SMEs make up 25pc of industries, 90pc of employment

Staff Correspondent

25 November, 2020 12:00 AM printer

Small and mid-size enterprises (SMEs) make up 25 per cent of the industrial sector and the sector represents around 90 per cent of employment in Bangla-desh,  according to a study.

The report of the study titled “Role of Small and Medium Entrepreneurs in Creating Employment in 2019” was jointly unveiled by the Policy Research Institute of Bangladesh (PRI) and IDLC Finance Ltd on Tuesday.

At the report unveiling webinar, economists and experts said financing in SMEs is relatively safe and cover more people compared to large industries.

Moreover, financing in the SME sector can also generate employment to a large population, which makes a significant contribution to the national economy, they said.

Ahsan H Mansoor, BRAC Bank Chairman and Executive Director of PRI, said large industries also depend on small enterprises for production and in such way small enterprises once became big businesses.

He also underscored the need to introduce technology in the SME sector as the SMEs are the carrier of big business in future.

He said the touch of technology in the SME sector has not come that way yet, resulting in lower production.

Managing Director and Chief Executive Officer of IDLC Arif Khan said since the beginning, SME financing is considered risky, but the reality is that lending to SMEs is less risky and debt recovery is better than large industries.

He said 10 to 15 per cent lending for large industries became bad loans while the rate is only 3 per cent for SMEs.

 “In countries like Japan and Germany, we have seen that the economy developed through small businesses. In our country too, small businesses need to be financed. The SME sector also creates a lot of jobs,” he said.

Presenting the report, Dr. Bazlul Haque Khandaker noted that SMEs make up 25 per cent of the industrial sector and the sector generates about 90 per cent of the jobs.

SMEs with a minimum of five to a maximum of 99 employees provide about 50 per cent of employment in most countries of the world, speakers said.

IDLC alone has financed in 13,931 SMEs to encourage investment in this sector in 2019. Of which 30 per cent is micro-enterprises while 70 per cent is small enterprises, informed Dr. Bazlul Haque.

Employment in these business ventures has increased by 105.7 per cent from the beginning of the journey to 2019 while employment of women entrepreneurs has increased by 148 per cent, Dr. Bazlul Haque noted.