Fund crunch tying hands of SME

The SME Foundation has been facing a shortage of funds for long, badly affecting its 'mandated' activities, according to a study.

The study, conducted by Bangladesh Institute of Development Studies (BIDS), has revealed that the foundation is now running on interest accrued from an initial endowment of Tk 2.0 billion provided by the government.

It also shows the overall income of the foundation over the last five years has declined by 0.74 per cent annually due to interest rate variations while its expenditure has increased by 12 per cent a year.

The foundation's overall net income also dropped 13.5 per cent in the last five years.

The study said the total income earned from both regional and national fairs organised by the Foundation was Tk 2.88 million in 2011 which came down to Tk 0.53 million as of June in 2016.

During the period, overall income earned from the fairs was estimated to have declined by 24.6 per cent annually.

The study recommended setting up a long-standing full-pledged one-stop service centre to help strengthen the foundation.

"It is important to strengthen the activities and the role of Policy Advocacy and Research Wing of the foundation," said the study.

The study titled 'Impact Assessment of SME Foundation's Activities' aimed to assess its institutional performance in the development of small and medium enterprises (SMEs).

A mixed method of both qualitative and quantitative approaches was adopted for evaluating the foundation's activities. The evaluation was carried out using available information and surveying a sample of SMEs.

A total of 526 entrepreneurs were interviewed and the enterprises were selected from 10 districts in the country's six divisions. The study report was released on October 29, 2019.

Most of the entrepreneurs who took part in both national and regional fairs benefited from marketing advantages (90.60 per cent), followed by increased sales/orders (82.91 per cent) and networking (75.21 per cent).

Lack of adequate advertising/campaigning, high participation fees, poor management and security measures and unsuitable time of fair organisation were some of the weaknesses reported by the respondents.

To make the foundation more dynamic and transform it into a knowledge-based institution, an organisational restructuring might be useful, the study said.

It also found weaknesses in regular updating of SME directory, periodic publication of SME statistics (yearly/half yearly), opening up the database of foundation-sponsored surveys and updating database of women entrepreneurs etc.

"Business support service needs to be decentralised with the help of Bangladesh Small and Cottage Industries Corporation if it agrees," said the study.

It also recommended filling one-third vacant posts so that the foundation can work at full capacity.

Contacted, SME Foundation managing director Safiqul Islam said all activities, services and interventions related to entrepreneurs might be hampered due to 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.

Though the government and stakeholders are playing a supportive role in boosting the SME sector, he said, it is very difficult for them to carry out huge tasks with a small amount of funds.

Mr Islam also highlighted the importance of resource linkages to promote the country's SMEs.

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