Bangladesh: Second Small and Medium-Sized Enterprise Development Project

Finance / Small and medium enterprise finance and leasing

The SME sector in Bangladesh plays a vital role in the growth of the country. According to the third economic census of the country carried out by the Bangladesh Bureau of Statistics during March 2013- May 2013, it is estimated that the SME sector comprises 7.2 million firms, which account for 90% of all private enterprises in Bangladesh or even 99% of all companies when micro enterprises are included. The SME sector employs also around 70- 80% of the non-agricultural workforce and contributed 25% of Bangladesh''s gross domestic product and 40% of the manufacturing output in 2014.

The major development challenge in Bangladesh is a sharp metropolitan-nonmetropolitan divide in terms of employment and economic growth. The contrast in the incidence of poverty between the urbanized (comprising Dhaka, Chittagong, and Sylhet divisions) and the more rural parts of the country (comprising Barisal, Khulna, and Rajshahi divisions) is significant. This disparity has emerged as a key public policy concern. Unemployment and underemployment in the rural part are also much higher than in the metropolitan part. The Government's policy priority is to foster economic development in nonmetropolitan and/or rural and nonurban areas (i.e., outside the metropolitan areas of Dhaka and Chittagong) to address regional inequalities.

1. Increased medium- and long-term credit, especially to SMEs, SME clusters, and BSCIC estates in rural areas

2. Strengthened capacity of SME entrepreneurs to access bank financing

3. Strengthened managerial and technical capacity of SME support institutions (BB, SMEF, BSCIC) and PFIs for SME cluster financing

4. Enhanced women-led SMEs' access to bank finance and financial services

5. Strengthened project management capacity of the implementing agencies

1a. Total $130 million loan disbursed to SMEs and SME clusters (as of 22 September 2021).

1b. As of June 2021, 13% credit line went to women entrepreneurs.

2a. Guidelines for establishing incubation centers prepared.

2b. Women entrepreneurs' needs incorporated into the design and development of incubation centers.

3a. Total 14 training workshops on how to form alliances in clustering and networking to help small firms to compete, grow, and cooperate with larger firms held in 12 clusters. Number of participants: 421. Total 5 workshops held, with PFI staffs Number of PFI staffs attended: 113

3b. Gender-related elements and/or elements addressing needs of women entrepreneurs have been incorporated in the needs assessment and training programs on SME, BSCIC, and SME cluster financing.

4a. Total 9 Trainers' training program for staff of Bangladesh Bank's WEDUs on access to financial services conducted. Number of BB staffs attended: 50

4b. Total 9 training on gender-sensitive approaches to assisting women entrepreneurs organized for 138 staffs of the PFIs.

4c. Organized 14 trainings on women entrepreneurs in accessing financial services and total 417 women entrepreneurs trained.

5a. Developed Financial management framework for SME Foundation (SMEF) and it was adopted by SMEF.

5b. Project management software implemented at Bangladesh Bank.

5c. Total 64 PFI staffs trained in comprehensive monitoring and reporting framework and project management software.