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41pc enterprises bemoan meagre SME loan: Study

SAJIBUR RAHMAN | Published: January 12, 2020 11:33:57 | Updated: January 14, 2020 12:33:27


Picture used for representational purpose - Collected

Nearly 41 per cent of small enterprises consider scanty the amount of loan offered by SME Foundation under its Credit Wholesale (CWS) programme, according to a study.

The Bangladesh Institute of Development Studies (BIDS) study shows as of April 2017, Tk 575 million was given to 1,200 micro- and small enterprises.

It said 450 of the loanees were women entrepreneurs.

The CWS programme contributed only 6.0 per cent (Tk 732,000 on average per firm) of the total credit disbursed in the past five years.

According to the study, small businesses' main source of credit is personal savings (49.5 per cent).

The BIDS findings illustrate that almost 73 per cent of the enterprises used the credit to raise their working capital base.

The CWS programme under the Finance and Credit wing is one of the major activities of the foundation.

SME Foundation has taken it as a pilot scheme with own funds to provides small entrepreneurs with collateral-free loan at 9.0 per cent interest rate.

The BIDS talked to 526 respondents who reported that access to the CWS credit facility is easier compared to other credit sources.

The study styled 'Impact Assessment of SME Foundation's Activities' aimed to assess institutional performance in the growth of small and medium enterprises.

A mixed method of both qualitative and quantitative approaches was adopted to evaluate its activities.

The evaluation was carried out using available information and surveying a sample of SMEs.

The enterprises questioned were picked from 10 districts under six divisions.

The BIDS study report was released on October 29, 2019.

Comparing performance and productivity of the firms, it found that the beneficiaries are generating, on average, more revenues than non-beneficiaries.

Similar inference can be drawn when profit of the firm is considered as the outcome, the study disclosed.

For the log of profit, the survey shows, the difference between beneficiary and non-beneficiary firms is statistically significant.

This implies that the firms which have received any sort of services from the foundation are making more profit than those of similar characteristics.

The study recommended that the foundation focus on making a complete database of the SMEs which have not set a far-reaching objective yet.

The scope for activities of the access-to-technology wing of the foundation needs to be enhanced considering huge demand for such services, it suggested.

When asked, SME Foundation managing director Safiqul Islam said their services and interventions related to entrepreneurs might lose traction for fund crisis.

The foundation received Tk 2.0 billion in 2007 to promote SMEs, but it needs Tk 8.0 billion right now considering the country's current economy, he added.

Stakeholders are playing a supportive role in boosting the sector, but it is difficult for them to do this gigantic task with limited funds, Mr Islam concluded.

sajibur@gmail.com

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