Best Sme Practices Bangladesh May Replicate
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
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