SMEs' recovery should top economic agenda

Looking at their number and the magnitude of employment they create, the Small and Medium Enterprises (SMEs) unquestionably occupy a considerable space in the economy. But when it comes to the question of their claim to the state's resources and services, they hardly get the attention they deserve. As such, formal finance, especially bank credit, the SMEs often find it hard to come by. In most cases, it is the requirement of collateral that comes in the way. Like most sectors of the economy, the SMEs, too, were not spared the devastating impact of the pandemic. The government, as it did for various other sectors, announced bailout packages for the SMEs. But unlike the bigger industries they could not take full advantage of the government's financial support. This is a chronic problem dogging this huge sector of the economy that employs close to 8.0 million workers who are the bread earners for 31.2 million as their family members. As for its (SMEs') contribution to the economy, it is 25 per cent of the country's gross domestic product (GDP).

Given the sector's potential to generate income and employment, representatives from government bodies concerned, development partners and other stakeholders recently met at a virtual dialogue to discuss its problems and prospects. Ways to address the bottlenecks and roadblocks stymieing SMEs' progress came under review at the talk. Especially, the adverse impact of pandemic figured prominently as it caused the sector to lose 66 per cent of its revenue. But the sufferings of the workers at those SME enterprises were still worse. According to an estimate, 42 per cent employees of this sector had to make do with partial pay, while 4.0 per cent were left to fend for themselves. But the SME enterprises and their employees could be spared much of the ordeal if they could have accessed the government-provided stimulus money as required and in time.

To be precise, it is more than just the availability of the financial resources that is at issue here. In truth, what is wanting is a proper mindset of those at the banks or other financial institutions in charge of disbursing the funds meant for the SMEs. The government will be required to address these issues at its policy level. That apart, the SME Policy 2019 the government announced earlier, if implemented in its true spirit, can help the sector to overcome much of the constraints it is hamstrung by. The strategic objectives of the policy, for example, promise a guarantee fund with allowance for SME-investors to access soft loans. It also provides for training and credit facilities for women entrepreneurs including development of a data server on the SMEs. At this point, it has to be acknowledged not just in words but in actions by all concerned that SMEs constitute the driving force of the economy.

So the post-pandemic recovery plan, now topping the government's economic agenda, will have no meaning, if the issue of the SMEs' proper recovery from the pandemic shock loses its importance. On this score, it is time the SME Foundation (SF) played its role as the agency to accelerate the country's industrial growth through promotion and extension of SMEs as envisaged at SF's inception in 2007. Hopefully, it will be able to duly disburse the Tk 2.0 billion credit fund now at its disposal within FY 2021-22 as it dealt out a similar fund of Tk. 1.0 billion last fiscal.