Bangladesh
Loans 2148/2149/2150 - BAN: Small and Medium Enterprise Sector Development Program, 2004
Read more about the project.
The development of small and medium enterprises (SMEs) has been central to Bangladesh’s poverty reduction and economic development efforts in the 1990s. SMEs now account for about 40% of gross manufacturing output, 80% of industrial employment and 25% of the total labor force in Bangladesh. However, the growth and expansion of SMEs have been limited due to various constraints:
- lack of medium- to long-term credit
- limited access to market opportunities, technology and business development services (BDS)
- lack of suitable incentives
- inefficient and limited outreach of government services for business registration, licensing and tax requirements
- weak business management capacity of SME entrepreneurs
The Small and Medium Enterprise Sector Development Program was approved on 20 December 2004 for $33.4 million, $30 million and $5 million respectively. Associated TA-3879 grant was awarded 11 June 2002 for $600,000.
The objective of the program is to support Government efforts to foster the development of the SME sector by strengthening the policy environment for SMEs and improving SMEs’ access to credit and related services. The Sector Development Program consists of the following components:
- Program Loan (BAN-2148) to establish SME policy and development framework, institutional structure and mechanisms to support SME development and improve SME access to various services.
- Project Loan (BAN-2149) for extending credit to small enterprises through a Small Enterprise Fund (SEF).
- Technical Assistance (TA) Loan (BAN-2150) for improving the effectiveness of government assistance to the SME sector and facilitating access to various support services including targeted capacity building and support for infrastructure development for SMEs.
- TA Grant (TA-3879) for assisting the government to implement and monitor the overall Program.
The majority of women’s businesses in Bangladesh are micro or small enterprises. Eighty six percent (86%) of home-based micro enterprises are owned and operated by women. They are heavily involved in manufacturing of clothing, retail sales, spinning and weaving of textiles, livestock and food production. The most important barriers to the growth of women’s businesses into small and medium enterprises include:
- negative socio-cultural perception of “women in business”
- limited access to credit
- limited availability of business development services
- weak voice of women representatives in policy dialogue
- lack of effective monitoring mechanism to assess policy impacts
- weak role of women entrepreneurs’ in decision-making positions
To promote women’s entrepreneurship in SME development, a gender action plan (GAP) was prepared during the design of the sector development program specifying targeted activities under each of its three components:
- Enabling Business Environment (Program Loan)
- SME Policy Preparation and Implementation:
- Women entrepreneurs will be represented in the National Council for Industrial Development through the president of a national women entrepreneurs’ association.
- Women entrepreneurs will be represented in the preparation of an SME policy and action plan.
- SME Cell and Advisory Panel in the Ministry of Industries will include women entrepreneurs’ experiences in policy research papers.
- Access to Information:
- SME database will have gender-disaggregated data, i.e. number of women entrepreneurs and women employees, as well as their status in the organization structure (operating vs. management level).
- SMEs in rural areas will have better access to information about legal requirements, government services and market opportunities through SME web-portal, helpline or outreach centers.
- Access to Credit (Project Loan):
- at least 10% of the SEF funds will be earmarked for women entrepreneurs for 1.5 years
- Participating financial institutions (PFIs) will simplify their lending procedures to encourage women applicants.
- PFIs will provide basic business advisory services (such as preparation of bankable proposals, and step-by-step guide on credit applications) to women borrowers or refer them to fee-based BDS providers for more complete training courses on business or financial management.
- Support for Capacity Building (TA Loan):
- targeted training programs for women entrepreneurs will be developed
- women entrepreneurs’ associations will collaborate with the Federation of Chambers of Commerce and Industries and Ministry of Industries/Small and Cottage Industries Training Institute under private-public partnerships to design, pilot-test and conduct training programs on women’s entrepreneurship development
- a forum will be developed to discuss concerns of women entrepreneurs and employees
- Small and Cottage Industries Training Institute and women entrepreneurs’ associations will encourage active participation by both the women entrepreneurs in the targeted training programs as well as female workers in the readymade garments industry in retraining programs to enhance their capabilities and employment opportunities after the phase out of the Multi Fiber Agreement
- gender concerns will be mainstreamed in all training modules
- PFIs and women’s entrepreneurs’ associations will provide a list of BDS providers available in the vicinity of women-run SMEs
- women entrepreneurs will be encouraged to utilize the resources of women entrepreneurs’ associations for support and networking
A Gender Specialist will be recruited under the TA Grant to
- prepare detailed activities to be implemented under the GAP
- monitor the implementation of the targeted women entrepreneurs’ training programs
- develop a system to monitor women beneficiaries, (iv) facilitate a forum for women employees and entrepreneurs
- ensure timely reporting on GAP implementation
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