop
production (1.1%), insufficient salary (0.9%), encouragement from other enterprenuers
and friends, observing a neighbouring thriving business, support from BDF. It is important
to highlight the role played by other entrepreneurs and family in supporting the new
entrepreneurs. Some businessmen expressed gratitude to their peers who encouraged
them not to be afraid of business and incited them just to try. Family and relatives
invited the future entrepreneurs to think how to uplift their living conditions and to
prepare the future. They even sometimes provided financial assistance.
Figure 16: Triggers of starting a business (%)
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Likewise, the respondents were asked their motivations in everyday running business.
Most of them were interested in earning much money (45.7%). Others stated they had an
overall satisfaction in running the business (32.2%) or the fact that their business is
thriving because of availability of the market (30.4%).
Figure 17: Motivations of running a business (%)
There are other various interesting motivations such as having a profitable business
(5.7%), uplifting the living conditions (5.1%), self-reliance (5.1%), always having money
(4.5%), helping others in finding jobs (3.6%) or catering for the family (2.7%).
Each entrepreneur met was proud of having an employment, solving his own small
problems, paying school fees, regaining self-esteem, being with others,contributing to the
national development or avoiding begging.
A cooperative of literate people in Karongi District started various businesses such as
coffee plantation, bee keeping and handcraft to serve as an example to the youth
and to demonstrate to them the availability of opportunities to uplift their living
conditions. That cooperative benefited from various incentive measures of the local
authorities such as land and handcraft showroom.
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Bee keeping in Karongi District.
Handcraft showroom in Karongi District.
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In Rubavu District, an entrepreneur is thriving in quarrying and selling sand. He can load
70 trucks a week. One truck worths 20,000 Rwf in summer (sun season) and 8,000 Rwf in
winter (rain season). He employs 40 people (many of them are women) earning 3,000 Rwf
from 7h to 12h or 5,000 Rwf from 7h to 17h. Most of the employees bought cows, goats
or pigs from their wages. Some employees also saved capital to start their own business
in the near future.
Beneficiary of entereprenuership training in Gicumbi District
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Quarrying and selling sand in Rubavu District.
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2.4 Capital invested and jobs created
The respondents of this study received entrepreneurship trainings in 2011. As
forementioned, 65.2% of them created a business. However, the amount of invested
capital revealed that the businesses created are very small (44.5% of them were created
with a capital less than one hundred thousands Rwf). The quartiles indicate that 25% of
the businesses cover capital less than 44,500 Rwf, half of them a capital less than 104,000
Rwf while three fourths were created with less than 401,000 Rwf. Only about 10.0% of
the businesses were started with more than 1 million Rwf (see table 10). Most of the
businesses with higher capital value are cooperatives.
Table 10: Capital invested (in thousands Rwf)
Capital (in thousands Rwf) Percentage
3.5 - 10 4.7
10 - 15 4.3
15 - 20 5.1
20 - 30 4.3
30 - 40 4.3
40 - 50 5.6
50 - 100 16.2
100 - 150 11.1
150 - 200 6.0
200 - 300 8.1
300 - 500 9.8
500 - 750 8.1
750 - 1000 2.6
1000 - 1500 3.8
1500 - 2000 3.0
2000 - 3500 2.6
3500 and more 0.4
Total 100.0
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The first source of the capital is personal saving (61.9%). The startups were also financed
by property sale (20.6%) as well as family’ assistance (20.3%). Only 24.0% of businesses
benefited from the bank loans.
Figure 18: Origin of capital (%)
Ot her s our ces of capi t al ar e t he s al e of crop product s ( 2. 5%) , t he s har e of
cooperat i ve/ tontine members (1.7%), the salary (1.7%). Some used training allowance
(0.6%) or competition award (0.6%) to start a business.
According to the respndents, 93.9% of businesses are thriving, only 6.1% of them are
stagnating. The soar of businesses is demonstrated by the fact that the present worth of
businesses is about three times of the starting capital. The current average worth of
business is now 1,606,675 Rwf from 421,283 Rwf, the first quartile is 157,875 Rwf while
the second and third quartiles are respectively 500,000 Rwf and 1,282,500 Rwf.
