The concept that economic advancement should not be limited to a privileged few but should, instead, elevate entire communities, ensuring that no one is left behind is one we strive for. In this context, Small and Medium-sized Enterprises (SMEs) emerge as crucial players, particularly in a country like Bangladesh. A nation renowned for its resilience and potential, Bangladesh stands on the cusp of transformation, with SMEs holding the key to shaping its future towards Smart Bangladesh.
SMEs have historically proven their ability to drive innovation, generate employment, and distribute wealth. In Bangladesh, where a significant portion of the population depends on informal employment and small-scale ventures, empowering SMEs is not just an economic strategy but a social imperative. The trajectory of inclusive growth rests upon their shoulders, as they have the potential to bridge the chasm between economic disparity and shared prosperity.
Bangladesh has a thriving SME sector. According to the Centre for International Private Enterprise’s Assessment Report 2022, Bangladesh’s SME sector can be divided into 33 subsectors of products and services. SMEs constitute 50.91% of the micro-economic sector, employ 35.41% of workers, and contribute 48.41% to Bangladesh’s GDP.
One of the primary merits of SMEs lies in their capacity to create jobs. Bangladesh, with its burgeoning population, faces the formidable challenge of providing employment opportunities to its youth. SMEs have the unique advantage of being labour-intensive, absorbing a substantial portion of the workforce and curbing unemployment rates. When nurtured and supported, these enterprises can not only offer jobs but also elevate skills, knowledge, and living standards across the board.
However, the journey toward fostering inclusive growth through SMEs is not devoid of hurdles. Access to finance is a perennial obstacle that often impedes the growth of these enterprises. Banks and financial institutions, traditionally risk-averse, tend to favour larger corporations with established credit histories. This systemic bias perpetuates a vicious cycle, wherein SMEs struggle to secure funds, thereby hampering their potential for expansion and innovation. To break free from this cycle, policy interventions are imperative, aiming to provide affordable credit, reduce collateral requirements, and establish alternative financing mechanisms tailored to the unique needs of SMEs.
A favourable business environment is vital for SMEs to flourish. Bureaucratic red tape, corruption, and lack of infrastructure can stifle growth. Simplified regulations, transparent processes, and improved infrastructure can create an ecosystem wherein SMEs can thrive. Additionally, fostering innovation through research and development incentives can empower these enterprises to harness technology, improve product quality, and compete on a global scale.
Digitalization in Bangladesh, impressive mobile penetration and the rise of e-commerce platforms, presents a golden opportunity for Bangladesh's SMEs with unprecedented access to a vast consumer base. By embracing digital technologies, SMEs can overcome geographical limitations, connect directly with consumers, and streamline operations, thus increasing efficiency and reducing costs. Government support in promoting digital literacy and providing training in e-commerce tools can go a long way in unlocking this potential.
Inclusive growth hinges on promoting gender equality and social inclusion. Women entrepreneurs in Bangladesh have exhibited remarkable resilience and potential in SMEs. However, they often encounter obstacles rooted in societal norms and access to resources. Facilitating women's participation through targeted training, access to credit, and networks can not only drive economic growth but also contribute to a more equitable society. Likewise, marginalized communities must also be integrated into the SME ecosystem, as their participation can ensure that growth is truly inclusive and holistic.
Education and skill development are cornerstones in this journey. By nurturing a skilled workforce, SMEs can tap into a pool of talent that drives innovation and productivity. Collaborations between educational institutions and industries can bridge the gap between theoretical learning and practical application, equipping students with skills aligned with the needs of SMEs. This symbiotic relationship not only ensures employability but also stimulates economic growth.
The role of the government cannot be overstated. A comprehensive policy framework that prioritizes SMEs, coupled with effective implementation, can unleash their transformative potential. Tax incentives, subsidies, and streamlined regulatory procedures can incentivize entrepreneurship and provide the necessary oxygen for SMEs to thrive. Moreover, dedicated agencies or departments focused on SME development can facilitate coordination, monitor progress, and address bottlenecks promptly.
Collaboration between the public and private sectors is equally critical. Private enterprises can play a pivotal role in mentoring, investing in, and partnering with SMEs. Such collaboration can lead to knowledge transfer, technology adoption, and market expansion, nurturing a symbiotic relationship where both parties benefit. Furthermore, establishing platforms for knowledge sharing, networking, and capacity-building can create a supportive ecosystem wherein SMEs can learn from each other's experiences and best practices.
As Bangladesh sets its sights on the future, the path to inclusive growth through SMEs emerges as a beacon of hope. By fostering an environment where SMEs can thrive, access resources, and participate fully in economic activities, Bangladesh can empower its citizens, bridge economic disparities, and chart a course toward shared prosperity.
The narrative of inclusive growth is not merely an abstract ideal but a tangible reality that can be shaped through deliberate policies and concerted efforts. SMEs stand as the linchpin in this narrative, representing the potential to uplift communities, create jobs, and spur innovation. As Bangladesh moves forward, it must recognize the pivotal role of SMEs in shaping its future and take bold steps to empower them.
Md Ashikur Rahman and Anupom Sarker are Freelance Contributors and postgraduate students of Public Administration and Governance Studies, Jatiya Kabi Kazi Nazrul Islam University.
