The Government of Rwanda, through the Rwanda Development Board (RDB), has supported local SMEs by promoting standards certification, market linkages, access to finance, and skills development. Over the past five years, RDB helped 44 agro-processing SMEs obtain S-Mark certification by covering 50% of the cost, enabling local producers to access wider markets. Despite these efforts, poverty in 2017 remained at 38.2%, with GDP per capita at US$748, and most rural residents depending on agriculture. This study examined the contribution of SMEs to socio-economic welfare in rural Rwanda, focusing on dairy enterprises in Rutsiro District. Using descriptive and correlative designs, data were collected from 84 dairy SME operators through questionnaires and document reviews. Results showed 70.8% agreed dairy SMEs prioritize local employment, and 85.7% received investment training. Also, 94% could perform financial transactions confidently, and 96.4% agreed SMEs enhance welfare. Regression analysis showed a P-value of 0.007 and an adjusted R² of 0.718, meaning 71.8% of welfare variation was due to employment, skills, and investment. The study recommended increased financial support, management training, and insurance awareness for entrepreneurs.