At starting, 90% of businesses worthed less than 1 million Rwf, that percentage
corresponds now to 3 million Rwf.
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Decoration business in Rwamagana District.
It is evident that such entrepreneurs are very optimistic. According to their vision, their
capital, for the next five years, would be about four times of the present worth.
The mean would be 4,756,345 Rwf, the first quartile would amount 800,000 Rwf, the
second and the third quartiles respectively 2,500,000 Rwf and 5,000,000 Rwf. On top of
that, the capital value of 10% of the businesses would be more than 10 million Rwf.
In the next five years, most of the entrepreneurs expect to expand their businesses. Some
of them would have recruited more employees, built their own shop, added new
products, increased capital, shifted from informal to formal sector. Others would need
however more financial support and training to achieve their objectives.
Even though there is a reasonable growth, only 57.5% of entrepreneurs declared that their
businesses have increased according to their plan. 42.5% others stated various hurdles
that hindered the achievement of their objectives. Among them, they cited insufficient
capital, clients and skills, the use of the capital for other purposes, bad weather, electricity
problem, high costs of supplying resulting in high prices that clients can’t afford, paying
high interests and the fact that the employee did not care enough about the business as
the owner would have.
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Enterprenuership beneficiary in Huye District
In terms of employment, the entrepreneurs were asked if, during the survey period, they
had employees. 252 out of 335 existing businesses created jobs. Most of them (68.7%)
created less than 4 jobs. In total, 1073 jobs were created (see table 10). The cooperatives
played a key role in this process. 19 cooperatives identified had 296 members/jobs.
Nevertheless, it is very difficult to assess the sustainability of these jobs because many of
them did not last more than one day.
Handcraft showroom in Karongi District.
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In relation to the above, about 25100 jobs were created by the entrepreneurship program
during the period 2009/2011, because at least 4,000 people received trainings every year.
As from 513 trainees sampled, 1073 jobs were created, the total number of jobs created
is estimated at (1073/513)*12000 = 25100 jobs.
Table 11: Jobs created
Number of jobs created Frequency Total jobs created Percentage
1 69 69 27.4
2 63 126 25.0
3 41 123 16.3
4 23 92 9.1
5 10 50 4.0
6 8 48 3.2
7 4 28 1.6
8 6 48 2.4
9 - 12 9 92 3.6
15 - 20 13 219 5.2
22 - 28 4 98 1.6
40 2 80 0.8
Total 252 1073 100.0
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2.5 Districts, sectors, BDC and financial institution contribution to
Districts and Sectors play a key role in entrepreneurship. They liaise between the RDB
services and the beneficiaries of the trainings. They indeed select them for trainings,
ensure thei r fol l ow- up and provi de other necessar y support to ensure the
i mpl ementation of the trainings a reality.
The District and Sector Youth Officers were asked which activities attract more Youth
when they decide to create a business. Breeding of domestic animals (73.5%), crop
production (52.9%) and retail (44.1%) are the main attractions for youth businesses (see
figure 20). Those activities are spread in the whole country with predominance of crop
production in Gasabo, Huye, Rubavu, Nyagatare and breeding of pets in Huye.
Figure 19: Attractions of youth in business (%)
entrepreneurship
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Districts and Sectors also participated in orgainizing trainings (50.0%), sensitization for
creating and joining cooperatives (32.4%), advocating to the financial institutions and
donors to obtain funds (17.6%), sensitization for creating a small businesses as it is (8.8%),
searching for successful businesses to serve as an example (8.8%), meeting and discussing
with youth (8.8%) and providing advice in business plan (5.9%). When people indeed join
a cooperative, it is more easier to reach and advocate for them.
Figure 20: Services offered by Districts and Sectors (%)
The Business Development Centers (BDCs) enable the potential entrepreneurs to have
access of various services provided by RDB. They are located in each of the Districts of
the country. They operate on the Private-Public-Partnership (PPP) model in which the
Government retains ownership of BDC’s assets and the operator assumes responsibility of
all services. However, the Government participates in 30% of the cost of provided services.
They provided services related to entrepreneurship development, business registration,
facilitation to access to finance, export development, IT services, tax advisory services,
training and business advice and counseling.
