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Sme Financing of Five Banks

In: Business and Management

Submitted By mahfuz143
Words 1136
Pages 5
SMALL and Medium enterprises (SMEs) have been playing a significant role for socio-economic development in all countries, particularly in the developing economies. In Asia, they play even a greater role as the sector constitutes about 98% of all enterprises, accounting for 30% of total employment and 30% of direct exports. However, SMEs face a plethora of challenges in terms of lack of access to information, technological disadvantages, lack of adequate finance and backdated marketing and managerial skills.

Bangladesh, being one of the least developing countries and faced with several constraints, has not been able to meet the challenges in SME sector appropriately. This has deprived the country of the substantial benefits that could come from the SMEs through their contribution to overall development of the national economy.

According to a study conducted by Canadian Integrated Development Association (CIDA), there are about 6.0 million SMEs in Bangladesh and among them only 27 thousand enterprises are ready to expand and export. SMEs contribute 50 per cent of total industrial output employing 82 per cent of industrial labour force. This statistics show that the productivity of labour is low as 82 per cent of workforce is producing only 50 per cent of output. Therefore, there is a high labour-capital ratio. Although Bangladesh is an overpopulated country with abundance of labour, a large portion of its total workforce still remains unskilled and semi-skilled.

One of the few reasons hindering the growth of SMEs towards capturing a larger market access is the assurance of quality products. Bangladesh Standards and Testing Institute (BSTI) is responsible in securing quality assurance (QA) certificates from registrars of QA. The importing countries of SME products sometimes discriminate LDCs and adopt different processes of protectionism to guard their own

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