Best Sme Practices Bangladesh May Replicate

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  • Topic: Politics of Nigeria, Industry, Economic geography
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  • Published : December 18, 2012
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Best SME Practices Bangladesh May Replicate

Md Joynal Abdin
Program Officer (Research)
SME Foundation, Bangladesh

At the conference titled "D-8 Taskforce Meeting on SME", held in Dhaka on October 09, 2012, Bangladesh, Egypt, Indonesia, Iran, Malaysia, Nigeria and Turkey presented papers on SME (Small and Medium Enterprise) Development in their countries. Let us have a look at the notable features of the presentations and identify the best practices of the D-8 member-states that Bangladesh may replicate for quicker SME growth to promote sustainable industrial development and poverty alleviation.

The Bangladesh case: The Bangladesh presenter mentioned in his paper: 1. Distribution of enterprises in the Bangladesh economy (according to his study) is 87 per cent small, 6 per cent medium, and 7 per cent large industries.

2. The present status: 84 per cent of SMEs took loans from commercial banks. Almost all of them needed collateral except some trading and service for which hypothecation served as collaterals. Guarantors were needed for 93 per cent of SMEs, 41 days were required to process applications, with two more weeks to actually get the loans. In total, it took 55 days to get the loans. Loans received meet demand of only less than one-third (31 per cent), while most are met from one's own and other sources. 3. Constrains of SME development are lack of running capital, high production costs/low profits, lack of access to finance, inadequate loan size, repayment before generating cash flows, low production due to shortage of fuel/electricity, lack of information on technical/marketing aspects, women with little access to financing / refinancing, many of them finding it difficult to comply with collateral requirements. 4. Recommendations for SME development: The SMEF/SME Cell should be strengthened, SMEF (Small and Medium Enterprise Foundation) personnel need to have practical experience, increase workforce in SMEF, create infrastructural facilities (roads, electricity, gas, water etc), establish industrial parks at various locations, create subcontracting facilities, so that specialisation takes place. Making a brief comment on the Bangladesh Paper, I would say it was a nice presentation but with a partial information about the overall SME development in Bangladesh. The paper emphasised only the bank loan part of the SME support. It might have covered the other areas like technological upgrading that SMEs experienced during last decade, government initiatives (though covered by a separate presentation made by the 'focal point' of that group) for SME development, increasing role of SMEs in GDP (gross domestic product), greater role of SMEs in employment generation, exportable products of our SMEs, technical collaboration that our SMEs are searching for, potential fields for joint venture investment from D-8 member-states, regulatory barriers of SMEs hindering growth etc. Such a paper may represent Bangladesh positively and achieved a lot from that meeting. A distressing aspect of the whole thing was none from Bangladesh attended the previous meetings of this working group held earlier in different countries. As a result, the Bangladesh side was completely unaware of the previous progress of the working group. My request to our policy makers is to attend all possible meetings of the working groups to have a fruitful result from this very important multilateral bloc.

The Egyptian case: The Egyptian presenter mentioned:
1. Egypt has a vision to become the leading industrial country in the Middle East and North Africa by 2025.
2. Major SME industries in Egypt are related to textile products: ('ginning' of cotton - spinning and textile dyeing and preparation - ready-made garments), food industries: (sugar refining - tobacco - juices medical herbs preparation - grinds and rice millers), chemical industries: (plastic and rubber - fertilisers cement), leather industries: (tannery - shoes - leather products - leather...
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