Micro, Small and Medium Enterprises (MSMEs) are considered the backbone of the socio-economic development of countries.
MSMEs have emerged as one of the largest employment generating sectors, comprising 80% of the total employment in Bangladesh.
Moreover, being a key driver of employment growth, the sector considerably contributes to 25% of the country’s GDP by manufacturing a wide range of products and services.
Resilience and rebuilding: MSMEs for sustainable development
This year, MSME Day is being observed globally under the theme “Resilience and Rebuilding: MSMEs for Sustainable Development.”
According to the United Nations, resilience and rebuilding are at the forefront of building back better and stronger from the impacts of the Covid-19 pandemic, climate crisis and conflicts.
“Now, the main condition for any development is to be sustainable and our goal is to develop the MSME sector of the country with the future in mind,” Dr Masudur Rahman, chairman of the SME Foundation, told Dhaka Tribune in an interview on the eve of the celebration of World MSME Day 2022.
He also said that they have to invest in entrepreneurs who can build a sustainable and environmentally friendly industry.
The sector was hit hardest by multiple shocks. However, those shocks also played a critical role in building back stronger.
“If we can involve more people in this sector by creating more jobs, the business will be sustainable and the sustainable development of the country will be realized,” he added.
In this regard, the MSMEs have to become more resilient to future shocks, and efforts and stimulus packages must target those most heavily affected by disruptions to global supply chains, rising inflation, and the continuing ramifications of the Covid-19 pandemic.
Challenges SME sector faces frequently
The medium and small businesses are more than ever in need of support, as they navigate through the impacts of the Covid pandemic, conflicts and the climate crisis.
“The main challenge is to keep the business afloat in the current reality,” said Dr Masudur Rahman.
However, at the same time, ensuring eco-friendly production, health safety of the employees and the development of their quality of life are the big challenges, he added.
“We have to work together to address these challenges,” he added.
Moreover, there are also a number of challenges the SME sector faces frequently.
More than 75% of SME entrepreneurs are still unbanked and, in some cases, they are ineligible due to a lack of proper documents.
Most of the entrepreneurs run their business through informal means and they arrange capital by themselves or from relatives and a number of entrepreneurs do not even have a trade license.
Moreover, lack of capacity, skills, product innovation, and product design, not to mention lack of new technologies, are also some major challenges and the cost of doing business is also rising in this sector.
Overcoming the challenges
The SME Foundation is working relentlessly to address these challenges.
“The sector ensured 80% of employment of the country's industrial sector and contributed 25% in GDP. We are on track to contribute 32% of GDP by 2024 set by the government,” Dr Mafizur Rahman, managing director of the SME Foundation, told Dhaka Tribune.
The SME Foundation already took initiatives like marketing SME products, business services, skill development and training programmes for 40,000 thousand entrepreneurs under 1,300 training centers.
They also initiated a cluster development programme under four clusters and established 300 special training programmes to train up more than 9,000 women entrepreneurs, he added.
To ensure the flow of capital and funds, the SME Foundation disbursed loans from the incentive package of Tk300 crore through agreements with 11 banks and non-bank financial institutions (NBFIs), said SME Foundation MD.
However, they said that they need an alternative organic financial structure for the SME sector.
Budget FY23 and the SME sector
They said that 14 proposals submitted by the SME Foundation have been included in the proposed budget for FY23.
“If these proposals are implemented, the country's SME entrepreneurs and the whole SME sector will benefit in many ways to ensure sustainable development of the SME sector,” said SME Foundation MD.
The government has accepted their VAT, customs, and tax-related proposals in the proposed budget for FY23, which will boost the development of small entrepreneurs and the economy, he added.
But there will also be the challenge of ensuring easy financing for SME entrepreneurs, especially women entrepreneurs.
Bangladesh observed the World MSME Day 2022
Meanwhile, SME Foundation observed the 5th edition of World MSME Day 2022 on Monday for the second time.
Observing the day, SME Foundation arranged rallies, dialogue programmes and many more.
At the main event, President Md Abdul Hamid joined virtually as chief guest.
Industries Minister Nurul Majid Mahmud Humayun presided over the event where Prof Dr Masudur Rahman gave the welcome speech.
State Minister for Industries Kamal Ahmed Majumder, Industry Secretary Zakia Sultana, and SME Foundation MD Dr Mafizur Rahman were also present.
According to the United Nations, MSMEs account for 90% of businesses, 60% to 70% of employment and 50% of GDP worldwide.
As the backbone of societies everywhere, they contribute to local and national economies and to sustaining livelihoods. In particular, among the working poor, women, youth, and groups in vulnerable situations.
Policymakers must move beyond recovery and consider ways to lower and eliminate barriers faced by MSMEs while improving the business environment and access to finance, markets and technology in these fragile times.
It is critical that countries and their development partners continue to support and empower MSMEs and unlock their full potential through inspiring innovation, creativity and decent work for all, according to the UN.
According to the SME Foundation, contributing 25% to the country’s GDP, the SME sector employs 20.3 million Bangladeshis in more than 7.8 million SMEs.