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The financial institutions are one of the most important stakeholders in entrepreneurship
program by funding the projects. It is in that context, 62 banks and micro finances were
asked their opinion about the access to finance. SACCOs and Banque Populaire du Rwanda
respectively represent 77.3% and 11.3% of the respondents.
Last year, 42.6% of financial institutions received between 150 and 700 loan applications
related to small businesses (with a capital less than 2 million). Most of the financial
institutions (29.8%) received between 51 and 100 loan applications (see table 12).
Table 12: Loan applications received
Number of loan applicatons Percentage of the banks
15 - 50 10.6
51 - 100 29.8
101 - 150 17.0
151 -200 23.4
201 - 300 6.4
301 - 700 12.8
Total 100.0
SACCOs are more likely to receive and fund more loan applications related to small
projects than other financial institutions, which is consistent with their mission. 28.9% of
the financial institutions funded between 80 and 90% of the loan applications received
(see table 13). Some of them (22.2%) even declared to fund all loan requests.
Table 13: Loan applications funded
Percentage funded Percentage of the banks
30 - 40 6.7
50 - 60 6.7
61 - 70 13.2
71 - 80 15.6
81 - 90 28.9
91 - 95 6.7
96 -100 22.2
Total 100.0
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2.6 Other institutions participating in entrepreneurship and their contribution
The Government of Rwanda is doing everything possible not only to upgrade and
strengthen entrepreneurship, but also to enable all institutions and to mobilize Non
Governmental Organizations (NGOs) operating in Rwanda to participate in this great
initiative.
It is in this context that, The Rwanda Development Board (RDB), at the top, and various other
organizatons started to organize a lot of actvites ranging from entrepreneurship awareness
campaign to fnancial support and entrepreneurship trainings (see table 14).
Table 14: Institutions that participated in entrepreneurship (%)
Insttuton Percentage
RDB 28.3
Sectors 12.9
Financial insttutons 9.9
Districts 6.4
Natonal Youth Council 4.7
Local authorites 4.5
Friends 3.7
Ministries 3.3
Cooperatve 1.6
BDF 1.4
Family support 1.4
PSF 1.4
RCA 1.2
Family 1.2
Hanga umurimo 1.0
World Vision 0.8
The financial institutions, mainly SACCOs, play a key role in this process by granting loans
to entrepreneurs. However, some of them are facing liquidity problem because of the high
number of the applications.
Districts have been of great importance by assisting RDB on the field. They indeed selected
the trainees and ensured their follow-up. They also provide advice, agronomist and
veterinary services to entrepreneurs.
Sectors are more close to the population than Districts. That’s why they are considered by
trainees as the most active on the field. Moreover, they ensured security of property and
sometimes issued land to enable youth cooperatives to start and operate.
Many other institutions namely the National Youth Council, different Ministries, the cells,
the Business Development Fund (BDF), Private Sector Federation (PSF), Rwanda
Cooperative Agency (RCA), Hanga Umurimo and National Women Council participated, at
different levels, to ensure the success of this great initiative.
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Some NGOs such as World Vision, International Fertilizer Development Center (IFDC),
Adventst Development Relief Agency (ADRA), Rwanda Agro-Dealer Development (RADD),
IREX (USAID), DUHOZANYE Associaton delivered various support to young entrepreneurs.
Some of them rewarded the winners of the competition which enabled them to start a
business. Others issued carpentry materials and helped in the creation of small income
generatng projects (see table 15).
Table 15: Assistance obtained from institutions (%)
Type of assistance Percentage
Training 39.0
Advice 15.6
Loan 9.4
Veterinary service 2.3
Financial support 1.9
Documents 1.8
Security 1.8
Collateral 1.4
Land 1.2
Advocacy 1.0
Modern seeds 1.0
Study tour 1.0
Material 0.8
Fertlizer 0.8
Follow-up 0.6
Agronomist service 0.6
It is worth highlighting that the role played by the cooperative, friends, the family and
other entrepreneurs in advising, encouraging and supporting financially and morally the
new entrepreneurs to achieve their dreams.
