The 3 Main Challenges for Business Development Service (BDS) Providers in Rwanda

It has been 18 glorious months since I stepped off a plane for the first time in Rwanda. It took me all of 1 hour to know I wanted to stay and build something here. As the taxi drove through Kigali I was awestruck at the cleanliness and infrastructure. Was this really the same place that had been plunged into turmoil 24 years previously by a horrific genocide? Am I in a major African city?

Over the next 18 months what I have realized is that Rwanda is a great place to live and do business. A lack of corruption; clear governance with a vision for the future; an appetite for growth and development. However, the private sector is still very small and there are challenges for Business Development Service (BDS) providers. Here I want to look at the 3 main challenges I have identified for BDS providers in Rwanda:

1)     Mindset

As mentioned above there is a real appetite for growth and development. The number of BDS providers in Rwanda has grown and continues to grow. The government, through the Private Sector Federation (PSF) and Rwanda Development Board (RDB) especially, have been working hard to provide support for businesses. Foreign organizations have been investing in Rwanda businesses both through private investment and aid. The main way of doing it is through skills development. This is fantastic, however one challenge, which gets in the way of sustained growth, is mindset. Skills are developed but mindset is overlooked. For majority of business owners the mindset is that of survival. 60% of businesses will close within 5 years of opening so it is not a surprise that this is the predominant mindset. This is seen in the difficulty to recruit businesses for BDS providers. Business owners see it as a cost rather than an investment. Helping businesses move to a growth mindset can really help to accelerate the growth of the private sector and especially BDS sector.

At GPS we follow a key framework called CALM. Consistency = (application + learning) x Mindset*. The key to consistency in the short term and growth in the long term is mindset development and this applies to businesses, providers and investors/donors. It takes time to develop but the more we can do now the better the chance of growing the market in the future.

2)     Small Customer Pool

One thing that became clear to me was that there is a limited pool of clients here in Rwanda. Time and again you will see the same businesses going through processes for different BDS providers. Why is that? The number of projects and foreign investment means that there will be free or subsidized programs. When it is free, and in many cases there is the possibility of finance (through grants or reduced rate loans), it becomes more attractive because there is minimal costs involved. However, this is both a good thing and a roadblock. Owners become good at the application process rather than the business improvement. On top of that the lack of their own financial investment lowers their risk but also the accountability. When it is the business investing in their own future you tend to see a greater level of commitment to improvement in the business not just in the short term but in the longer term.

In my role as the Director of SME growth, at Inkomoko, I was able to implement a new sales methodology where the focus was on helping potential clients understand their challenges and how that will impact future growth. It is a form of sales where educating the potential clients is at the center. However, this is a process that takes time to fully realize it’s potential. The average time taken to convert potential clients into paying clients was months rather than weeks. By consistently using this method of increasing awareness of the challenges and allowing time for the business to see the day to day challenges differently, it becomes more likely that you can decrease the time taken to convert clients. In the longer term this will grow the customer pool.

3)     Results, Results, Results

Sustainability is the buzz word in the development sector. It is a fantastic aim, self-sufficiency and not just relying on donor money. However, my opinion is that the way BDS providers are currently focusing on the results, rather than the growth and learning found in the journey, is a big hindrance.

The pressures to serve a certain number of businesses and the length of service (typically 3 – 6 months) foster quantity over quality. As such there is less focus on helping the business through the growth journey and more focus on providing the service. At GPS we encourage clients to think about the long term vision and purpose and then focus on the steps of the journey that will help them get there. By doing this we try to create consistency in habits and mindset that fosters sustainable growth. 

These challenges in isolation and combined make it hard for BDS providers to fully realize the potential that is here in the market. However, if we can shift mindsets; focus on consistency in growth and learning, in the short term; and look to build in the long term, we will start to see Rwandan businesses and the private sector reach its potential.

To discuss these challenges or the challenges you and your business face, contact Oggy Nduka at oggy@gpsdevco.com