Loan hurdles, skill gaps, and tech lag hinder SME growth: Entrepreneurs
The 11th SME Product Fair is being held at the Bangabandhu International Conference Centre in the capital
Small and micro-entrepreneurs are facing challenges in expanding their businesses due to difficulties in obtaining bank loans, lack of skilled manpower, limited technology adoption, and lagging product development, according to entrepreneurs participating in the ongoing SME Fair.
The 11th National Small and Medium Enterprise (SME) Product Fair 2024 is happening at the Bangabandhu International Conference Center in the capital from 19-25 May.
Rubina Akter Munni, the owner of a leather goods stall named Design by Rubina, told The Business Standard that she cannot secure large orders from foreign buyers due to the unavailability of easy bank loans to expand her factory.
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Despite having 14 years of experience, she has been unable to get a loan to build a proper factory. Rubina's factory is currently operating out of a rented space in Tongi. She needs Tk2 crore to build a factory on her own land but is restricted by a lack of funds.
Before the pandemic, she exported products worth Tk3 crore annually, but her sales decreased significantly. Now, potential foreign buyers require factory compliance before placing orders.
Rubina's low bank transactions hindered her loan eligibility, despite her business's stability through cash and Mobile Financial Services. She emphasised the need for a substantial loan, around Tk4 crore, with favourable terms to expand her business.
Rubina urged the government to support long-standing entrepreneurs like her in setting up factories.
Esrat Jahan Chowdhury, the owner of Tulika Eco Ltd, pointed out that Bangladeshi handicrafts are in high demand abroad but that Bangladesh is lagging behind due to a shortage of skilled workers, irregular work patterns, and communication gaps with potential buyers.
She suggested that if home-based handicraft workers receive proper training, entrepreneurs could readily find skilled labour, boost confidence in fulfilling export orders, and consequently enhance employment opportunities.
Swapna Rani Sen, the CEO of Rangpur Craft and winner of the National SME Entrepreneur Award for Best Female Micro Entrepreneur in 2023, highlighted the limitations caused by a lack of access to modern technology.
Entrepreneurs are struggling to compete due to the time-consuming nature of traditional production methods. She proposed the establishment of common facility centres equipped with modern machinery within industrial clusters to improve efficiency and reduce production costs.
The fair also featured a platform for ethnic minority micro-entrepreneurs, Sabangee. Nima Chakma, a saleswoman at the stall, advocated for training programmes to improve the skills of women weavers and establish dedicated workspaces for them.
Rashedul Karim Munna, managing director of Creation Private Limited, emphasised the growing importance of compliance certification for product exports.
He urged the government to provide policy support for entrepreneurs in the handicrafts sector, who are currently operating informally and struggling to secure loans due to their inability to meet bank requirements.
Rashedul called for separate loan policies designed specifically for micro and cottage industry entrepreneurs.
At a seminar titled "Smart Financing for Smart Bangladesh: Possible Solutions for Mainstreaming the Marginal Entrepreneurs," SME Foundation Chairman Dr Md Masudur Rahman said that the majority of small entrepreneurs operate informally.
He mentioned the foundation's efforts to formalise these businesses by providing various training programmes, enhancing entrepreneurs' capacities, and linking them with modern management practices.
Zaytoon Business Solutions Chairman Arfan Ali stressed the urgency of adopting financial technology solutions such as AI-powered auto-credit scoring to improve loan access for marginal entrepreneurs.
He also highlighted the importance of financial literacy programmes and widespread internet connectivity for MSMEs.
According to the SME Foundation, there are an estimated 78 lakh MSMEs in Bangladesh, including cottage industries, which indirectly employ about 2.1 crore people.
