Fund crunch hurts SME sector

Week-long �National SME Fair-2016� concludes

Ensuring greater availability of funds in the local Small and Medium Enterprise (SME) sector will add pace to the national development process, say stakeholders of this sector. “The sole problem for entrepreneurs is lack of capital to start a business,” SME Foundation Chairman KM Habib Ullah told The Independent. “It will be a blessing for them if they get cheaper loans. Moreover, we make 100 per cent recovery of the amount we give to entrepreneurs as loans.”
“Comparing the number of SMEs in the country, the SME Foundation is a very tiny organisation. With only 60-70 employees, it is really tough to ensure all services to all SME community,” he added. The Foundation started its journey in 2007. Total financial resources available to the Foundation are inadequate and also volatile, according to him. The Foundation received an endowment fund of Tk 200 crore and the interest earned on this fund is its sole source of finance. The earning on this endowment is inadequate to undertake different activities by the Foundation as mandated in the Government Gazette. Total proceeds from the endowment fund depend on the market rate of interest, which varies over time, the Foundation chief observed.
“We were told to keep the money in banks as fixed deposit and, with the profit from the banks, we have to run our organisation and give services to the local entrepreneurs,” Habib Ullah told The Independent and added that till now, the fixed deposit of
Tk 200 crore is the sole capital. The profit of the deposited amount comes to the Foundation only at 6 per cent interest now. “With this limited money, a large number of entrepreneurs cannot be provided with loan,” he said.
The SME Foundation Chairman also said, “It’s a great chance for us to expand business by helping entrepreneurs with money and by giving a good finish to their products by bringing in trainers from foreign countries.”
“Japan, China, Malaysia and Korea saw their development through SMEs. If we want to make Vision 2021 successful, we must develop SMEs in the country,” he said. “SME Foundation must be strengthened, so that the organisation can contribute by proving counselling to entrepreneurs and kick start their business.”
Answering questions on whether the sector lacks publicity, Habib Ullah said, “I must say we have a weakness in publicising the sector. We are thinking of promoting the sector through television programmes as well. But you know, without money everything planned cannot be done.”
Meanwhile, the seven-day SME Fair at Bangabandhu International Conference Center (BICC) concluded yesterday. Participants at the Fair expressed disappointment as they did not get the expected number of customers during the last six days. Visitors and entrepreneurs said that people were unaware of the Fair due to lack of proper publicity.
“I came to know of the Fair from the e-commerce sites of boutique shops. I did not see any campaigning through the media. The organisers should have informed the public of the great occasion,” Farhana Akter, a visitor from the
capital’s Dhanmondi, told this correspondent.
Like in the previous years, boutique shop Seuti participated in the Fair. Sultana Chowdhury, owner of the shop, said that through this Fair, SME business, especially of women entrepreneurs, can be boosted. But the presence of visitors this year is disappointing.
Talking to The Independent, entrepreneurs expressed their disappointment in banks and their unwieldy process of providing loans.
“I started my business with Tk 8,000 about 17 years ago,” Rajshahi-based entrepreneur Ruksana Parvin Naju, owner of Naj Boutique House, told the Independent.
“In course of time, my business flourished and its capital value came to Tk 10 lakh. But due to lack of production capacity, I cannot supply products as per the demand of the consumers,” she said and added,
“Entrepreneurs like me have to borrow from NGOs at a higher interest rate due to lack of funds from banks.”
High interest rates act as the key barrier to the advancement of small and medium enterprises in the country. Single-digit interest loans should be made available to all small and
medium entrepreneurs to help bolster economic growth, said some of the entrepreneurs.
However, Industries Minister, Amir Hossain Amu, while addressing the inaugural ceremony of ‘National SME Fair-2016’ and ‘National SME Entrepreneurs Award-2016’ on Sunday, said the government is taking initiatives to lower the interest rate of loans to small and medium enterprises through banks and other financial institutions to single digit under their refinancing scheme.
The SME Chairman said, “With the assurance of the minister of lowering loans to single digit, we hope that the SME sector will develop someday.”
Initially, the Fair was set to conclude on Thursday but considering the demand of stakeholders and visitors, SME Foundation decided to extend it till Saturday (yesterday).

