Micro, Small and Medium Enterprises (MSMEs) account for 98 percent of all businesses in Rwanda, employing over 2.5 million people according to the Ministry of Trade and Industry. However, despite increased business digitalisation globally, the digital journey of many MSMEs in Rwanda is still fragmented, potentially inhibiting their growth. While some businesses have adopted accounting software like QuickBooks, others continue to rely on manual or semi-digital systems, including spreadsheets and paper records, to manage core functions such as inventory, sales, and accounting.

In partnership with the Ministry of ICT and Innovation, the Mastercard Foundation and the ICT Chamber, Cenfri, under the Rwanda Economy Digitalisation (RED) programme aims to support the digitalisation of selected Rwandan MSMEs in the hope this will lead to improved efficiency, profitability and ultimately job creation. The Mastercard Foundation’s broader objective is to connect 30 million young Africans to dignified work by 2030, with a focus on youth, women, rural entrepreneurs, and people with disabilities.

We are targeting to assist 40 MSMEs in this phase of the programme and, to date, we have onboarded 19 MSMEs in need of digital transformation. The businesses are led by women or young people and based in rural areas. These MSMEs are in different sectors such as agriculture – including dairy production and agro-processing – retail and trade, education and tourism.

Extent of digitalisation

During the selection process, the businesses identified a range of challenges that inhibit their business from growing. When it comes to payment transactions, businesses use a mix of bank transfers, cash payments, and mobile money, with orders typically received via phone calls, WhatsApp, and email. Some businesses have attempted e-commerce for customers within the country but abandoned it due to high transaction costs and low volume of sales.

Digital presence also varies. Some businesses maintain websites and social media accounts, while others struggle with low visibility. Internal billing remains largely manual, with invoices collated in Excel after processing. The reliance on personal phones for business operations, such as marketing, taking orders and communicating with customers highlights the absence of dedicated digital tools. Many businesses do not own computers, which further limits their ability to leverage technology effectively.

Common challenges faced

Despite their ambitions to expand product lines, export, and scale operations, MSMEs we interviewed face numerous hurdles including digital literacy gaps, cybersecurity concerns, limited infrastructure, and the need for more enabling policies for e-commerce and digital trade.

As an example, some businesses reported that, due to the absence of a local e-commerce legal framework in Rwanda, they adopt international trade laws for local transactions, including international standards for ‘terms and conditions’ on locally sold products. Not all of these terms are necessarily suited to the local context.

Other challenges include:

• Contractual obligations: Many MSMEs struggle with establishing and enforcing agreements, leading to inconsistencies in supplier and client relationships.
• Limited marketing efforts: Low visibility makes customer acquisition difficult.
• Inefficient tracking: Many MSMEs lack proper systems to monitor product sourcing and distribution, leading to inefficiencies such as attempting to collect produce twice from the same location.
• MSMEs especially those in the production process are unable to set-up Key Performance Indicators (KPIs) to track batch numbers. These enterprises are unable to assign a unique identifier to each group of products created together, allowing for traceability and monitoring throughout the supply chain. The use of Material Requirements Planning(MRP) system would help to manage inventory, ensure quality control, and comply with regulatory requirements.
• Inventory mismanagement: Stock-taking is irregular, sometimes happening once every six months, making it hard to track supply and demand fluctuations.
• Unstructured order management: The majority of businesses we interviewed use WhatsApp for business, but without a dedicated WhatsApp account for business, tracking orders remains inconsistent.
• Competition and a lack of innovation: There are many similarities in business ideas, standing out in a crowded market is a challenge.
• Supply chain constraints: For online businesses, suppliers struggle to meet peak demand, leading to stock shortages and increased product costs.
• Data inaccuracy: Many MSMEs do not capture information in real time, making it difficult to evaluate profits for different business units.

Unlocking opportunities through digitalisation

To address some of these issues, the RED programme is supporting MSMEs to leverage digital technologies that not only streamline internal processes but also strengthen their market presence and business competitiveness.

Here are some interventions that the programme is implementing:

• Establishing a strong digital presence through building websites and a consistent presence across social media platforms such as Facebook, Instagram, and WhatsApp for businesses. This will allow businesses to reach broader audiences, communicate their value propositions more clearly, and facilitate more professional interactions with clients and partners. MSMEs will be guided on how to strategically invest in targeted ads that convert interest into sales, based on data-informed customer segmentation.
• Optimising inventory and supply chain systems – the programme will provide tailored support to integrate Management Information Systems (MIS) that streamline business processes, from real-time stock monitoring to supply tracking and sales forecasting. These systems will help the businesses reduce the likelihood of overstocking or understocking, and help businesses respond more effectively to seasonal or unexpected demand shifts.
• Customer Relationship Management (CRM) tools will be introduced to MSMEs to allow them to systematically manage interactions with both new and existing customers. CRMs facilitate better service delivery, automate follow-ups, and help track sales cycles more effectively.
• Integrated payment systems such as mobile money, bank transfers, and electronic billing machines (EBMs) enable accurate, real-time tracking of revenue and expenses. Through the programme, MSMEs will be able to explore open-source software solutions that provide end-to-end integration across purchases, accounting, invoicing, and inventory, empowering MSMEs with accessible and scalable financial management capabilities.
• Data collection and analysis. Businesses will be equipped to generate reliable data on sales, customer trends, inventory, and finances. This data can then be analysed to identify profitable business units, track outstanding credit, monitor market demand, and assess operational efficiency.
• Capacity development for business owners and their teams to ensure they are equipped to use and maintain these systems. The MSMEs will be trained on digital literacy, content creation, financial reporting, and basic data analysis.

Understanding MSME challenges through a digitalisation lens is only part of the picture. MSMEs in Rwanda are faced with other systemic challenges and this is perhaps especially true for those based in more rural areas.

We do not anticipate the interventions offered via the Rwanda Economy Digitalisation Programme will act as a silver bullet, catapulting this cohort of MSMEs to instant success. However, with targeted support, the businesses could shift from informal, inefficient practices to streamlined, technology-enabled operations. By leveraging existing digital tools and adopting new solutions, we are hopeful MSMEs could address key operational gaps and explore new opportunities for market growth.

We are also cautious not to recommend solutions to MSMEs that they will not be able to maintain or afford on their own. For example, it will not be wise to migrate a business onto a bespoke solution if the firm will not be able to afford the monthly subscription.

We plan to be rigorous in testing what does and does not work, beginning with a baseline assessment. We look forward to sharing lessons from this intervention so that other MSMEs may benefit from this experience.

If you own a small business in Rwanda (particularly if the business is youth or women-owned and operates predominantly outside of Kigali) and you wish to be considered for inclusion in the digitalisation initiative, please contact ernest@cenfri.org.

This article was first published on Igihe.