Problems SMEs face in Bangladesh

Small and medium enterprises (SMEs) are the backbone of the Bangladesh economy: they make up more than 90 percent of all businesses that provide two out of three private sector jobs in the country.

So, it is very important to help the sector grow for the sake of the country’s economic success and sustainability.

Yet, SMEs face various challenges from marketing of products to access to finance, lack of capital and skilled manpower, poor training facility, undeveloped sales channels and low level of financial inclusion, which, according to a quick survey conducted by The Daily Star, are some of the reasons that hamper the growth of SMEs.

Fifty SMEs, who took part in a fair in Dhaka recently, responded to the survey.

Most of the respondents urged for a common marketing platform for micro and SMEs along with easy access to funds.

A sales centre system can be formed all over the country to display the products of SMEs to the consumers, said Jahida Parvin, proprietors of Nakshi Hastashilpa (handicrafts).

“It will cut our marketing costs,” she said.

Many clients want to buy their indigenous products round the year but they do not have any showroom for displaying their products, said Rejaul Islam, another SME entrepreneur.

“Facebook or e-shopping could be a solution but some bad e-product sellers have spoiled the faith of customers by giving low-quality products through e-shopping,” he added.

The government can take up a project where all the SMEs will get a chance to showcase their products at a lower marketing cost, said Mukul Khan, another entrepreneur.

There is a government project of this nature -- Joyeeta -- but it is for women entrepreneurs only.

Lending to SMEs has increased to 19 percent of total loan portfolio in March this year from 15 percent a decade ago, but it is still inadequate, said Ahmed Rashid Joy, general manager and head of SME at IDLC Finance.

“We have to take the SME loan portfolio to 40 percent if we want to become a developed nation.”

But extending more loans to SME is not easy as small entrepreneurs have severe documentation and accounting problems, he said. If new banks are allowed, these should be fully SME banks, he added.

A sub-contracting system among the big companies can be a solution to the SMEs’ marketing problem, said Ahsan H Mansur, executive director of PRI.