TThe effect of entrepreneurial capacity on the SMEs growth in Kigali city – a case study of Gasabo district

Abstract

The purpose of this study was to find out the effect of entrepreneurial capacity on the SMEs growth in Kigali city. It was conducted under the problem that various SMEs are mushrooming in Rwanda and various policies for facilitating their growth, including capacity development have been put in place by the government. Various literatures show entrepreneurial capacity as leading to SMEs growth but the literature doesn’t illustrate whether this also applies in Rwanda. This leaves a gap it prompted the researcher to fill this gap and come up with new knowledge. Kigali city was the study area and Gasabo district was the specified area of data collection. Data collection was restricted to the effect of the entrepreneurial capacity on the SMEs growth. This study was designed as descriptive-correlational. The study population was all the SMEs (32619) in Kigali city. Purposive sampling was used to select one district from Kigali city. Gasabo district was then selected using simple random sampling from the three districts constituting Kigali city. Sample size of 133 was determined using Slovene’s formulae. 133 sampled respondents were determined using simple random sampling, but only 89 responded. Both secondary and primary data were collected. Secondary data was collected through the review of the existing literature and studies related to this study. A structured research instrument was designed to collect quantitative primary data. Content validity was applied to check whether the content of the instrument was valid. The instrument contained items that collected data basing on each research objective. Collected data was analyzed in SPSS using descriptive statistics, correlation analysis where Pearson moment correlation coefficient was used to establish relationships and the level of significance was set at 0.05; and regression analysis which established the predicting variables. Results from the analyzed data indicated that entrepreneurs had the capacity to grow their businesses, possessed knowledge and skills obtained from various experiences/domains, the majority never got chance to attend trainings on how to run their businesses and trainings were needed in the fields of customer care, financial management, as well as how to make production; the entrepreneurs’ capacity of various kinds impacted positively the growth of SMEs; entrepreneurs were challenged by lack of mortgage, collaterals, high and many taxes, as well as high rent; the growth of SMEs was related to the capacity skills obtained from various domains, including natural knowledge and skills (.378*); and, the best predictors of SMEs growth included, among others, capacity skills being prerequisite to any business startup; and, without the capacity skills, businesses would vanish. From the study findings, it was concluded that entrepreneurial capacity had effect on the SMEs growth in Kigali city. The study recommended that capacity trainings be offered to all entrepreneurs; and taxes be reduced.