Calling for an SME revolution
The financial help received by the commerce of this country mainly comes from banks, NBFIs (Non-Banking Financial Institutions) and NGOs (Non-Governmental Organisations). While the banks and the NBFIs concentrate on the big fish, the NGOs tend to help the poorer, more disadvantaged populace. What this does is inevitably create a gap in the middle that is deprived of any financial support; this "missing middle" is the SME entrepreneurs. According to the World Bank there are approximately six million such entrepreneurs in Bangladesh struggling to develop their business and make a living.
Before we divulge deeper it's better we define SME industry for a clearer understanding of what it means in the Bangladesh context. The World Bank defines SME in Bangladesh as any working entity or business employing five persons or less. Unfortunately, Bangladesh Bank, in its brilliance of a better comprehension of the economy, officially defines any company with a hundred employees or more a small enterprise. This gap in numbers has created confusion within the banks and NBFIs, some of whom are making the best of the confusion by financing bigger industries in the name of SME.
For all latest news, follow The Daily Star's Google News channel. But not to deny any credit to those who deserve it, there are some banks that have been working relentlessly to help finance the "real" small and medium enterprises. "While SME is a fashion to other banks it has remained a passion for us" said a senior banker working in one of the few banks excelling in the SME finance business. And it is true that there are banks out there that have gone out of their way to develop and finance small and medium enterprises reach their potential. Like a modern day Robin Hood these banks have been taking from the rich and giving it to the poor -- taking valuable funds collected in the urban areas to the cash-starved semi-urban and rural areas for investment.
Unfortunately not enough banks are coming forward to help the SME community this way. That is why we see thousands of people migrating everyday from the rural to the urban areas in search of a brighter future. Ironically even the cities do not have enough jobs available for these people and thus all this activity only escalates the existing unemployment situation. Today there are almost thirteen million unemployed people in this country -- thousands of whom are qualified doctors, engineers and teachers.
The lack of adequate guidance and finance is slowly leading to a state of decadence. This needs to change and can change. With a little help from the government and a lot of effort from the financial institutions things can turn around. For example, if banks decide to invest in and finance a certain part of their portfolio to help the SME industry, it could inject much-needed funds to revitalise the struggling commerce in the rural and semi-urban areas.
Countries like Malaysia, Singapore, Indonesia and Thailand have already realised the strength and potential of the SME sector. Their respective governments have relentlessly pursued to establish policies that have favoured SME entrepreneurs and built formidable economies on the backs of these business enterprises. The leadership had a vision and they went the extra yard to see it come alive; the banks obliged.
What Bangladesh needs is its own SME revolution. It is high time that our government makes bold changes to policy and encourage the development of the SME entrepreneurs across the country; we need our banks to extend a helping hand, and we need our population to be more aware of the industry and about the difference it can make to the economy in the long run. Loans like Anannya, Apurba and Pathshala for small and medium enterprises already exist. There are also doctor's loan for doctors and teacher's loan for teachers in the market. Big changes can only come about through customisation of the products for SME customers. Not only do we need more, we have to expect more. Banks and NBFIs should be encouraged to step up to the challenge and we need more people to be responsive to the changes.