This is consistent with the OMIDYAR NETWORK report about which ‘the entrepreneurs
are best assisted either by other entrepreneurs or by established functional or industry
experts who possess appropriate and relevant expertise”
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Exercise session in groups during trainings
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2.7 Challenges to the creation and management of businesses
The financial institutions as well as the potential entrepreneurs face a certain number of
challenges related to the financing and the implementation of business projects.
In relation to business preparation, the potential entrepreneurs cited not to be ready for
starting (51.9%) or to have found another occupation (22.2%) to justify the absence of any
reactions to trainings.
The trainees who prepared a project but did not implement it mentioned that it was due
to lack of capital (58.8%), insufficient skills (58.8%) as well as lack of collateral to secure
the loan application (38.7%). Either the applicant doesn’t have it at all, either it is
insufficient or when BDF is ready to provide 75% of collateral, the applicant is unable to
find the remaining 25%. Apart from lack of capital and collateral, the youth, in Kigali City,
can’t proceed to livestock or crop production as their counterparts in rural areas.
Figure 21: Constraints to business implementation (%)
Moreover, financial institutions are reluctant to trust unmarried people and some SACCOs
haven’t yet signed an agreement with BDF. So far, 340 SACCOs have done it.
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According to managers of financial institutions, some loan applications were rejected
because of the lack of collateral (38.7%), insufficient capacity of repayment (30.6%), loan
records (17.7%), insufficient savings of the applicant (17.7%) or insufficient liquidity of the
bank (14.5%).
Figure 22: Reasons for loan denial (%)
To overcome this challenge of lack of collateral, some banks ask the loan applicants to
modify their projects accordingly or to seek help of friends.
Only 4.8% of SACCOs declared they didn’t encounter a collateral problem, either because
the applicants had it, or due to the help of BDF. Other banks (BPR) stated that those who
have no collateral don’t dare to apply for loan.
There were also cases where one collateral had been issued to several banks, which arises
a lot of problems in case of aunction.
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In addition, the projects were poorly prepared. That’s why SACCOs drafted a form to be
filled in by loan applicants instead of financial study document. The help of Proximity
Business Advisors (Proba) was also playing a great role.
Also, some financial institutions are reluctant to fund new start-ups. They urge the applicant
first to start a business and seek for loan later when his business is proven operating.
However, according to SACCOs managers, the biggest challenge in business management
was the loan deviation (41.9%) at different levels. It occurred when a loan was used
differently from its initial purpose. It usually happens when the applicant operates one
withdraw. The consequences are often failure and no repayment of the loan (see table 16).
Table 16: Challenges in business management (%)
Challenge Percentage
Project deviaton 41.9
Insufcient skills 6.5
Poor management 4.8
The applicants argued that they deviated from the loan purpose when the amount
delivered by the bank was less than their requests. So, they found themselves in the
situation where they were unable to implement the proposed project and imagined
another one according to the amount obtained.
Other challenges are insufcient skills in business management, the confusion between a loan
and a fnancial assistance and the mixture of personal and business actvites. The confusion
between loan and Government support or VUP occurred especially when the loan was
delivered to a group of people or without documents. However, 11.3% of SACCOs declared
the management was good and 1.6% stated there was an improvement in dealing with
loan applicants and enterprenuers. The fnancial insttutons overcome these challenges by
frequent visits, discussions, advice and by delivering the loan in installments according to the
business plan issued by the applicant.
They al so sei zed di fferent opportuni ti esopportuni ti es to meet thei r cl i ents
(meeti ngs organized by the local authorities, communal works, at the markets).
In addition, all financial institutions pledged to regularly conduct awareness campaign for
their activities.
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In terms of loan depreciation, the financial institutions adopt two different behaviors in
case of no payment: counseling and discussion for SACCOs and auction for other banks.
Table 17: Challenges to loan depreciation (%)
Challenges Percentage
No repayment 35.5
Delays 30.6
Confusion 6.5
Deviaton 4.8
Repayment difcult in crop producton 3.2
35.5% of the banks faced indeed the problem of loan payment and 30.6% of them
encountered delays in payment (see table 17).
However, the percentage of applicants who did not repay their loan was estimated less
than 5% in average. There were delays, but finally the loan applicants paid after
discussions and counselingcounselingcounseling of the SACCOs managers.
