The document discusses small and medium enterprises (SMEs) in Bangladesh. It notes that SMEs make up 90% of private enterprises in Bangladesh and contribute significantly to GDP and employment. However, SMEs face numerous challenges accessing finance. The document outlines key sectors targeted by the government for growth, trends in SME lending, constraints faced by SMEs including access to finance, and recommendations to strengthen the SME sector such as enhancing access to finance, reducing interest rates, and providing support services.

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Advancing Financial Access
for SMEs
Presented by:
Munawar Reza Khan
Deputy Executive Director
TMSS, Bangladesh

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Booster Sectors in Bangladesh
The Ministry of Industries, Government of Bangladesh has identified the
following booster sectors:
Electronics and electrical
Software-development
 Light engineering and metal-working
Agro-processing/agro-business/plantation agriculture/ specialist
farming/tissue-culture
Leather-making and leather goods
Knitwear and ready-made garments
Plastics and other synthetics
Healthcare & diagnostics
Educational services
Pharmaceuticals/cosmetics/toiletries
Fashion-rich personal effects, wear and consumption goods.

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Importance & Role in Economy
Considering presences of SMEs in Bangladesh
economy, it is found that almost 90 per cent of
the private enterprises are SMEs and about 70 -
80 per cent of non-agricultural workforce are
working there. The SMEs contribute up to 25
per cent of GDP including about 40 per cent of
gross manufacturing output and around 25 per
cent of the total labor force.

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Importance & Role in Economy
About 6.8 million SMEs are actively
performing in Bangladesh which are
employing about 37 million people and
providing 77 per cent of household income.
Various categories of SMEs together
contribute between 80 to 87 per cent of
industrial employment and 29 percent of
total employment in Bangladesh.

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Financial Institutions
 Banks
 NBFIs / Leasing Company
 Micro Finance Institutions (MFIs)
Different Govt. Organizations

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SME Loan Disbursement Trend
in Bangladesh
Banks Contribution = 74.23 %
NBFIs Contribution = 19.74%
MFIs Contribution = 2.34%
Different Govt. Organizations = 3.69%
2013 =USD 10665 Mil
2014 = USD 12614 Mil
2015 = USD 14484 Mil
Manufacturing = 28 %
Trading = 64%
Service = 8%

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Major Constrains in SME Advancement
in Bangladesh
 Banks Lack of Investment Finance & Working Capital
Finance
 Short falls of Enabling Environment forTrade & Business
 Non-Tariff Barriers (NTB) and Changes in WorldTrade
Regimes
 Barriers in Access to Finance for Women Entrepreneurs.
 Inability to Market SME Product
 Inability to Maintain Product Quality
 Lack of SkilledTechnicians and Workers
 Poor Management Skills of Entrepreneurs

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Important Complicated Issues Of SME
Loan Disbursement
1) Delay In Repayment Of Loan
2) Trustworthiness Of Loan Borrower
3) Failure To Submit Proper Business
Plan

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Important Complicated Issues of SME Loan
Disbursement
Failure to Submit Inadequate
Financial Projection
 Lack of Entrepreneurial
Knowledge
Lack of Govt. Support

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Important Complicated Issues of SME
Loan Disbursement
Lack of Available Fund
High Rate of Interest

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Challenges for SMEs
 Lack of financial literacy
 Lack of easy access of bank loan
 Poor information about market opportunities and requirements
 Fierce competition from low cost imported products
 Lack of adequate investment funds
 Banks main focus on corporate business rather than SMEs
 Lack of collateral and high rate of interest for bank loans
 Lack of modern technology
 Lack of advisory and technical services
 Lack of skilled technicians and workers
 Lack of research and development activities
 Poor physical infrastructure and high transportation cost
 Lack of credit guarantee scheme
 Lack of mentoring

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Impact of SME Growth in Bangladesh
Employment Generation (Both Self & Wage)
Reducing economic disparities between urban and rural areas
Creating opportunities for value adding processing activities
and generated sustainable livelihood
Women Empowerment
Enhanced Living Standard
Creation of Market for Indigenous Group
Visible Contribution to GDP and Poverty Reduction
Growth in International Business
Reduction in Urban Migration
Creation of Entrepreneurship

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Recommendations
Enhancing Access to SME
Finance
Development of SME
Infrastructure
Provide Consultancy Service
Quality Control of SME
Products
Reduction Of Interest Rate
Increase Fund For SME
Training Facilities for SME
Workers & Entrepreneurship

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Recommendations
Organizing Trade Fairs,
Symposiums, Workshops
on SME on Regular Basis
Introducing Friendly
Financing Polies.
Settings Help Desks in the
Financing Sectors and
Business Promotion
Bodies With Internet
Facilities.
Provide Business
Development Services by
the Financing Bodies.

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Recommendations
Exploring Market
Opportunities on a Sustained
Basis and Mobilizing the
Required Support Services of
Small & Medium Industries
by the Direct Support
Services of the Govt.
Creating an Enabling
Environment for Attracting
Private Investment.
Introducing a Differentiated
and Hassel-free Indirect Tax
System for SMEs
Increase Govt. Support

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Recommendations
Conduct a Census of SMEs
Containing Detailed
Information on Inputs,
Outputs, Technology and
Management. (To be
updated periodically)
Issue Identification Cards
With Registration Number
to SMEs.
Create a Database of SMEs
and Update it Periodically.
Create a Detailed Upazilla
Level Map of SMEs to
Identify Cluster.