91pc SMEs don’t have access to finance: expert

Some 91 per cent small and medium enterprises (SMEs) still do not have access to financing although the government has allocated funds to help them shrug off the Covid-19 shocks.

Commercial banks distribute 18 per cent of their total disbursed loans to the SME sector, but only 9 per cent small businesses have access to bank finance.

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Khandakar Golam Moazzem, research director of the Centre for Policy Dialogue (CPD), shared the information while delivering a keynote presentation at a seminar titled "Bangabandhu's thought on SME development and present perspective".

The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) organised the seminar at its office in Dhaka yesterday.

Commercial banks distribute 18 per cent of their total disbursed loans to the SME sector, but only 9 per cent small businesses have access to bank finance

"We have good policies, but most of them have not been implemented due to a lack of necessary collaboration among ministries," said Moazzem, a panel adviser of the FBCCI.

The SMEs are the backbone of the economy but banks are reluctant to provide loans to this sector and tend to provide loans to large business as it is of a lesser hassle, said FBCCI President Md Jashim Uddin.

At the height of the pandemic, the government announced an incentive package of Tk 22,000 crore for the SME sector but two years on, loans from this package are yet to be disbursed, he said.

He said the increase in fuel prices raised the cost of transportation alongside raw materials for industries, for which unemployment would increase and poverty alleviation would be hampered.

Uddin urged banks to provide loans to SMEs through tripartite agreements with sector-based associations and district chambers if necessary.

Entrepreneurs in the SME sector do fail to repay loans but they do not get loans in times of their needs, so policies should be simplified, said Mafizur Rahman, managing director of SME Foundation.

Industries Minister Nurul Majid Mahmud Humayun said a bank's job was not just to make a profit but also perform certain duties for the nation.

He said banks should not enhance the disparity between cities and villages by giving loans to big businesspeople in urban areas. Rather, it is their responsibility to ensure balanced development, he said.

The minister said everyone talks about SMEs but do not do any work. Assuring that the limitations at the government level will be overcome quickly, SME Foundation has to be financially strengthened, said Humayun.

Research conducted through SME Foundation shows that there are about 10 lakh SMEs and 68 lakh cottage industries in the country, of which 7.21 per cent are run by women.

Cottage, micro and SMEs account for nearly a fourth of Bangladesh's gross domestic product.