The loan deviation, bad weather in crop production, mismanagement and bankruptcy
were also cited as the origin of no payment of the loan.
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2.8 Suggestions from respondents to improve entrepreneurship program
The entrepreneurship program was launched by Government of Rwanda to help especially
Youth and Women to be job creators, not job seekers. Creating venture demands to be a risk
taker, because failure is possible. It fortunately provides immense joy when success occurs
not only for the entrepreneur by generating income and uplifting the living conditions, but
also for the country economy by creating new jobs and wealth.
Likewise, to see their dreams becoming realities, the recipients of entrepreneurship
trainings emitted valuable suggestions aiming at improving the program. Four top of them
are related to the increase of follow-up (30.0%), the consideration of revision and regular
trainings (18.5%), the advocacy to the financial institutions (13.6%) and the financial
support (13.5%) at start-up stage (see table 18).
Table 18: Suggestions to improve entrepreneurship (%)
Suggeston Percentage
Follow-up 30.0
Regular trainings 18.5
Advocacy to the fnancial insttutons 13.6
Financial support 13.5
Increase training duraton 7.2
Help in obtaining collateral 4.3
Comprehensive business plan 2.7
Increase advisory service 1.8
Consider proximity for trainee venues 1.6
Issuing certfcate 1.4
Specialize trainings 1.0
In addition, the trainees declared that one training session was not sufficient to have a
comprehensive business plan. So, they suggested a possible revision of training on annual
basis.
They would like to receive trainings related to their projects such as piggery, bee keeping,
bakery, carpentry, customer care, computer literacy, food conservation, bar, restaurant
and hotel management, the use of fertilizers, mushroom production, marketing, poultry,
hairdressing saloon, soap production, production of plums, development of egg incubation,
juice production, up scaling the business or the management of big businesses.
Some respondents expressed the desire to get a comprehensive business plan to be able
to prepare their projects without a help of someone. Many of them want to understand
the financial institution functioning and how to obtain a loan easily.
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The most important concern is however related to stakeholders such as district youth
office and the financial institutions. The respondents who don’t have capital for starting
a business are encouraged to submit their projects to district youth office for help.
Nevertheless, sometimes they do not receive any response to their applications.
The same for financial institutions. The trainees are worried about not getting loans even
when they have collateral. Appropriate communication should remedy to that situation.
Even if the request is not satisfied, the decision should be notified to the applicant. Often
the BDF staff was being obliged to inform the applicant that his loan application was
accepted.
Due to those hindrances, the trainees would like to benefit from the RDB advocacy to the
financial institutions. Considering proximity for trainee venues could also prevent from
making long journey, sometimes under rain or sunshine and facilitate to revise exercises.
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3.0 THE DETERMINANTS OF ENTREPRENEURSHIP
After the entrepreneurship training, many of the trainees prepared business projects
and others succeeded in implementing them. However, some of them failed while others
suspended the business activities because of pursuing studies. This chapter highlights the
determinants of business preparation, implementation and failure.
3.1 The determinants of project preparation
The trainings raised entrepreneurship awareness among the recipients. Many of them
understood it was possible to start a business even with small amount of money and grow.
The employees realized they had a huge capacity and ability to make additional money
besides their salary and the job seekers apprehended it was no longer necessary to wait
for employment but it was worth creating their own business.
So, 90.8% of the trainees prepared at least one business projects. Male (94.8%) out
numbered female (84.1%) in doing so. Among the provinces, the Western (92.2%) and
Southern (92.2%) are on the top. Many of the prepared business are related to livestock
(27.7%), crop production (20.1%) or trade of crop products (15.6%). Due to these differences,
it is worth examining if there are any variables explaining the project preparation. It is in
this context that sex, age, resident province, marital status, level of education, profession
and last occupation before entrepreneurship trainings were considered.
The most important determinant of the business preparation is the last occupation of the
trainee before entrepreneurship trainings. A crop producer, a business owner or a student
has respectively 21.1, 10.2 and 4.9 times more chance of preparing a business than a
technician. This result is consistent with the proportion of prepared businesses related
to livestock and crop production. 47.8% of prepared projects are indeed related to those
economic activities. Any activity undertaken in these areas (rearing a pig, growing maize)
was actually considered as a business. Nevertheless, there is no difference between a
technician, a teacher or a social worker in terms of business preparing. The second variable
explaining the project preparation is the sex. A male has 4.3 times more chance to prepare
a project than a female. The variable age also indicates that any time an individual gets
older by a year, the chance to prepare a business increases by 0.122. This demonstrates
that the younger the person, the less he is likely to prepare a project. The reasons are lack
of capital or collateral to secure the loan applied for.
