How Bangladesh's Nano SMEs can conquer global markets

Trade and competition are fundamentally linked, with exports serving as an important component of the gross domestic product (GDP) and a key driver of global economic integration. Export competitiveness refers to a country's ability to produce goods and services that can compete effectively in international markets. It also measures an economy's share of non-extractive exports relative to its GDP, compared to the corresponding share of global non-extractive exports to global GDP.

With the transition from agriculture to manufacturing, Bangladesh now has an economy where exports play a central role, particularly since the government began promoting export-oriented industrialisation in the 1980s. As a result, the ready-made garments (RMG) sector has emerged as the cornerstone of the economy and remains its dominant export earner. Despite recent challenges-such as the 20 per cent reciprocal tariff imposed by the United States (US), exports grew by 8.55 per cent in FY 2025, with the RMG sector alone accounting for 84 per cent of total export earnings. However, such dependence exposes the economy to significant vulnerabilities stemming from policy shifts, fluctuations in global fashion cycles, or trade shocks. Diversifying exports beyond garments is therefore an urgent priority from both economic and strategic standpoints.

Small and medium-sized enterprises (SMEs) form the backbone of Bangladesh's economy. The country has nearly 11.8 million CMSMEs (Cottage, Micro, Small, and Medium Enterprises). Despite their vast potential, industrial units, and manufacturing infrastructure, SMEs contribute only 27 per cent to GDP.

From a family handloom weaving unit in Tangail to a 100-employee IT company in Dhaka, SMEs represent innovation, creativity, authenticity, cultural heritage, and ethical value-qualities that large corporations often lack. Nano SMEs, in particular, have significant capacity to become competitive exporters in a world that increasingly values sustainability, authenticity, local character, and the human touch. Global consumers are seeking products such as organic foods, handcrafted jute goods, vintage-inspired accessories, handmade jewellery and bags, and niche software solutions-precisely the kinds of goods and services Bangladesh's nano enterprises can offer.

A perfect international example is Bali's rattan bag industry, where small, family-run enterprises transformed a local craft into a global fashion trend. What began as a cottage industry producing rattan bags for local tourists evolved into an international phenomenon, with demand from customers across Europe, the United States, and Australia. Indonesia's rattan product exports totalled US$ 158.5 million in 2024, representing 42.2 per cent of the world's total rattan exports. At the nano enterprise level, individual workshops show striking export capacity: one such workshop produces up to 7,000 rattan bags per month, selling at US$10-30+ per bag, and successfully exports to Brazil, Australia, and the US. This example shows that small-scale producers can achieve significant market penetration and generate strong revenue without compromising artisanal quality, responding effectively to global consumer demand for handcrafted, sustainable products.

Bangladesh holds similar potential. As the world's largest jute producer, its hand-woven jute goods already enjoy strong eco-friendly appeal. Tangail handloom sarees, renowned for their craftsmanship and heritage, could be positioned as luxury niche exports. Unique agro-products such as Rajshahi dried mango, Sylhet organic tea, and regional spice mixes can create distinctive export niches. The IT sector also presents vast potential, with its strong workforce and low entry barriers. Additionally, as one of the top leather producers, Bangladesh could leverage craftsmanship to expand exports of handcrafted leather wallets, belts, and bags-products that align with the growing global demand for ethically produced premium leather goods.

The most significant barrier is the capital and financing gap. According to the World Bank, Bangladesh faces a financing gap of nearly US$ 2.8 billion for SMEs. Traditional microfinance schemes are often ill-suited for export-oriented growth. Logistical and administrative challenges further constrain progress, as export infrastructure is primarily designed for large-scale shipments. For instance, an agro-food producer in Rajshahi seeking to export small quantities abroad faces prohibitively high costs. Compliance and certification obstacles also hinder small producers. A BSCIC (Bangladesh Small and Cottage Industries Corporation) case study found that rural honey producers, despite maintaining high-quality standards, were unable to access Middle Eastern markets due to the lack of certification and adequate packaging capacity. Whilst digital platforms such as Etsy, Amazon Handmade, and Daraz provide opportunities for global reach, rural nano enterprises often lack digital literacy, reliable internet access, or secure payment gateways to expand their businesses internationally.

The Ministry of Industries has initiated the formulation of the National SME Policy 2025, which aims to increase the SME sector's contribution to GDP from 27 per cent to 35 per cent by 2030. The draft policy outlines ten strategic goals focused on strengthening innovation, improving access to finance, expanding export linkages, and enhancing digital capabilities.

To tap the export capacity of nano enterprises, policies must focus on actionable financial and institutional mechanisms. These include introducing digital credit scoring, low-collateral loans, and credit guarantee schemes tailored for SMEs; institutionalising export readiness programmes through collaboration amongst the government, universities, and chambers of commerce; expanding public-private partnerships to facilitate digital market access and capacity building; and promoting cluster-based export initiatives to showcase regional craftsmanship under collective branding.

Brand image can also be elevated through storytelling and heritage marketing-emphasising artisan traditions, environmental sustainability, and product uniqueness.

Empirical evidence suggests a positive long-term relationship between SME output, government expenditure, and GDP growth. Export diversification cannot be achieved by focusing solely on industrial giants. Nano SMEs represent the resilience, creativity, and entrepreneurial spirit of Bangladesh. Policies must move beyond rhetorical recognition and provide concrete support that enables nano businesses to integrate into global value chains. Bangladesh's competitiveness in the ensuing decades will be determined by its capacity to convert nano potential into macro impact rather than just by its industrial giants.

The writer is a postgraduate student at BRAC University. She can be reached at nahida.sultana.5623@gmail.com