Small footwear makers need low-cost fund to flourish

Despite having immense potential, footwear manufacturing business in Bhairab cannot flourish at the desired level, largely due to lack of both low-cost fund and technical assistance, according to insiders.

If provided necessary support for technology transfer and installation of a common facility centre in the area, the local footwear makers can play a significant role in the country's economy, they said.

During a recent visit to Bhairab Upazila, Kishoreganj, this correspondent found thousands of small shoe factories operating in and around the vicinity, 80 km away from the capital city.

At present, around 15,000 factories are running in Bhairab sadar and surrounding areas, and they created employment for nearly 60,000 people, said Bhairab Footwear Factories Owners' Association (BFFOA) president Md Al Amin Mia.

Women make up around 20-25 per cent of the total direct employment in the shoemaking businesses, he said.

"If we get required support, we can create more employment in Bhairab and other parts of the country."

Unavailability of low-cost fund is a major obstacle to running the business, he added.

"We cannot provide collateral for bank loans, as most of our businesses are very small in terms of investment and annual turnover," said the president of BFFOA, which has 800 members.

Very few factory owners manage to get credit from the banks, he said, while some others borrow money from microcredit lenders at a very high interest rate.

Sources said the footwear making business began in Bhairab in the middle of 1980s with only five or six entrepreneurs opening factories. Now there are nearly 15,000 factories, half of them located in Bhairab upazila town.

Each of these micro-enterprises created direct employment opportunities for four or five persons. They produce a wide array of footwear using leather, artificial leather and other synthetic materials for male, female and children.

Most of them still use traditional production methods and supply their products to traders in almost every district of the country.

There are also several medium entrepreneurs having an investment of Tk 50 million to Tk 100 million.

BFFOA Vice President Sher Mohammad Sohrab Ali said the socio-economic progress achieved by Bangladesh in recent years paved the way for a huge domestic footwear market, but a large quantity of imported items take away the lion's share.

The country still imports a huge quantity of footwear from India, Myanmar, China and Vietnam, he said.

"We can help reduce dependency on the imports, as we have expert shoemakers, cheap workforce and favorable transportation system in our country," he said.

He also said a common facility centre (CFC) for footwear makers is urgently required to give an impetus to the sector's growth.

With the help of a CFC, small businesses will be able to share knowledge, avail scopes to develop skills, and use modern machinery at a reasonable cost to increase their production capacity.

The business owners, however, hailed the Small and Medium Enterprise Foundation (SMEF) for providing them with necessary supports, including training programmes.

The shoemaking business in Bhairab is one of the 177 cluster-based industries located in different parts of the country identified by the SMEF, which undertake various initiatives to promote the small and medium-sized entrepreneurship.

Bhairab is the largest shoe-cluster in Bangladesh.

The SMEF, a government agency, organised several training programmes on issues such as business development and fire safety.

"Now many of our members know how to protect the factory from fires, thanks to the training given by the SMEF," General Secretary of the BFFOA Md Sabuj Mia told the FE.

Fire incidents gutted thousands of businesses, causing huge financial losses in the past, he said, adding that most of the raw materials for shoes are inflammable.

A couple of years ago, a private commercial bank, at the behest of SMEF, expressed its interest to provide Tk 80 million in loans to the entrepreneurs, but it backed down considering the risk factors, he said.

"Banks should bring changes to their credit policies for small businesses like us considering the impact we are making to the economy through generating employment and reducing dependency on imports," he added.

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