June 27 is World Micro, Small, and Medium Enterprises (MSMEs) day.
MSMEs play a major role in economic development in both developing and industrialized economies. In emerging markets, four out of every five new positions are created by MSMEs, which is 80% of total new employment in the formal sector. Job creation through MSMEs leads to economic growth and directly benefits the poor and vulnerable, particularly women and youth.
It reduces poverty, generates incomes, and positively impacts household investments in education and health, all of which are essential to the fulfilment of multiple Sustainable Development Goals (SDGs). According to the World Bank estimate, 600 million jobs will be needed by 2030 to absorb the growing global workforce, which makes MSME development a high priority for governments around the world.
Bangladesh is no exception: Over 6 million MSMEs provide 7.86 million jobs, livelihood to 31.2 million people, contribute 75% to 80% of export earnings, about 25% to GDP, and 45% of manufacturing value added. MSMEs are an important part of larger national and global value chains for several industries, such as the ready-made garments, leather, plastics, light engineering, automobile, electronic, agro-processing, and others.
The plastics sector is illustrative of the MSME development potential in Bangladesh. It is rapidly building a promising production base by expanding the market for diversified products at home and abroad, as well as creating employment in the industrial sector, accelerating private investment and ensuring foreign exchange flow in the country. Currently, there are around 6,110 plastic products manufacturing units in Bangladesh, out of which 98% are SMEs. These provide direct employment for 1.5 million people.
The consumption of plastics in Bangladesh was 9.0kg per capita in 2020 (World Bank) and 24kg per capita in Dhaka. The Bangladesh Plastic Goods Manufacturers and Exporters Association forecasts an increase to 35kg per capita by 2030, meaning more plastic goods will be in the market mainly manufactured by the SMEs.
Plastics are an integral part of daily life. Socio-economic progress in health, nutrition, education, transportation, housing, manufacturing, leisure, sports, etc has only been possible due to the use of plastics. Plastics in their use phase contribute to resource efficiency and waste minimization.
Modern and efficient packaging reduces food losses and improves efficiency in transportation and distribution. Plastic car parts reduce vehicle weight, thereby contributing to improved vehicle fuel efficiency. However, plastics are a cause of severe environmental concern, due to resource and energy use in manufacturing and non-biodegradability of plastic wastes. Improvement in the design, manufacturing, and waste management of plastic products is crucial for Bangladesh to maximize benefits from plastics use and minimize environmental impacts.
This is well doable through complementary business strategies in design, manufacturing, and waste management of plastics products and packaging. In the design stage, through Design for Environment (DfE) products and packaging can be designed for minimal weight, volume, and diversity, and include recycled or renewable materials, each contributing to less and easier to recover and recycle end of life plastic waste.
To some extent this is already happening, as today’s soft drink crates and bottles are much lighter than they used to be, due to use of better materials and technology. Concerted efforts can yield more environmental and competitiveness benefits.
In the manufacturing phase, adoption of Resource Efficient and Cleaner Production (RECP), can significantly reduce pre-consumption plastics waste. RECP is possible through such practices as: Good house-keeping; input substitution; better operating practices; equipment modification; technology change; onsite recovery and reuse; production of useful by-products; and product modification. RECP is a globally proven approach to improve productivity and reduce environmental impact of the enterprises.
Application of RECP is beneficial for enterprises, in particular MSME’s, contributing to enhancing their productivity and competitiveness; for the environment by lowering the impact of their operations, and for people, by decreasing the risks to workers and communities.
At the end of life stage, circularity is the alternative to waste disposal. The main idea of such a circular economy is to keep materials and parts in use in society through successive, ideally even perpetual, use, recovery, and reuse cycles. This has been common practice for many decades, for example for metals, paper, glass, and clothing, yet has become now even more urgent out of necessity to protect the environment and climate.
New circular approaches already commercialized include, for example, the use of PET from drink bottles for manufacturing of T-shirts and sportswear, and the recovery of waste cotton garments into viscose.
The United Nations Industrial Development Organization (UNIDO) has been globally at the forefront of development, application, and scaling up of such resource efficiency and circularity strategies over the past three decades. Working with the government of Bangladesh, its donors, private sector and technical institutions, UNIDO has started to bring this expertise base to Bangladesh.
With funding from the government of Norway and in collaboration with BPGMEA, UNIDO will demonstrate Design for Environment and Resource Efficient and Cleaner Production, initially in some 20 plastic goods and packaging manufacturing units. With funding from the European Union, UNIDO is working with European transnational companies to introduce circularity practices in Bangladeshi RMG manufacturers, particularly to recover plastic and fabric waste for production of new garments.
The urgent need for green industrial development is rapidly shaping the post pandemic industrial landscape. This presents business opportunities for Bangladeshi MSMEs in plastic and other sectors. It is imperative to build the requisite capacities, knowledge, and partnerships for large scale adoption of green industry practices, and thereby keep the Bangladeshi MSME sector fit for the future.
René Van Berkel is a Representative and Head of Regional Office in India of the United Nations Industrial Development Organization. Zaki Uz Zaman is Country Representative of the United Nations Industrial Development Organization, Country Office in Bangladesh.