Activities of the small and medium enterprises (SMEs) are widely recognised as the heartbeat of Bangladesh’s economy. With their substantial contribution to GDP and employment, they are not only a driving force of local development but also hold the potential to be major players in global trade. With a contribution of nearly 30% to the GDP and accounting for over 80% of national employment, SMEs remain a vital pillar of Bangladesh’s economy. As the country nears LDC graduation, many believe the success of this sector will define the next chapter of national development. In an interview, with Md Mushfiqur Rahman, chairperson of the SME Foundation, spoke to us about the sector’s current condition, its achievements, key challenges, and what lies ahead. This interview was conducted by our senior correspondent Mousumi Islam.

Daily Sun: How would you assess the current state of the SME sector in Bangladesh?

Mushfiqur Rahman: The SME sector contributes 25–30% to the GDP, and if we include the informal sector, this figure is even higher. More importantly, SMEs generate 80–90% of employment. This sector alone can help propel Bangladesh’s progress.

However, several barriers must be addressed. First, the cost of production is high. For example, a worker producing one saree per hour needs training and tools to scale up to producing 20 in that time. Therefore, we need to increase our production capacity.

Second, many SME entrepreneurs still suffer from digital aversion. If this isn’t addressed, we will fall behind in the global competition. Without digital integration, we risk falling behind in global competition also.

Access to finance is another critical challenge. The process is complex and discouraging for many. Lastly, as we approach LDC graduation, both SMEs and even large industries are underprepared. However, if we act now, we can build resilience.

Daily Sun: Are there any proposals or initiatives to address these challenges?

Mushfiqur Rahman: Certainly. For e-commerce businesses, we’re offering training, developing software, and building networks among entrepreneurs.

Since its establishment, the SME Foundation has served over 2 million entrepreneurs through direct and indirect support. Over 5,000 programmes have provided direct services to 2.5 lakh entrepreneurs, with 55% being women.

To help tackle financing barriers, we introduced the country’s first collateral-free loan at single-digit interest rates, starting in FY 2008–09. So far, Tk10 billion has been disbursed to 11,000 entrepreneurs through banks and financial institutions. A Tk4 billion revolving fund continues to support this initiative, with 26% of the beneficiaries being women.

We’ve also identified 177 SME clusters across Bangladesh and are working to improve their infrastructure and productivity. Our Women Entrepreneurship Development (WED) Wing offers tailored support to female entrepreneurs, including specialised training, financing, and market access.

Daily Sun: How much of the targets set in recent years has been achieved?

Mushfiqur Rahman: The Foundation has consistently performed well in its annual targets. In FY 2018–19, we ranked 2nd out of 13 institutions under the Ministry of Industries for implementing its Annual Performance Agreement (APA). In subsequent years, we’ve maintained top positions. In FY 2023–24, 692 out of 807 programmes were implemented, indicating a 85% success. In FY 2022–23, 745 of 786 programmes were implemented, a 94.78% success rate, and in FY 2021–22, 660 out of 741 programmes, meaning 89% success, were implemented.

Daily Sun: What initiatives have been taken to launch a one-stop service for SME entrepreneurs?

Mushfiqur Rahman: We’ve already established an advisory desk that functions as a one-stop point for entrepreneurs seeking support from the Foundation. However, for a large-scale, fully integrated one-stop service, we need stronger coordination between public and private entities and broader infrastructure.

Daily Sun: How far has digitisation progressed?

Mushfiqur Rahman: From its inception, the SME Foundation has worked to enhance entrepreneurs’ skills in using ICT tools, offering training in Digital Transformation, Artificial Intelligence (AI), and other advanced technologies.

Significant progress has been made in the digitisation process. Over the past years, approximately 13,000 entrepreneurs have received ICT-related services.

Support was provided to around 20 trade bodies/associations in different districts through training, website development, and computer equipment to enhance their capabilities.

Through 10 online systems, over 1.5 lakh individuals have received various digital services.

The Foundation has launched e-commerce training programmes, training on social media business operations, and connecting entrepreneurs to online marketplaces.

Our efforts include E-commerce training, social media business training, cybersecurity workshops, product photography skill development, and business intelligence and data analysis courses, which go on in partnership with APO, Japan.

We’re also helping entrepreneurs adopt AI for marketing, operations, and customer service, while linking them to software providers for automation.

Future plans include introducing Cloud Solutions, Blockchain, IoT, and AI chatbots to further digitize SME operations.

Daily Sun: How can entrepreneurs overcome skill gaps and lack of information?

Mushfiqur Rahman: To address skill gaps, both training programmes and coordination among responsible institutions are essential. Public-private partnerships can play a vital role here.

Entrepreneurs should have easy access to key information such as where to get training, loans, as well as public-private services.

The SME Foundation regularly organises seminars, workshops, and matchmaking programmes and uses its verified Facebook page to disseminate essential information to entrepreneurs.

Daily Sun: Do you have any special plans for export-oriented MSMEs?

Mushfiqur Rahman: Yes. The Foundation is actively supporting export-focused SMEs through export readiness programmes, export training, support for international trade fairs, product improvement and diversification, design development

This year, we launched RISE – Readiness for Internationalisation through Skill Enhancement – to build global competitiveness. With the right support, SMEs can become a sustainable export engine and make “Made in Bangladesh” a globally recognised brand.

Daily Sun: What are the main challenges the Foundation faces?

Mushfiqur Rahman: We do face a few persistent issues like limited financial capacity, no regular budget allocation or tax exemption, lack of district or divisional offices, absence of authoritative powers unlike peer organisations abroad, and no permanent headquarters. Despite these hurdles, we continue to deliver impactful services across the country.

Daily Sun: What are your future plans?

Mushfiqur Rahman: Over the next three years, we plan to mentor 15,000 new entrepreneurs, train 25,000 in technical and vocational skills, set up product display and sales centres in major cities, organise regional SME fairs and Establish a central CMSME database

We also plan to disburse Tk10 billion in loans to 10,000 entrepreneurs, including women, ethnic minorities, and people with disabilities. Besides, there are plans to develop 30 new SME clusters, connect 3,000 women entrepreneurs to corporate buyers via the SMEF supplier platform, host business plan competitions for students, digitise 5,000 entrepreneurs and introduce modern technology adoption programmes for 500 entrepreneurs.