SME sector needs a leg-up

Raihan Amin | Update:

Recently a newspaper article on the SME sector caught my eye. Although the topic was quite narrow and specific-How Universities Can Help SMEs-the correspondent used a meandering style. Let me add to the literature by reiterating that universities can and should reach out to this promise-laden but neglected sector.To make a difference, precise interventions are called for. 

Firstly, a number of established universities can come together to form a group. Next, a working committee has to be set up to spearhead a study having the full backing of the respective board of trustees. Agenda No.1 of the working committee should be to start a dialogue with stakeholders. Among many, Bangladesh Bank and the SME Foundation come to mind. NASCIB is another one which has all but vanished from public view.

Engagement should be multi-faceted, in the form of focus group discussions, interviews, questionnaires and town-hall discussions. Trade associations should have a seat at the table as should bankers. Concurrently, an in-depth study of this sector should be initiated. This research should sit the sector within its commercial universe touching on its history, definition, growth, geographical spread, employment, investment, value added, potentials, problems, government support, bank financing, infrastructure, taxes and regulatory issues. The report should also indicate to what extent the sector belongs in the shadow economy. Only then will we have a basis for action-be it policy from the government and/or other types from the for- and not-for profit actors.

UNESCAP points to the following prominent roadblocks facing SMEs in the Asia-Pacific region: availability of qualified workforce, innovation, access to market intelligence and other business information, access to funding and working capital, and government support.

Experience shows that if an intelligent person is given the key to one door, he should be able to unlock other doors on his own. For example, helping a new entrepreneur with market research should motivate her with regulatory requirements; assistance with bank financing should logically lead to an accounting system. Because universities are repositories of knowledgeprofessors should comfortably tackle market intelligence and business plans. A large corpus of our laws and regulations are in English. This alone is a huge impediment. Translating relevant parts of statute to Bangla will be of immeasurable help.

If horses don’t come to the well the latter has to snare the horses! That entrepreneurs-that too uneducated ones-will approach universities, is wishful thinking. The gap couldn’t be wider. The working group mentioned earlier should go all out for attracting potential entrepreneurs from surrounding areas and from their students and alumni. Social media promotions and business plan competitions should be used as baits.
Entrepreneurs, being risk-takers, possess certain qualities and traits which set them apart from the rest. Research has shown that crucial personality characteristics, for example resilience, are possible to be discovered via psychometric tests cloned from popular employment tests long used in the West. Peru, India and a couple of East African countries have successfully launched such tests, albeit in a small scale. A longer time is needed before we can declare victory. It would be wrong to replicate this experiment line and sinker without translating the questionnaire and piloting it in our milieu. This pen and paper test cut a lot of fat from the underwriting process leading to time and efficiency gains.
A novel experiment such as this will require generous funders. The Asian Development Bank and World Bank have generously poured funds in this sector from time to time. Can they not spare small change for a study of this magnitude?

* Raihan Amin is a former banker and an educator and trainer

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