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Following the completion of the four stakeholders’ consultation meetings by the end of April 2016 and a number of other consultations, the draft of the new National SME Development Strategy, under the INSPIRED Project, has now been prepared and was formally submitted to the Ministry of Industries for review on 25th of May 2016.

It is widely accepted that SME promotion is of crucial importance to increase the competitiveness and value addition of products as well as to develop national and local competitive advantages. It has also become clear in the last two decades that just the set-up of SME policies is not enough to strengthen the competitiveness of a nation or region. Much more is required; including a healthy mix of differentiated SME, cluster and innovation promotion activities, selective industrial policy initiatives, bottom-up and top-down approaches as well as competitiveness enabling factors such as organisational and institutional prerequisites; necessary to encourage sustainable growth and value added production.

A significant transformation of the SME sector has taken place in Bangladesh over time with various government initiatives. It is estimated that 7.5 million MSMEs (including cottage) constitute a significant component of economic enterprises accounting for over 97% of all enterprises in Bangladesh, and the share of SMEs in GDP is estimated at about 25% (ADB, 2015). According to the Economic Census 2013, manufacturing units accounted for 10.9% of all units employing 30% of total non-farm employment and the rest accounted for by trading and services units.

Despite the growth of SME sector in Bangladesh and its importance in generating employment, SMEs face hindrances due to lack of institutional credit, low levels of technology, low productivity, and lack of marketing facilities and market access problems. In addition, unreliable power and gas supply, infrastructure deficiencies, compliance issues and stiff competition both in domestic and international markets seem to have been the key hurdles for the development of SMEs.

A coherent SME policy framework should constitute an integral component of the overall economic development policy; otherwise any strategy just freestanding will be a failure. A comprehensive SME Strategy should be an integral part of each National Development Plan, which aims at unemployment reduction and growth. In this context, the draft of the new National SME Development Strategy is well formulated and largely reflects the current situation and the bottlenecks that the SME sector faces in Bangladesh.

Through Nine Strategic Goals, a cross-cutting strategy has been formulated that thoroughly investigates diverse areas of finance, technology, innovation, marketing, managerial capacity, human resource development, institutional & regulatory framework, and business development services etc., all of which are expected to aim at increasing the competitiveness of SMEs of Bangladesh.SME Development Frame work

Contrary to the previous SME Policy Strategy that had been formulated in 2005, the new National SME Development Strategy 2016-2020 is accompanied by
an implementation framework outlining all strategic areas to be addressed and specific activities and work/action plan for implementation. The implementation framework identifies each responsible organisation with specific details of what activities under specific strategic areas they will implement. Each activity also has a timeline and will be monitored by the appropriate government department or organisation as outlined in the Action Plan. Moreover, emphasis has been placed upon effective coordination and implementation. Several tiers of Committees are proposed to monitor and evaluate the implementation progress of the strategies. The SME Foundation remains at the centre stage of implementation and coordination of the strategies, with the Ministry of Industries taking on the role of supervising the overall implementation of the Strategies; and having three committees proposed to oversee the implementation of strategies: (i) National SME Development Council, headed by Honourable Prime Minister, (ii) National SME Task Force, headed by the Senior Secretary/Secretary of Ministry of Industries and (iii) Five Working Committees.

The Strategy takes inputs from on-going reforms and policies to improve the general business environment with targeted interventions to support innovative enterprises, start-ups and export-oriented enterprises. The Strategy also includes a set of actions to be undertaken by the Government in order to create a level-playing field for all SMEs; through regulatory reform and administrative simplifications with provisions for investment in human capital, business development services, better access to finance and fostering of technological transfer

Overall, the scope of the National SME Development Strategy 2016 can be summed up as follows:

  1. Identify key strategic areas of intervention and the role of key actors for sustainable development of the SME sector in Bangladesh.
  2. Encourage the role of private sector in SME development and close collaboration from various stakeholders in harnessing future growth potential of SMEs.
  3. Lay down policy direction towards making the business environment friendlier through technology adoption, easing access to institutional finance, and strengthening regulatory and institutional framework.
  4. Formulate an effective coordination mechanism to bring in all concerned ministries, agencies, trade bodies and organisations under a platform in order to resolve issues concerning SMEs.

Although SMEs have, to a certain degree, their own responsibility to stay competitive, they require institutional support and supporting policies. Thus, in order to sustain a healthy SME sector, it is                 imperative to support SME development in a well-coordinated manner as the central pillar of growth. Promotion of SMEs has rightly been the centre piece of the Government’s strategy for economic revival, poverty alleviation and employment generation. To this end, the logical first step was the formulation of a comprehensive new National SME Development Strategy.Comprehensive and Coordinated Approach to SME development 1

The anticipated approval of National SME Development Strategy is considered a manifestation of the Government’s commitment towards developing a macro-economic growth framework that facilitates SME growth.

In this context, as the first step, the direct support and intervention of the Ministry of Industries towards finalisation of the National SME Development Strategy is, therefore, very much essential.

The development of SMEs can be instrumental for Bangladesh to embark on higher growth trajectories as envisioned in various Plan documents of the Government, such as the Strategic Plan 2021, 7th Five- Year Plan (2015-2019), Industrial Policies 2015, etc. It is time now to look forward and move beyond the initial efforts made to support SMEs. Steadfastly, all efforts should continue to build the necessary infrastructure, provide business development services and room for innovation.