The Financial Express

Enabling small businesses to play due role  

| Updated: June 10, 2021 22:41:12

Enabling small businesses to play due role   

A study based on available data revealed that 80 per cent of all the business enterprises in Bangladesh belong to the category of the Cottage, Micro, Small and Medium Enterprises (CMSMEs). And, as for their contribution to the country's Gross Domestic Product (GDP), it is around 20.25 per cent. Considering that they employ over 5.0 million people, it has to be acknowledged that these business entities play a significant role in the economy as they are a source of livelihood for such a big chunk of the population. Notwithstanding this, so may enterprises are yet to access the state resources they are entitled to for their sustenance and growth. This is more so because they constitute the worst pandemic-hit sector of the economy. A very recent study shows that till the end of December last year, 74 per cent of these firms were affected by the pandemic, many of those incurring output losses ranging from 20 to 26 per cent.

As expected, the issue of the CMSMEs again came up for deliberations at a recent virtual meeting where government and business leaders, experts in the field and representatives of development partners shared their views on mainstreaming the sector in the national economy. True, the issue of addressing the problems facing the CMSMEs has been raised more than once in this column as well as discussed at different relevant forums on a number of occasions. Evidently, these only highlight the urgency of the subject. As such, it is a pressing need that the government considered it as a thrust sector and extended necessary policy support to strengthen it. The imperative is to make a robust move to include the CMSMEs in the formal economy and mobilise government's fiscal resources to that end. True, the government leaders often voice their concern for the sector with promises to better its condition. In the outgoing fiscal year (2020-21), government did even announce a stimulus package of Tk 200 billion to bail out the pandemic-hit CMSMEs. Undeniably, this only proves that the government has no dearth of concern for the sector. But the point is how to reach that well-meant government largesse to the needy and capable. To that end, first, the banking and financial institutions have to be bound by strict rules to treat the CMSME candidates seeking financial assistance such as stimulus money or loan with priority and set a timeline and a target for them (bankers) to meet. Second, the task of creating a digital database for CMSMEs should be considered a top priority.

Third, it has to be acknowledged that the main barrier to the CMSMEs' access to banks is their long and complicated loan procedure. The process has to be simplified. Fourth, CMSMES have to be empowered through educational and skills training programmes. This would help them better access the banking and other financial bodies. And by this means, they would be able to upgrade their status to join the economic mainstream and lay claim to their due share of the state's resources.

Incidentally, the key role the small and medium enterprises play in the economies of Japan, China and India cannot be gainsaid. Over 99 per cent of their business entities belong to the CMSMEs category. Hopefully, the policymakers would take a cue from this fact and enable the CMSMEs to assume their due role in Bangladesh's economy.

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