Lack of adequate support both from the government and private sector is putting up a great barrier to the advancement of the country’s small and medium enterprises (SMEs) sector, a platform which can contribute more to economy. Experts said SMEs can contribute manifolds to the national economy by creating huge employment opportunities as well as earning more foreign currency.
SMEs are the backbone of Bangladesh because through these the rural and village people are also getting incorporated into producing goods which can play a vital role in lifting the economy of the country further, they said. If these SMEs are helped both by public and private organisations then these can be turned from small level manual factories into large scale industries, they said adding that, this will also establish a new market in the world economy.
A Japanese study said in last year SMEs are the potential sector for create huge jobs and contribute more to the gross domestic product (GDP), but the contribution of the sector to our economy is still negligible. The study found out some barriers to developing this sector. These include scarcity of fiscal incentives, management problems, access to finance and bureaucracy.
Besides, in this regard, the World Bank study said access to finance for SMEs is limited in Bangladesh, compared to the average in South Asia. However, the GDP’s contribution of this sector is only 20.25 percent in Bangladesh. On the other hand, this contribution is at 80 percent in India and 60 percent in China.
Taking to The Bangladesh Post, many SME entrepreneurs said, they are still facing fund crisis to expand their businesses. They said, “We faced many difficulties to get bank loans as most of the entrepreneurs cannot manage enough collateral for getting credits.”
They urged authorities concerned to give loans easily to them as they are contributing more to develop the country’s economy by creating huge employments. A SME entrepreneur Rezbin Hafiz told The Bangladesh Post that, “SME entrepreneurs are working hard to develop the nation by creating huge jobs.”
“We are facing different problems, including fund crisis as well as lack of skilled labors”, she said adding that, the government should give more support to entrepreneurs by removing all barriers to develop the SME sector. Deputy managing director of the SME Foundation SM Shaheen Anwar told The Bangladesh Post that SMEs are important for self-employment, generating employment opportunities for others, increasing GDP growth, contributing to export earnings, supplying livelihoods to stakeholders, and poverty alleviation of the country.
SME Foundation is providing good support to create SME entrepreneurs in the country, he said adding that, the government has given more emphasis on establishing more entrepreneurs for creating huge employments, he said.
“We are providing various supports, including proving funds, trainings and other incentives for developing this sector”, he added.
He mentioned “We have arranged different fairs to diversify products for attracting the local and international customers to encourage SME entrepreneurs”.
But existing challenges like creating skilled manpower as per sectoral demand, providing product-specific manufacturing skills to the youth, improving productivity and product quality by adopting new technologies, increasing investment capacity by creating and maintaining an enabling environment through harmonization of government policies, must be addressed to achieve our development goals, he said.
World Bank’s former lead economist Zahid Hussain told The Bangladesh Post that “The government should take multiple initiatives to create new entrepreneurs or SMEs to manage huge employment opportunities for ensuring jobs for all unemployed people.”
However, only financial support alone is not enough, he added.
Hence, the government should provide beginners with all business supports, including infrastructure, market survey for choosing best products and creating market for selling their products to get best result from them, he said.
“At the same time, the government has to create skilled manpower to meet local and overseas demands,” he said. Thousands of small and cottage industries, set up throughout the country over the years, are ensuring bread and butter to millions without adequate government supports, he added.
Currently, SMEs account for 40 percent of gross manufacturing output, 80 per cent of industrial employment and 25 percent of total labour force, he said adding that, small industries under leather sector, in spite of various odds and difficulties, account for 70 percent of export earnings of the sector.
Prime Minister Sheikh Hasina has already given directives to the authorities so that women entrepreneurs can get special facilities in the economic zones as she wants males and females to come forward equally, he added.
“New markets have to be explored alongside creating domestic markets. The country has to take initiatives for increased market exploration”, she said. She continued the government has taken steps to build a skilled workforce in the country as the demand of such manpower is high everywhere.
Financial institutions division senior secretary of Finance Ministry Asadul Islam said, “We are working hard to develop the SME sector.” Many entrepreneurs claimed that, they faced huge harassment to take collateral free loans from banks, he said adding that, no excuse or harassment is acceptable from banks, if they cannot provide collateral free loans to SME entrepreneurs.
According to the government's directive, banks have to take all kinds of initiatives in their lending, he mentioned.
He said banks and financial institutions are also responsible for collecting loans. He also advised the Bangladesh Bank to monitor the implementation of government directives.