SME sector can ease unemployment problem  

Sarwar Md. Saifullah Khaled   | Published: May 06, 2019 22:11:48 | Updated: May 08, 2019 22:20:13

Amid the growing unemployment problem in Bangladesh, the Small and Medium Enterprise (SME) sector can be an effective tool to solve the problem provided it gets necessary support to flourish. There is no alternative now to creating skilled manpower through technology-based education and putting emphasis on the SME sector. A large number of educated youths are now unemployed in the country. The government should think for more employment generation for youths since the current rate of unemployment will rise further in the future.

As per the Bangladesh Bureau of Statistics (BBS), country's unemployment rate has increased from 4.35 per cent in 2016 to 4.37 per cent in December 2017. About 2.0 million young people join every year the country's workforce. Half of them i.e. 1.0 million find jobs at home or abroad. So, it has become a challenge to create more jobs so that the rest can be employed.

The country's SME sector can play an important role in reducing unemployment and attaining double-digit Gross Domestic Product (GDP) growth in the future. The SME sector is playing a significant role in many developed countries. So, we need to carry out extensive research and take necessary plans in this regard. The country needs to provide policy support to encourage small and medium entrepreneurs. Various training programmes should be arranged to create skilled entrepreneurs. SMEs will generate jobs and boost economic growth.

The Bangladesh Bank (BB) has instructed the countries banks to provide at least 20 per cent of the loans to SME industries. Entrepreneurs can get loans from Entrepreneurship Support Fund (ESF). Bangladesh Small and Cottage Industries Corporation (BSCIC) has also taken various initiatives to promote the SME sector. At present, its main focus is on the areas having business potential where it can build SME industrial parks. It will build industrial parks on around 20,000 acres of land in the next 10 years and create 10 million employments for the country's job seekers. Educated youths will get priority.

As per a report of the Planning Division tiled "Study on Future Direction of SME in Bangladesh", SMEs now occupy an important position in the national economy. They account for about 45 per cent of manufacturing value addition, about 80 per cent of industrial employment, about 90 per cent of total industrial units and about 25 per cent of the labour force. Their total contribution to export earnings varies from 75 per cent to 80 per cent. The industrial sector makes up 31 per cent of the country's gross domestic product (GDP), most of which is coming from SMEs. The total number of SMEs in Bangladesh is estimated to be 7.9 million. Of them, 93.6 per cent are small and 6.4 per cent are medium.

About 60 to 65 per cent of SMEs are located in and around the metropolitan areas of Dhaka and Chattogram. The authorities should encourage establishment of SMEs in larger numbers outside these two metropolitan areas for harmonious development of the country's economy. 


Sarwar Md. Saifullah Khaled is a retired Professor of Economics, BCS General Education Cadre. 


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