Small and Medium Enterprises (SMEs) play an important role in the economic development of a country. Their role in terms of production, employment generation, contribution to exports and facilitating equitable distribution of income is very critical. Yet the potential of the SMEs has not been fully utilised in Bangladesh.
Analysts say it is vital to provide SMEs appropriate policy support to develop the sector and increase SMEs' contribution to the country's GDP. The SMEs are unable to thrive in Bangladesh because of some major challenges like lack of fiscal incentives, management problems, access to finance, policy inconsistency etc, they say. As of now, the contribution of SMEs to the gross domestic products (GDP) is only 20.25 per cent in Bangladesh. A study conducted recently revealed that the proportion of SMEs to all enterprises is 80 per cent in Bangladesh, while it is 97.60 per cent in India, 99 per cent in China, 99.70 per cent in Japan and 60 per cent in Pakistan.
Bangladesh has 17,384 micro enterprises, 15,666 small ones, 6,103 medium and 3,639 large scale enterprises where a total of 5.02 million people are engaged, says the study.
There are some problems in the SME sector. According to the study, if these can be resolved through methodical measures, the country's GDP will get a significant contribution from this sector.
There is no denying that the country has a huge possibility in the SME sector. If the government or Bangladesh Bank can ensure loans for the SMEs, there would be a huge opportunity to reduce unemployment.
Access to finance is still the main obstacle for women-led small and medium enterprises as banks hesitate to lend to SMEs run by women. Women entrepreneurs complain that despite fulfilling the criteria set to get bank loans, they are often being denied the facility as bankers lack confidence about giving loans to them.
Some bankers admit that several genuine SME entrepreneurs failed to get loan. As per the Bangladesh Bank's (BB's) instructions, 20 per cent of all bank loans must go to the SMEs. But in reality, the entrepreneurs are not getting that amount of loans.
Many women entrepreneurs complained that they tried their best to get access to bank credit, but all their efforts went in vain. Most of them fulfilled most of the criteria to get bank loans. Some organisations working for women's empowerment say they had received several complaints from women, saying the women were not getting loans.
Though it is said that banks disbursed millions of taka as SME loans every year, SME entrepreneurs keep saying that only a few of them got such loans. Many of the borrowers getting loans are not real SMEs. Small entrepreneurs say it is a common problem for them. Bangladesh Bank should take initiatives so that the targeted amount actually goes to SME entrepreneurs.
Last year, a seven-day 'National Small and Medium Enterprise (SME) Fair-2019' was organised in the city for bringing the local small and medium entrepreneurs under a single square roof.
SME Foundation organised the fair with a view to promoting the SME products, exhibition and introduction of SME goods for expanding business, trade and commerce. A total of 280 SME entrepreneurs, including 188 women entrepreneurs, exhibited their products at the fair where six best entrepreneurs were awarded.
The country's industrial policy has, of late, identified SMEs as a thrust sector. The Ministry of Industries has set up an SME cell as part of the policy and strategy for the expansion of the SME sector.
The ministry has formed an SME panel with representatives from the private sector to help the government implement the recommendations of the SME Taskforce.
Meanwhile, the Federation of Bangladesh Chambers of Commerce & Industry (FBCCI) has taken up steps to collect district-wise data to open a SME website. It is also planning to turn its SME cell into an institute for the development of the SMEs.
Yet, what is true about the upcoming situation is that 35 per cent of core skills will change globally soon. Bangladesh, sooner or later, will also face the impact of change in core skills around the globe shortly, experts say. In order to address the emerging situation, the country's SMEs should adopt new technologies to boost their business, as they are the backbone of the economy. There is an urgent need for bringing immediate change in technical and IT-related curriculum in universities as well as in technical and vocational training institutions, especially in the public universities.
The upcoming scenario is that about one-third of the present technical and IT-related skills and courses, taught in the Bangladeshi universities, will be replaced by the next five years due to disruption in the core skills globally.
The rate of skill changes across the globe is changing very fast. In Bangladesh, there will be a major impact on employment and wages due to these technological changes. There will be destruction, productivity and creation at the same time. Scopes of job delegation to machines are higher than before due to the Fourth Industrial Revolution.
However, empowering the SMEs should be one of the priority areas and strategies of strengthening the country's economic growth. However, a level-playing field for small businesses is important for generating employment and increasing opportunities for women and the poor.