Small and medium enterprises and job creation in Rwanda

Abstract

This study analyses Small and Medium Enterprises and Job Creation for a panel of Rwandan SMEs across manufacturing and all services sectors of the economy, using LRM (Linear Regression Models) system to analyse a Panel data consisting of 453Rwandan SMEs enterprises during 2006-2011.The conceptual framework is adopted and modified from Kristen,M and Rogerson (2002);Munikrishnan & Verakumaran (2009).The model explains the relationship between Labour productivity ,Size in terms of number of employees, Fixed assets, Female owner, Manager experience, Region, machinery vehicle and equipment and Legal status of the business which eventually leads to job creation. We aimed empirically exploring the linkage between SMEs and Job creation in Rwanda.To reach objective, the panel data from census conducted by World Bank for the period 2006-2011 used. Results indicated that size in terms of number of employees, fixed assets, Machinery vehicle and equipment, Region of the business significantly contributed to job creation in SMEs .However, female owner, Labor productivity and manager experience were found to be insignificant on job creation in SMEs in Rwanda. Even though Small Enterprises were aware of government incentives do not create Job.