SOS from SMEs
Micro, small, and medium enterprises (MSMEs), thanks to their entrepreneurial spirit and agility, have emerged as the heart of the growing economy of Bangladesh and the backbone of the financial ecosystem. However, a concerning trend is developing, threatening their very existence.
In many cases, larger corporate entities leverage economies of scale to trespass upon markets traditionally dominated by MSMEs. As a result, we witness a disturbing rise in premature shutdowns of smaller ventures.
Big businesses can deploy more resources to expand their footprint. On the other hand, small businesses are usually at a disadvantage because they don't have comparable resources. The impact of the early departure of small businesses due to uneven competition goes far beyond the boundaries of individual businesses and affects the economy, the employment landscape, and the social fabric.
Usually, MSMEs circulate more money back into the economy than big firms or corporate chains. In addition, they bank on local or regional relationships, fostering trust and civic engagement among the communities. Therefore, the closure of MSMEs is a big blow to the economy's growth trajectory and the communities.
Moreover, the alliance of industries under the umbrella of big conglomerates deepens income inequality. The growing divide threatens social stability and obstructs national progress.
As soon as small businesses close, individual dreams and aspirations are shattered and the vision of moving up the economic ladder becomes a distant mirage. This hurts the very foundation of a prospering democracy. A sense of dissatisfaction increases among a large number of groups who were left behind by the tide of economic transformation.
We have witnessed a number of small businesses taking early exit due to the entrance of large conglomerates in different sectors and sub-sectors, such as plastic, bakery, confectionery, agro-processing, and frozen food, in the last couple of decades.
Addressing this pressing issue demands a multidimensional approach. Policy support is needed. Governments must endorse proactive industrial policies tailored to safeguard the interests of MSMEs and restrict giant groups from entering into true MSME clusters.
Targeted subsidies, tax holidays, access to affordable credit, and streamlined regulatory frameworks can provide a lifeline to struggling businesses, enabling them to navigate the turbulent times brought on by competition. Additionally, adopting an ecosystem favourable to innovation and entrepreneurship is paramount.
Incubation centres, technology hubs, and skill development initiatives can empower MSMEs to leverage their inherent strengths and carve out niches in the market.
Fostering a culture of collaboration and knowledge sharing can reinforce the resilience of MSMEs. Establishing clusters where smaller enterprises can pool resources, share best practices, and collectively negotiate with larger players can level the playing field. Moreover, strategic partnerships between MSMEs and academic circles, research institutions, and larger corporations can catalyse innovation and strengthen sustainable growth.
MSMEs should act as backward and forward linkage of big corporates where a win-win situation will prevail and they will not act as a competitor to each other.
For a fruitful future ahead, we must recognise the crucial role MSMEs play in shaping Bangladesh's economic destiny. By supporting policies that prioritise their growth and sustainability, we can tap their potential. As we strive towards building a more resilient and inclusive economy, we should pay heed to the call to safeguard the visions and aspirations of the countless entrepreneurs who dare to dream for a better tomorrow.
The author is a banker.