Home ›› 30 Oct 2022 ›› Special Supplement
Shopkeeper Abul Kalam has been running his store for more than 25 years. He is serving his community for decades after decades, fulfilling groceries and other basic needs of people’s day to day life.
Everyone in the locality is happy with him as he is always there with his products and services whenever required.
Abul Kalam lives with his wife and two kids, who might not face any difficulties regarding food in their day to day lives. But if we talk about the education of his kids, medical treatment for his wife or fixing his dilapidated village home, then the challenges will become prevalent.
Although he has been running his own business for a couple of decades, he still does not have that much liberty to enjoy other basic needs of a human being.
He is working for his own business religiously for seven days a week till late hours. But his life never changed for the better. The tragic part is that he took it as his fate to go without treatment or let kids help him rather than go to school.
Like Abul Kalam, such Micro, Small, and Medium Enterprises (MSMEs) play a major role in most economies, which is very important for global economic development. Most developed countries receive more than 50 per cent contributions from the MSME sector.
This particular indicator in our neighbouring countries also shows a very upwards trend. On the other hand, the contribution from this engine of economic growth in our nation is about 25 per cent.
It is very clear that for a country’s development, the rise of the MSME sector is very important.
They are not only limited to groceries or simple services to the community, but they are well placed to serve large manufacturers and exporters in all sectors, which creates many job opportunities and plays a strong role in ensuring socio-economic development.
According to the Bangladesh Bureau of Statistics (BBS), there are about 7.8 million MSMEs in Bangladesh, with 25 million workers in this sector. As of the last couple of years, there has been no concrete census, so I believe in reality this number to be quite high in the current scenario.
Now the question, what is their problem? Why could they not manage to grow their business? Later, we will identify how we can help them to grow.
Some basic needs to grow a business is financial sustainability, such as working capital, credit facilities or operational excellence like automated business operation management, enabling technology, full stack online presence, ensuring compliance or customer management like sales channel expansion, marketing facilities, service location expansion, customer retention etc.
One of our surveys showed us how they are lagging behind in those basic business needs, and most importantly, a lack of resources in all aspects to adopt those needs. If we go back to our childhood and try to remember one of the service providers who used to serve our families then we can clearly visualise this.
Most of the service Providers might be at the same place with the same resources, and same limited business domain. Solving the above issues will give them wings to fly and break all bottlenecks towards a sustainable business.
The government is working hard to develop this sector. We see many initiatives of the government to achieve the global agenda of Sustainable Development Goals (SDG).
One important initiative we saw is the 20,000 crore stimulus package for all MSME sectors, introduced to help them spring back from the crisis caused by the pandemic.
Covid changed the perception of all businesses, especially in terms of business management, sales growth and financial sustainability. Only rolling money through a traditional way is not sufficient for business growth.
Here comes digital inclusion, which can be a perfect solution for all of these issues and most importantly, it can ensure sustainability. Manual processes can give a start but not the scale. That is why before financial inclusion, digital inclusion is a must.
Technology will play a key enabler to overcome this situation. Expanding business location from one simple lane of an area at a national or even at multiple areas would not have been possible or cost effective without online presence.
Serving a couple of thousand customers with proper satisfaction would not be possible without consistent digital inclusion. Retaining customers with their different requirements becomes very easy with proper tracking.
A report by Access to Information (a2i) indicates that almost 20 million Bangladeshi workers were out of work during the pandemic, and it happened due to the practice of manual processes and less digitisation.
As a result we have less visibility of business operations and transactions, which is also one of the major barriers of getting funds from banks. Since a good portion of MSMEs is far from the banking system, there remains a gap in profiling.
Hence, banks are hesitant to move to cash flow-based loans from collateral-based loans. If we can ensure a proper record through digital platforms, the customers can be considered for not only cash-flow based loans, but also supply-chain based loans which can cater the working capital requirement of MSMEs easily.
Currently, the majority borrowers are existing clients or have good banking records from earlier. That is why we see a good part of the MSME segment untouched. Financial institutions are also failing to reach all segments for not having appropriate databases.
Lack of digitisation is a significant reason for missing them in the survey radar. On the other hand almost no usage of Alternate Credit Score (ACS) ensures their complete absence in this arena.
Sheba Platform Ltd is working from the beginning with the vision of MSME empowerment. To address the digitalisation problem we have introduced a product named “sManager.” It can be a game changer by making their businesses mostly digitised.
Through this system, currently more than 1.7 million registered MSMEs availed different features to manage their businesses which will open a new era of possibility. It is now very easy to keep records of day-to-day transactions, which will also give them different analyses of their businesses, helping them to grow more.
One of the major problems of MSME is giving small credit to its multiple consumers and not getting back the due amount on time. MSMEs are losing this money or facing delayed repayments due to a lack of proper records or follow-up to consumers.
sManager solved both problems through the “Due Tracker” feature. It will also help MSMEs to open its website automatically along with the management of social media sales, which will actually help them in moving from local to national and eventually global markets.
It will also give them financial sustainability by helping to manage their financial issues, including credit facility through financial institutes. Besides, they are getting access to digital platforms like Sheba.xyz for B2C clients and Business.xyz for B2B clients to boost their sales.
Through this product, they can enable new online business segments in addition to their existing businesses, which was never possible earlier. Logistics challenges are also solved through logistic service providers, which have been integrated with sManager and ensure product delivery with a committed timeline and competitive pricing.
In this way, a proper database will automatically be prepared, and an Alternate Credit rating system can be implemented as well.
Bangladesh is a land of opportunity, and we believe together we can achieve all goals. The right collaboration among all stakeholders and integration of all expertise could play a vital role to resolve all issues.
We need to run the existing system and in parallel, enhance the technology to take further steps in the new era. To create a faster and sustainable impact, partnering up with financial institutions is an absolute requirement.
Thus, true change will happen within the shortest period of time, and we will move towards a Smart Bangladesh.
Ilmul Haque Sajib is the co-founder and COO of Sheba Platform Ltd. He can be reached at [email protected]
