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The authorities’ failure to implement the SME Policy-2019 has created a barrier for the government in providing all-out support to Small and Medium Enterprises, which have been hit hard by the coronavirus pandemic.
Even after two years of its formulation, authorities are yet to finalise the working strategy for the policy implementation which is said address issues such as fund shortages, lack of technical expertise and market expansion strategies for the sector.
Through its SME Policy-2019, the government set a target to create 1.5 crore employment opportunities by modernising, providing training and technological support to SMEs to help them flourish.
The government also plans to increase the sector’s contribution to the country’s GDP from 25 per cent to 32 per cent by 2024.
However, the slow progress of the implementation of the government policy has stunted the growth of the sector, which has been long suffering from lack of a skilled workforce and technical know-how in modern production technologies and innovation, even before the pandemic situation began.
Stakeholders in the cottage, micro, small and medium enterprises (CMSMEs) sector fear that the slow progress of the implementation of the SME Policy-2019 will drastically reduce their contribution to employment and other prime areas of the economy.
The policy will ultimately fail to achieve its objectives by June 2024 due to the delay, they added.
“Frankly speaking, 99 per cent of the entrepreneurs are already frustrated as the government support for the cottage, micro, small and medium (CMSM) sector hasn’t been upgraded for years,” said Rehana Akter, an award-winning SME entrepreneur, while talking to The Business Post.
“The Ministry of Industries, SME Foundation, BSCIC, and other related organisations formulated the SME Policy 2019 with certain goals in mind. However, it might not be effective for SMEs as these organisations have no specific data regarding some 1 crore enterprises across the country,” she added.
The government bodies were scheduled to hold a meeting to finalise the strategy paper to implement the recommendations as per policy on July 8. The meeting, however, had to be postponed due to the week-long shutdown that began on July 1.
According to the Brac Institute Governance and Development, some 79 per cent of cottage, small, medium enterprises (CMSME) faced acute fund crisis due to the coronavirus pandemic, while around 2 per cent of these enterprises have been closed for good.
However, trade bodies representing the SME sector claimed that all CMSME were hit hard by the restrictions imposed due to the pandemic and some 15 per cent of SME businesses were forced to shut down due to fund crisis.
Talking to The Business Post, Dhaka University Economics Professor M Abu Eusuf said that most of the SMEs suffered losses due to the ongoing pandemic, which will also pose a barrier in implementing the SME Policy 2019.
Most SME entrepreneurs have no proper knowledge regarding e-marketing and e-business which also creates an obstacle for the market growth of SME products, he said.
Entrepreneurs said the pandemic has already left a negative impact on SMEs and the sector will hit rock bottom if the Covid-19 situation does not improve soon.
Talking to The Business Post, KPC Industries Chairman Kazi Sazedur Rahman pointed out that “a good number of SMEs have already slashed their manpower due to the pandemic and the situation might worsen further.”
According to state-run Small and Medium Enterprises (SME) Foundation, there were 78,18,565 SMEs across the country as of 2013. Of them, 68,42,884 (87.52 per cent) were in the cottage category, 1,04,007 (1.33 per cent) in micro, 8,59,318 (10.99 per cent) in small and 7,106 (0.09 per cent) in medium, and 5,250 (0.07) in large category.
Of the total enterprises, 55,89,019 were located in rural areas and 22,29,546 urban zones, employing some 2,45,00,850 workers. Of the workers, 2,04,49,132 (83.47 per cent) were male and 40,51,718 (16.53 per cent) were female.
Besides, a recent study conducted by Japan Bangladesh Chamber of Commerce and Industry (JBCCI), found that Bangladesh has 17,384 micro enterprises, 15,666 small ones, 6,103 medium and 3,639 large scale enterprises.
SME Foundation Managing Director Dr Md Mafizur Rahman told The Business Post they were working to prepare a final list of SME entrepreneurs and their products by December this year.
He said data on 78.13 lakh SMEs were prepared by the Bangladesh Bureau of Statistics (BBS), in 2013 and published in 2015. By 2021, the number of SMEs in the country reached around one crore.
Soon after the pandemic broke out in 2020, the government announced a Tk 20,000 crore financial stimulus package for the CMSME sector to help them overcome the impact of the global pandemic.
The sector also received another Tk 300 crore under the incentive package.
Later, Bangladesh Bank (BB) released a circular on April 13to disburse the special package among CMSMEs through designated banks and financial institutes.
According to SMEF, the respective banks and financial institutes disbursed some Tk 14,772 crore out of Tk 20,000 crore among 99,733 SMEs till May 29 this year, while 115.95 crore from incentive package was disbursed among 1,044 SMEs till July 5.
However, the disbursement data shows only 12 per cent of all CMSMEs in the country received aid from the government during the pandemic.
Meanwhile, 7.85 lakh SMEs took loans from different banks, financial institutes, NGOs and private sources.
On June 5 this year, Bangladesh Bank Governor Fazle Kabirclaimed that 82 per cent of stimulus package were distributed among CMSMEs and the rest of the sum will be disbursed before July 1.
BSCIC Chairman Md Mostaque Hassan said that the Covid-19 pandemic already has hit the industry sector and recovery initiatives have been taken since March last year.
Industries Secretary Zakia Sultana told The Business Post that they have taken “massive plans” to accelerate the whole working procedure to implement the SME Policy 2019.
But, she said, their “activities were badly hit by ongoing coronavirus pandemic.”
She added that the concerned organisations, including Small and Medium Enterprise (SME) Foundation and Bangladesh Small and Cottage Industries Corporation (BSCIC), have continued their works in respective areas to boost the country’s economy.
