There are glimmers of hope amid the despondent economic news of these coronavirus days. At the outset of the pandemic, the readymade garment sector was posed with the challenge of holding on to foreign buyers. They have managed to tackle that challenge well. And now the news of increased employment in small and medium enterprises, especially those of women entrepreneurs, is also encouraging news.
A recent joint study of IDLC Finance and Policy Research Institute (PRI) stated that the small and medium enterprises (SMEs) over the past five years, generated 105.7 per cent new job opportunities per year. And the enterprises of women entrepreneurs created the most employment, that is, 146.2 per cent.
The research said that while the SME sector entrepreneurs basically began their businesses with family members, they later formally appointed new employees. Thus this sector has become a large area of employment.
Most of the employment among the SMEs is in the service sector, comprising 174 per cent. Then 131 per cent of this employment is in industry, 74 per cent in business companies and 30 per cent in agro-enterprises.
Two types of employees are employed in the SME sector. One is salaried and the other is on a daily wage basis. In both sectors employment has gone up by 134 per cent and 94 per cent respectively. And annual turnover totals around Tk 60 million (Tk 6 crore).
Even during the coronavirus pandemic, when the government has announced stimulus packages for the SME sector, the banks prevaricate in releasing these funds. Yet the rate of repayment is much higher among SMEs as compared to larger industries
Many SME enterprises are taken up as family initiatives. The family members are both the entrepreneurs and the workers. But once the business expands, then outside persons are employed.
Over the past decade, while the heavy industries are going through a slump, this SME sector is a boost to the economy and also contributes to alleviating unemployment.
They say 'small is beautiful,' but despite the steady success in this sector, there are problems too. If the government does not pay attention to these problems, it will be hard to hold on to this success.
The main problem of the SME sector is funding. The entrepreneurs begin by investing their own savings. But once the business or industry begins to expand, then bank loans become necessary. However, our banking system tends to cater to the already affluent. They make more profit from large loans and so ignore the small enterprises.
Even during the coronavirus pandemic, when the government has announced stimulus packages for the SME sector, the banks prevaricate in releasing these funds. Yet the rate of repayment is much higher among SMEs as compared to larger industries. This sector has very few default loans too.
On the other hand, it has become difficult to get a secure place for this industry. Most of the small and cottage industry zones built up during Pakistan times has been grabbed or being used for other purposes. The government should allocate separate plots of land for SME in the main cities. There can be a SME industrial zone like the BSCIC industrial zone. As the SME industries are growing randomly here and there, the entrepreneurs feel insecure. Women entrepreneurs are harassed by hoodlums and are victims of extortion too, as reported recently in Prothom Alo.
If loan facilitation could be increased and the entrepreneurs could be provided with security, the SME sector would be able to generate even more opportunities for employment.