Fund crunch hurts SME sector

Week-long �National SME Fair-2016� concludes

Ensuring greater availability of funds in the local Small and Medium Enterprise (SME) sector will add pace to the national development process, say stakeholders of this sector. The sole problem for entrepreneurs is lack of capital to start a business, SME Foundation Chairman KM Habib Ullah told The Independent. It will be a blessing for them if they get cheaper loans. Moreover, we make 100 per cent recovery of the amount we give to entrepreneurs as loans. Comparing the number of SMEs in the country, the SME Foundation is a very tiny organisation. With only 60-70 employees, it is really tough to ensure all services to all SME community, he added. The Foundation started its journey in 2007. Total financial resources available to the Foundation are inadequate and also volatile, according to him. The Foundation received an endowment fund of Tk 200 crore and the interest earned on this fund is its sole source of finance. The earning on this endowment is inadequate to undertake different activities by the Foundation as mandated in the Government Gazette. Total proceeds from the endowment fund depend on the market rate of interest, which varies over time, the Foundation chief observed. We were told to keep the money in banks as fixed deposit and, with the profit from the banks, we have to run our organisation and give services to the local entrepreneurs, Habib Ullah told The Independent and added that till now, the fixed deposit of Tk 200 crore is the sole capital. The profit of the deposited amount comes to the Foundation only at 6 per cent interest now. With this limited money, a large number of entrepreneurs cannot be provided with loan, he said. The SME Foundation Chairman also said, Its a great chance for us to expand business by helping entrepreneurs with money and by giving a good finish to their products by bringing in trainers from foreign countries. Japan, China, Malaysia and Korea saw their development through SMEs. If we want to make Vision 2021 successful, we must develop SMEs in the country, he said. SME Foundation must be strengthened, so that the organisation can contribute by proving counselling to entrepreneurs and kick start their business. Answering questions on whether the sector lacks publicity, Habib Ullah said, I must say we have a weakness in publicising the sector. We are thinking of promoting the sector through television programmes as well. But you know, without money everything planned cannot be done. Meanwhile, the seven-day SME Fair at Bangabandhu International Conference Center (BICC) concluded yesterday. Participants at the Fair expressed disappointment as they did not get the expected number of customers during the last six days. Visitors and entrepreneurs said that people were unaware of the Fair due to lack of proper publicity. I came to know of the Fair from the e-commerce sites of boutique shops. I did not see any campaigning through the media. The organisers should have informed the public of the great occasion, Farhana Akter, a visitor from the capitals Dhanmondi, told this correspondent. Like in the previous years, boutique shop Seuti participated in the Fair. Sultana Chowdhury, owner of the shop, said that through this Fair, SME business, especially of women entrepreneurs, can be boosted. But the presence of visitors this year is disappointing. Talking to The Independent, entrepreneurs expressed their disappointment in banks and their unwieldy process of providing loans. I started my business with Tk 8,000 about 17 years ago, Rajshahi-based entrepreneur Ruksana Parvin Naju, owner of Naj Boutique House, told the Independent. In course of time, my business flourished and its capital value came to Tk 10 lakh. But due to lack of production capacity, I cannot supply products as per the demand of the consumers, she said and added, Entrepreneurs like me have to borrow from NGOs at a higher interest rate due to lack of funds from banks. High interest rates act as the key barrier to the advancement of small and medium enterprises in the country. Single-digit interest loans should be made available to all small and medium entrepreneurs to help bolster economic growth, said some of the entrepreneurs. However, Industries Minister, Amir Hossain Amu, while addressing the inaugural ceremony of National SME Fair-2016 and National SME Entrepreneurs Award-2016 on Sunday, said the government is taking initiatives to lower the interest rate of loans to small and medium enterprises through banks and other financial institutions to single digit under their refinancing scheme. The SME Chairman said, With the assurance of the minister of lowering loans to single digit, we hope that the SME sector will develop someday. Initially, the Fair was set to conclude on Thursday but considering the demand of stakeholders and visitors, SME Foundation decided to extend it till Saturday (yesterday).