SMALL and medium enterprises are considered the backbone of the national economy as they account for 99 per cent of all businesses that provide two out of three private-sector jobs. Yet, government policies have performed poorly at addressing SME concerns. SME owners at a consultation meeting, which the Centre for Governance Studies held in Mymensingh on September 4, have talked about challenges they face. The challenges range from the marketing of products to an access to finance and include the lack of capital and skilled human resources, poor training facility, undeveloped sales channels and a low level of financial inclusion. The most challenging factor is, however, widespread corruption in public offices. From securing trade licences to custom clearance for import and export to goods transport, they have to pay bribes. The owners have complained that corruption has become an integral part of everyday business affairs to the extent that refusing to pay bribes would mean losing competitive edge on the market. SME owners on August 19 in Barishal talked of similar challenges. Corruption is a burden for all; but for businesses with small investment, the burden is heavier.

The growth of SMEs can lead to a balanced development through economic, social and environmental protection, but an inadequate policy support and widespread corruption have negatively influenced the growth in the sector. A more inclusive and simpler loan policy is a pressing concern for small businesses and the demand has become more prominent during the Covid period. While SME owners complain of the complicated loan application process and the use of speed money, bankers ask the owners to improve their knowledge of the application process and streamline their documentation to gain a quick access to loans. There are challenges other than an equitable access to loan schemes and corruption. A lack of data by the government regarding SMEs has been a major cause for such poor policy formulation. For example, there is no updated official data on the number of SMEs in operation. The last time such data were collected was in 2013, when there were around 7.9 million SMEs. Owners often lack the knowledge and technical skills required for long-term success. The strengthening of coordination within institutional structures, the strengthening of capacity building of the Bangladesh Small and Cottage Industries Corporation, the SME Foundation and other SME related trade agencies can make a change in this regard.

In view of economic contribution of the SMEs, the government must immediately address the exclusionary loan policy and allegations of corruption in securing trade licences and other related process. The government must also explore strategic tools to simplify legal and administrative procedures for enhancing SME business, simplification, and rationalisation of SME tax policy. The government must consider setting up a specialised bank to address needs of the SMEs.