However, the available data did not demonstrate the role of resident province, marital
status, level of education and profession of the trainee in project preparation. In other
words, the trainees of all provinces, marital status, levels of education and professions
prepared the projects at the same level. Nevertheless, some of those variables are
correlated to the variables in the model (age and marital status for example). In addition,
this model explains only between 10.3% and 21.8% of the project preparation.
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3.2 The determinants of project conversion
Preparing a business is a good step to start an enterprise, but converting it is the best
achievement. Some trainees did not convert their business due to various reasons. The
three top hindrances are lack of capital (58.8%), insufficient skills (58.8%) and the problem
of lack of collateral (38.7%).
In general, 71.6% of the prepared projects have been converted. In other words, 65.2%
of trainees created a business. According to the economic activity, the high conversions
are related to transport (83.3%), haircut salon (82.4%) and crop production (80.5%). The
traders of domestic animals converted all their projects but their number is too small to
be generalized. The level of education also played a non negligible role. Only 61.8% of the
holders of Bachelor’s Degree converted their projects while this proportion is 82.8% for
the trainees who attended only primary school. This could be explained by the fact the
latter category mostly prepared the projects related to livestock and crop production.
The Eastern and Northern provinces respectively converted 80.3% and 79.2% of their
projects while this proportion fell at 48.9% in Kigali City. In terms of age, the 36-43 and
20-24 years old converted respectively 91.2% and 65.9% of their projects.
In relation to the above, it is worth wondering if any set of variables could explain the
conversion of the prepared projects. To do so, the variables sex, age, resident province,
marital status, level of education, profession and the last occupation of the trainee before
entrepreneurship trainings were taken into account.
All provinces outperformed Kigali City in terms of project conversion. Most of the
businesses are indeed created in economic activities which are less practiced in town
(livestock and crop production). In terms of project preparation, there is no difference
between provinces. But when it comes to the phase of implementation the difference
appears, Kigali City dragging behind others.
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The level of education demonstrates that those who attended the University (Bachelor’s
Degree holders) are less likely to convert their projects. The trainee who attended primary
school, O’ level or secondary school has respectively 9.4, 6.7 and 3.9 times more chance
to implement their projects than the Bachelor’s Degree holders.
In relation to the profession, the technicians who were less likely to prepare a business
are more active in converting them. So, a technician, a scientific and a business holder has
respectively 6.1, 5.2 and 3.6 times more chance to convert his/her project than a teacher
Finally, the more an individual is older, the more he/she is likely to convert his/her project.
This phenomenon has been early explained by the fact that the young people lack capital or
collateral. Most of the Bachelor’s Degree holders are also young. It is also worth indicating
this model explains only between 13.7% and 22.1% of the project conversion.
Contrary to what has been said about project preparation, the last occupation of the
trainee before trainings doesn’t play any role in conversion according to the data. The
trainees of all occupations converted their projects at the same level. The same is true for
sex and marital status even though the latter is highly correlated with age.
To sum it up, the variable age plays a key role in entrepreneurship. The more an individual
is older, the more he/she is likely to create a business. The reasons are well known. The
Youth has neither a capital nor collateral to secure a loan requested. Some of them are
fresh from school and are job seekers; others are waiting to inherit from their parents or
to get the first job to constitute a capital.
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3.3 The determinants of bankruptcy
Few cases of bankruptcy were identified as it was not the objective of the study. Only 5.7%
and 1.0% declared respectively failure and suspension. For that reason, it was not possible
to identify the determinants of bankruptcy. However, it is still important to highlight it.
