Tuesday, 26 October, 2021

Scitech Special

Strengthening SME digitally

Strengthening SME digitally

Technology has empowered the small and medium enterprises (SME) sector in Bangladesh in last couple of years which is acknowledged as driver of economy.

The specially designed enterprise resource planning (ERP) solutions for SMEs have gained momentum through bringing transparency in community-based economies across the country. 

In Bangladesh, the term cottage, micro, small and medium businesses (CMSME) is more popular. There are 11 million CMSMEs in our country employing 30 million people.

The cottage and micro businesses account for 89 percent of SME establishments and employ 56 percent of the workforce. The CMSMEs sector is contributing almost 25 per cent of GDP.

Bangladesh has made significant progress in adopting digital technology since adopting the Digital Bangladesh campaign in 2008. We've built a strong mobile phone network, widespread fourth-generation mobile network support, and a nationwide optical fibre network. Almost 10 million people use the Internet for communication, information, and entertainment.

Many government services are now available online. People can access government services using their phones or computers at Union Digital Centres around the country.

However, unfortunately, the CMSME sector still lags in terms of technology adoption. Scarcity of business solutions for CMSME sector,  lack of awareness and skill gap are considered to be the main reasons behind this lag.

Supporting the expansion of CMSMEs in Bangladesh is very important for the country's development. However, although cottage, micro, small and medium industries are defined in National Industrial Policy 2016, cottage and micro enterprises are not addressed in SME Policy 2019.

Cottage and micro industries are somehow excluded from the published policy and time-bound action plans, despite the fact that the Minister of Industries chairs the high-level National SME Development Council and the Secretary of the Ministry of Industries leads the National SME Task Force.

Infrastructure support for roads and energy, access to markets, access to finance, and growing skills and expertise are where the mSME sector requires assistance. In recent years, we've made significant progress in infrastructure support. However, it appears that our support is insufficient in other areas and that progress is slow, particularly in the CMSME sector.

Our neighbour India has recently made a lot of progress in mSME growth. They amended the mSME Development Act, 2006 and created a separate ministry called the mSME Ministry.

India has taken significant steps to boost the mSME sector, including a plan to enhance the contribution of the mSME sector to national GDP from 29 percent to 50 percent by 2026.

They started building a national mSME databank in 2016. In 2020, they began registering mSMEs through a single-window paperless process that did not require additional documentation or certificates.

If an mSME registers with this system, it can have benefits including quick access to low-interest bank loans, minimum alternate tax incentives, and priority in training and skill development.

India also has made significant progress in fintech-based mSME lending in recent years. A number of enabling and infrastructure initiatives, such as using an Aadhar card to open a bank account via electronic KYC, payment interoperability using Unified Payments Interface (UPI) and private credit bureaus, have fueled this trend.

India launched the Digital India campaign in 2015, 7 years after the launch of Digital Bangladesh programme. In line with the campaign, the mSME mMinistry launched Digital mSME scheme in 2019. mSME has digitized a lot of its operation processes and the ministry’s website has a public Digital mSME dashboard showing real-time progress in numbers.

In Bangladesh also, we can revitalize the CMSME sector using digital technology in areas such as providing market knowledge, promoting sales, and increasing customers and sales. Digital solutions, online services, and community support can be used by government entities working for the development of the CMSMEs.

Mobile App can help small businesses keep track of their finances and run more efficiently. Business people can also use ICT to learn more about effective company processes, gain access to better raw materials, better comprehend supply chain management, and discover new markets.

Community help as well as online learning and training can also be provided via digital platforms. Online videos can help business people learn and improve their skills. Government can initiate and take leadership in helping CMSMEs to adopt digital technology.

Currently there is no way to check the validity of a trade licence of a CMSME. Government can also take initiative to have an integrated trade licence database. This may be done using a combination of realtime and offline synchronisation of data from all the different local trade licence issuing authorities such as city corporations and municipalities.

The BSCIC under the Ministry of Industries has begun the process of creating a CMSME database. To have a complete database of all the CMSMEs in the country, new smart phone-based technology should be deployed to collect data from all around the country.

Any mSME registered with the government database will enjoy benefits such as online validation of trade, credit worthiness check by banks and priority for government training or other facilities.

This database will help in the delivery of services to this sector, monitor sector developments, and develop policy initiatives. Benefits for CMSMEs include online trade license verification, quick approval of loans, and priority for government training and other facilities.

In recent times, one business app named TallyKhata has become popular among small businesses and retail shops in the country. This app enables recording all business transactions using a simple pelam and delam user interface in Bangla and makes running business easier.

There is no scope of errors and omissions. A lot of these businesses sell on credit. As a one-stop book keeping app, TallyKhata keeps accurate ledger of all transactions for a business. When a customer makes a purchase on credit, the app sends an SMS with transaction balance to the customer. The last 12 months, TallyKhata has grown to have 2.9 million registered users making it the largest digital CMSME database in the country.  Around 200 thousand users get benefits from the app every day.

TallyKhata is not the only one small business platform in Bangladesh. Large mobile operators such as Grameenphone and Robi also have a lot of data on CMSMEs.  Business-to-business ecommerce platform ShopUp and Sheba XYZ are also working in the CMSME sector. It would be interesting to see how the government can collaborate with these large digital business platforms for the development of the CMSME sector.

Although we adopted the Digital Bangladesh campaign in 2008, its benefits have not reached the CMSMEs of the country. Digitization can boost their performance in many ways such as skill development, improved operational efficiency, financial inclusion and improving access to finance.

The government and mSME focused private businesses may work together to address this. This sector requires policy support, public-private partnerships, and innovative initiatives for skill development and digital credit to start a strong growth trajectory and realize our dream of being a developed country by 2041.


## Jannatul Islam, better known as Rahad, is young media activist having frequent footprints in technology issues along side of business affairs. He can be reached over email at [email protected]