munawar reza khan, tmss, bangladesh, advancing financial access for sm es
TRANSCRIPT
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Advancing Financial Access for SMEs
Presented by:
Munawar Reza KhanDeputy Executive Director
TMSS, Bangladesh
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Booster Sectors in BangladeshThe Ministry of Industries, Government of Bangladesh has identified thefollowing booster sectors:
Electronics and electrical
Software-development
Light engineering and metal-working
Agro-processing/agro-business/plantation agriculture/ specialistfarming/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 Bangladesheconomy, it is found that almost 90 per cent ofthe private enterprises are SMEs and about 70 -80 per cent of non-agricultural workforce areworking there. The SMEs contribute up to 25per cent of GDP including about 40 per cent ofgross manufacturing output and around 25 percent of the total labor force.
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Importance & Role in EconomyAbout 6.8 million SMEs are activelyperforming in Bangladesh which areemploying about 37 million people andproviding 77 per cent of household income.Various categories of SMEs togethercontribute between 80 to 87 per cent ofindustrial employment and 29 percent oftotal 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 Advancementin Bangladesh
Banks Lack of Investment Finance & Working Capital
Finance
Short falls of Enabling Environment for Trade & Business
Non-Tariff Barriers (NTB) and Changes in World Trade
Regimes
Barriers in Access to Finance for Women Entrepreneurs.
Inability to Market SME Product
Inability to Maintain Product Quality
Lack of Skilled Technicians 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 activitiesand 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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RecommendationsEnhancing 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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RecommendationsOrganizing Trade Fairs,
Symposiums, Workshopson SME on Regular Basis
Introducing FriendlyFinancing Polies.
Settings Help Desks in theFinancing Sectors andBusiness PromotionBodies With InternetFacilities.
Provide BusinessDevelopment Services bythe Financing Bodies.
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RecommendationsExploring Market
Opportunities on a SustainedBasis and Mobilizing theRequired Support Services ofSmall & Medium Industriesby the Direct SupportServices of the Govt.
Creating an EnablingEnvironment for AttractingPrivate Investment.
Introducing a Differentiatedand Hassel-free Indirect TaxSystem for SMEs
Increase Govt. Support
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RecommendationsConduct a Census of SMEs
Containing DetailedInformation on Inputs,Outputs, Technology andManagement. (To beupdated periodically)
Issue Identification CardsWith Registration Numberto SMEs.
Create a Database of SMEsand Update it Periodically.
Create a Detailed UpazillaLevel Map of SMEs toIdentify Cluster.