According to the European commission report (Enterprenuership 2020 Action Plan:
Reigniting the enterprenurial spirit in Europe, January 2013), business failure, like business
creation, is part of a dynamic, healthy market. Evidence shows that by far the majority
(96%) of bankruptcies is due to a string of late payments or other objective problems. They
are, in other words ‘honest failures’, without any fraud by the entrepreneur. Entrepreneurs
are nevertheless treated by many bankruptcy laws as if they were fraudulent, having to go
through complex procedures before they can be discharged. Even after a discharge, those
whose businesses got bankrupt sometimes are stigmatized and have difficulties financing
a new enterprise. Therefore, many potential entrepreneurs simply give up and do not
consider trying again.
Yet research shows that ‘second starters’ are more successful and survive longer than average
start-ups; they grow faster and employ more workers. Thus, a failure in entrepreneurship
should not result in a “life sentence” prohibiting any future entrepreneurial activity but
should be seen as an opportunity for learning and improving.
It is therefore urgent to ensure a follow-up to the entrepreneurs, especially at the start-up
stage to prevent the bankruptcies by counseling, restructuring, providing advisory services
to bankrupt entrepreneurs and developing programs for second starters.
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CONCLUSION AND RECOMMENDATIONS
The entrepreneurship program has been introduced in developing economies very
recently. It is however taking a considerable importance in the society, particularly among
the young people due to the increasing unemployment they are facing.
Likewise, the Governments are paying a great attention to the entrepreneurship programme
because it doesn’t only create wealth and jobs, but also enables people to uplift the living
conditions, decentralize economic power and give people a stake in the future,
especially in Sub-Saharan African economies dominated by the informal sector.
In Rwanda, the entrepreneurship trainings raised a huge enthusiasm and interest. It is as if
people were waiting for it. It is regarded as a new opportunity to catering for one’s welfare
and the family. Due to the awareness campaign and the trainings, a non-negligible number
of businesses were created.
However, for the entrepreneurship to enter in Rwandan mindsets, the following initiatives
should be undertaken:
1. Introduce entrepreneurship culture courses in educational system from primary
school: The majority is still Rwandan pupils who don’t attend schools beyond the
primary level. That’s why it is important to start the initiative of entrepreneurship
courses from that level, by teaching the simple principles of saving, good behaviors,
attitudes and culture required for a true entrepreneur. Furthermore, the more the
qualities are imparted to children at young age, the more they are easily mastered and
integrated into the everyday life.
2. Decentralize business award to District level: RDB has started to award the best
performer in different categories at national level. Although the initiative is helpful in
many ways, it remains unknown of the public particularly in rural areas. That’s why it
would be interesting to establish a system of awards at smaller scale to motivate small
entrepreneurs. Specific criteria would be set up to only allow the small businesses to
compete.
3. Ensure proper traceability of trainees: The office in charge of youth and cooperatives
in different Districts of the country plays a key role in the entrepreneurship process
by collaborating with RDB to organize the trainings. To optimize their monitoring, the
District youth office should have the complete list of trainees to facilitate their work
on the field and advocate for the loan application to financial institutions. Moreover,
this traceability would enable the follow-up of trainees.
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4. Urge the trainees to create the off-farm jobs, especially in Kigali City: This study
demonstrated that most of the businesses were created in agriculture, while one of
the pillars of EDPRSII is to create off-farm jobs. Therefore, some financial institutions
are reluctant to fund the businesses related to agriculture because of the bad weather
those businesses are susceptible to face. So, it is wise to urge the trainees to shift
their businesses from agriculture to off-farm. To do so, Kigali City presents many
opportunities.
5. Extend the entrepreneurship skills to elders: So far, trainings have targeted especially
youth and women. As the global population, the median age of the Rwandan population
is expected to rise for coming decades and people will live longer and healthier. So, a
growing cohort of well-educated, highly experienced adults and having their know-how
and skills will retire. Engaging them in both business creation and in supporting new
and existing entrepreneurs will maximize the wealth of experience they possess that
can be lost on retirement, cultivate intergenerational learning and ensure knowledge
transfer. That’s why it is worth considering the elders in entrepreneurship trainings.
