Resources and Their Usage
Senior 3 · Entrepreneurship
Resources and Their Usage
Lesson 2 of 4
22 min
Before any definitions, look closely at the photograph of a tea picker below and list every resource that went into the moment it shows. Some are in plain sight; others you have to infer.
A list like that is hard to manage. An entrepreneur therefore sorts resources into types, because each type is obtained, paid for and looked after in its own way: land is rented, workers are recruited and trained, machines are maintained, money is borrowed and repaid.
Definition
Natural resource: a resource provided by nature, which people did not make: land, soil, water, minerals, forests, wildlife, sunshine and climate.
Human resource: the people who work in a business or a country, with their physical effort (labour), skills, knowledge and ideas.
Physical (capital) resource: a man-made item used to produce other goods and services: buildings, machines, tools, vehicles, furniture and computers.
Financial resource: money and ways of getting it: cash, savings, bank balances, loans, grants and money raised from shares.
Example: for a tea estate, the hillside is natural, the pickers are human, the withering racks in the factory are physical and the bank loan for new fertiliser is financial.
The most useful way to sort resources in a business is by what they are. The diagram gives the five groups, and the table below explains each one.
| Type | What it includes | How a business obtains it | Example in a Rwandan business |
|---|---|---|---|
| Natural | land, soil, water, minerals, forests, climate, wildlife | buys or rents land; pays for a mining or water-use licence | fertile soil on a potato farm in Musanze |
| Human | labour (physical and mental), skills, experience, ideas | recruits, pays wages and salaries, trains | a TVET-trained electrician in a solar-installation firm |
| Physical (capital) | buildings, machinery, tools, vehicles, equipment | buys, leases, builds, maintains | a maize mill in a cooperative’s store |
| Financial | cash, savings, loans, grants, share capital | saves, borrows, sells shares, applies for grants | a SACCO loan to buy stock |
| Time and information | working hours, deadlines, market data, know-how, technology | plans schedules; researches the market; buys software | knowing which day hotels restock |
Rwanda’s natural resources include minerals. The Rwanda Development Board lists the country’s major mining commodities as cassiterite (tin ore), wolframite (tungsten ore), columbite-tantalite (coltan) and gold. They are non-renewable: once dug out, they are gone.
Definition
Renewable resource: a resource that nature replaces within a human lifetime, if it is not used faster than it is replaced: forests, fish, water, sunshine, wind, crops.
Non-renewable resource: a resource that exists in a fixed amount and cannot be replaced once used: minerals, petroleum, natural gas, and the clay and stone taken from a quarry.
Example: a eucalyptus woodlot is renewable if it is replanted after cutting; the cassiterite in a mine is non-renewable.
Definition
Factors of production: the four groups into which economists put all productive resources: land (every natural resource), labour (human effort), capital (man-made goods used in production) and enterprise (the entrepreneur who combines the other three and bears the risk).
Example: a bakery uses land (the plot and the wheat grown on farms), labour (bakers), capital (ovens) and enterprise (the owner who plans and takes the risk).
Each factor of production earns a payment, called its reward. Knowing the rewards lets you read where a business’s money goes.
| Factor | What it covers | Reward | Paid to |
|---|---|---|---|
| Land | all natural resources | rent | the landowner |
| Labour | human physical and mental effort | wages and salaries | workers |
| Capital | man-made goods used in production, and the money lent to buy them | interest | the lender (a bank, SACCO or saver) |
| Enterprise | organising the other factors and bearing risk | profit (or loss) | the entrepreneur or owners |
Tip
Memory hook. The rewards follow the same order as the factors: Land–Rent, Labour–Wages, Capital–Interest, Enterprise–Profit. Say it as “Real Workers Invest Profitably” to remember R-W-I-P.
Worked example 1: classifying a cooperative’s resources
Ubumwe Brick Makers is a cooperative of 24 members in Bugesera District. It uses: clay dug from land rented from a farmer; water from a borehole; firewood for the kiln from its own replanted woodlot; a brick-moulding machine and the kiln; a pickup truck; a Frw 3,000,000 SACCO loan; the manager’s list of builders who buy regularly; and the dry-season months, when bricks dry fastest. Classify each resource.
| Resource | Type by nature | Other features |
|---|---|---|
| Clay | Natural | non-renewable, tangible |
| Borehole water | Natural | renewable if not over-pumped |
| Firewood from the woodlot | Natural | renewable, because it is replanted |
| 24 members’ work and skill | Human | tangible effort, intangible skill |
| Moulding machine, kiln, truck | Physical (capital) | tangible; need maintenance |
| SACCO loan | Financial | must be repaid with interest |
| List of regular buyers | Information | intangible |
| Dry-season months | Time | cannot be stored; must be planned |
Worked example 2: following the rewards
In one year Ubumwe Brick Makers sells bricks for Frw 9,600,000. It pays rent for the clay land of Frw 600,000, wages of Frw 4,800,000 and interest on the loan of Frw 420,000, and spends Frw 2,580,000 on water, firewood, fuel and repairs. What is the reward to enterprise?
Step 1: add the payments.
Step 2: subtract from sales.
Step 3: interpret. Rent went to land, wages to labour and interest to capital. The Frw 1,200,000 left is the reward to enterprise: profit, which in a cooperative is called a surplus and is shared as the members decide. Had costs been higher than sales, the enterprise would have earned a loss: the entrepreneur is the only factor whose reward is not guaranteed.
Warning
Common mistakes. (1) In economics, capital as a factor means man-made goods used to produce (machines, buildings), not only money; the money lent to buy them earns interest. (2) Labour is not only muscle: an accountant’s thinking is labour too. (3) Land means every natural resource, including water and minerals, not only the ground.
Factors of Production | Economics Explained, from the Federal Reserve Bank of St. Louis (about 6 minutes). Watch for the four factors and the payment each one earns, then pause for the short quiz at the end.
Practice
Sources and credits
Written by Ganzaa: the classification diagram, the tables, the Ubumwe Brick Makers case, the worked examples and the practice items. The cooperative and its figures are illustrative (2026).
This lesson adapts CC BY-SA material and is shared under CC BY-SA 4.0.