As a conclusion, it is worth highlighting the following points:
a) Strengths:
• The trainings have raised an awareness for entrepreneurship;
• Undeveloped formal sector enables small business to pursue their opportunities
without being blocked by larger companies;
• Easy registration of business.
b) Weakness:
• Lack of knowledge among existing and aspirant entrepreneurs restricts them from
taking calculated risks to start and stretch their business (fear of failure);
• Market opportunities are very limited and the cross border trade not developed.
c) Opportunities:
• Contribution to skills development and service delivery;
• Contribution to job creation and uplifting the living conditions.
d) Threats:
• Failure of trainees to obtain a loan to start a business may discourage others to attend;
• Weak entrepreneurial culture associated with stigma for people who failed may
discourage potential entrepreneurs to start a business.
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A. PROFESSIONS
1. SCIENTIFIC: Accounting, economy, finance, management, mathematics, chemistry,
ICT, biology;
2. SOCIAL WORK: Social work, administration, clinical psychological, secretariat, hotel,
journalism, languages;
3. TECHNICAL: Electronic, electricity, architecture, veterinary, agronomy, masonry,
carpentry, plumbing, mechanics;
4. EDUCATION: Teacher
5. BUSINESS: Tailoring, haircut, trade, bar, photography, transport, handcraft,
self-employed, entrepreneur;
6. AGRICULTURE: Crop production, livestock.
APPENDICES
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B. OCCUPATIONS
1. TECHNICAL: Veterinary, agronomy, journalism, nursery.
2. EMPLOYEES: Cleaning, security guard, waiter, receptionist, hotel, employee,
secretariat, soldier;
3. STUDENT: Student;
4. EDUCATION: Teacher;
5. BUSINESS: Tailoring, self-employed, haircut, trade, transport, handcraft, welding,
carpentry, masonry, electricity, photography;
6. AGRICULTURE: Crop production, livestock, honey production.
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C. ECONOMIC ACTIVITIES
1. CROP PRODUCTION: Beans, cassava;
2. AGRIBUSINESS: Agriculture oriented to the market products (Rice, coffee, pineapple,
mushroom, bee keeping, maize);
3. LIVESTOCK: Cows and small domestic animals
4. SMALL DOMESTIC ANIMALS : Piggery, poultry, goat, rabbit;
5. TRADE OF AGRICULTURE PRODUCTS;
6. TRADE OF DOMESTIC ANIMAL: Trade of cows and small domestic animals;
7. BAR AND RESTAURANT;
8. HAIRCUT: Hairdressing
9. TRANSFORMATION: (Liquid soap, maize fuel, bakery, animal food, mayonnaise);
10. TECHNICAL: Masonry, carpentry, welding, mechanics, brick fabrication;
11. SERVICES: Tailoring, Tigo cash, MTN money, cybercafé, handcraft, cloth trade, studio
photo, decoration, stationery, design;
12. TRANSPORT: Motorist, bicyclist.
D. LIST OF ACRONYMS
1. BDF: Business Development Fund;
2. HCID: Human Capital and Institutional Development;
3. SMEs: Small and Medium Enterprises;
4. PSF: Private Sector Federation;
5. RCA: Rwanda Cooperative Agency;
6. RDB: Rwanda Development Board;
7. SACCOs: Saving And Credit Cooperatives;
8. PROBAs : Proximity Business Advisors
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BIBLIOGRAPH
1. Action Coach, Essential characteristics of an entrepreneur.
2. ASPIRA/Morgan Stanley Entrepreneurial leadership initiative, What is
entrepreneurship?
3. European Commission, Entrepreneurship 2020 Action plan: Reigniting the
entrepreneurial spirit in Europe, January 2013;
4. Gompers P. and al, Performance Persistence in entrepreneurship, Harvard Business
School, July 2008;
5. Kauffmann, Anatomy of entrepreneur: Are successful women entrepreneurs different
from men?, May 2010;
6. OECD, Measuring entrepreneurship: A collection of indicators, 2009;
7. OMIDYAR NETWORK, Accelerating entrepreneurship in Africa: Understanding Africa’s
challenges to creating opportunity-driven entrepreneurship;
8. Saras D. Sarasvathy, What makes entrepreneur entrepreneurial? June 2001;
9. U.S. Department of State. Principles of entrepreneurship, 2000.
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P.O Box 6239, Kigali, Rwanda
email: [email protected] / website: www.rdb.rw
doc_811787435.pdf