Digitisation of SMEs: Opportunity or challenge?
Bangladeshi SMEs are suffering from scarcity of skills required in various specialised fields and also from limited availability of managerial skills
Md. Joynal Abdin
The small and medium enterprises (SMEs) are considered as the most significant part of economy. They are labor intensive and low capital investment in nature. Due to their labor intensive feature they used to contribute more in employment generation and assist the government to fight with unemployment. SMEs are the mother of heavy industries and backbone of the economy. In many countries SMEs are the feeder organization of large corporations. Big branded companies used to get part of their products from SMEs through outsourcing or subcontracting. SMEs are a significant part of the products value chain in those economies. Till now subcontracting / outsourcing business has not being popularized / formalized / institutionalized in Bangladesh. As a result value chain concept of product manufacturing has not developed here in real sense. Outsourcing concept started its journey in readymade garment sector during last few years. But it is not widely practiced method in any other sector in Bangladesh.
Global business environment is changing its dynamics every day. Rapid development of science and technology is supplying fuel to the movement of business dynamics changing motion. For example if we look back to one decade we will see that SMEs were using record book with pen or pencil for keeping record of materials or financial transactions. Using postal / courier services to send documents were only means. Physical visit was necessary to test a raw materials quality and final decision of purchase. But today within a decade big revolution happens in this arena due to the rapid progress of information and communication technology. Today sophisticated computerized record keeping is available in affordable price. Internet communication changed up the dynamics of manual communication and physical presence became unjustified here. Email communication replaced the postal or courier services, video conferencing technology ensured audio visual communication without physical presence, mobile communication has just create a revolution in this sector. Robotics with artificial intelligence made the previous dynamics completely irrelevant within this one decade. We do not know what the next miracle is waiting for us in the coming decade.
With the advancement of science and technology industrial community adopted the best possible solutions and ensures justified progress of the sectors as required. For example steam engine was invented in 1780s and business factories started to mechanize themselves with water power and increase productivity at highest rate at that time. With invention of electricity in 1870s manufacturing assembly line concept was initiated by the entrepreneurs with use of electricity and productivity increased into the next step. Later on they adopted computerized automation concept while computer was invented in 1969. Similarly today in 2017 industrialists are fighting to adopt digital technologies for digitization of respective enterprises by using cyber physical systems, robotics with artificial intelligence even the 3D printing technologies for ensuring productivity, products quality, and well acceptance of the consumers. Now come to the point how many SMEs are capable to adopt all these new technologies in terms of Bangladesh? How much modernized our SMEs are? Rapid progress of technology is opportunity or threat to the Bangladeshi SMEs?
I have the opportunity to visit SMEs throughout the country. I have optimistic observation regarding the enterprises located in Dhaka, Chittagong, and other divisional cities or BSCIC industrial areas. I found them at least updated to the millennium technology or later. But in most of the cases SMEs located at old clusters or district level are lagging behind in terms of technology upgradation. As a result they are losing market share and becoming seek. With those old fashioned technologies of 1970s SMEs are less productive, product qualities are not up to the expectations of buyers, products design and shape is too old. They are unable to diversified products due to the technical limitation. They are unable to enter into the new segment of market due to lack of knowledge. They are just waiting for death. I saw this measurable situation in Coconut oil cluster at Bagherhat, in few cases the story is similar to some SMEs of Bagura Light Engineering Cluster, Coxs Bazar Ship Building Cluster, Rongpur Satoronji cluster and many jewelry or pottery clusters all around Bangladesh.
According to a recent report of the World SME Forum it is expected that the global B2B trade of SMEs will be USD 6.7 trillion by 2020 and B2C trade will be USD 3.2 trillion by this time. That means a bigger opportunity is waiting for Bangladeshi SMEs to be a part of that bigger cake and capture a reasonable share of it. But, question is that could we think about our readiness to grape this opportunity? Do Bangladeshi SMEs are ready with qualitative products and world class service in their basket? How much share is our target? What are the preparatory activities we have to finish up by this time?
To analyze current scenario of Bangladeshi SMEs we will find out that, till now Bangladeshi SMEs do not have access to global market, they are disconnected from global value chain, We do not have information about global markets demand of our products and current available supply chain, What are the standard we have to comply with labor, environmental, social, and quality standards to grape a justified share of that market.
Bangladeshi SMEs are suffering from scarcity of skills required in various specialized fields. Bangladeshi SMEs are suffering from limited availability of managerial skills, specialized skills such as technology and language those are crucial for reaching global markets. Finally, SMEs are suffering to get a formal bank loan with competitive rate of interest.
Digitization and expansion of ICT skills could offer a very unique solution to most of the above mentioned challenges. For example an SME entrepreneurs or manager could easily identify global demand of his / her product by using ITC Market Access Tools from his / her office or residence. They could at least identify what types of skills is required to improve their capacity and which are institutions in home or abroad offering these skills for students or professionals by using internet. They could easily collect information of SME loan products offering by different banks by searching into respective website. They could search buyers from global business directory by becoming members of respective network in online. Thus we could see that ICT / digitization is an opportunity for the SMEs but they have to be trained up accordingly to utilize this opportunity.
Government could play a very vital role by training entrepreneurs / professionals / upcoming professionals about how to utilize ICT tools to collect required information and from where. Because another recent study shows that, ICT skilled SMEs are making 13% more revenue than that of an ordinary SME. They are getting 10% more buyers than that of the ordinary SMEs. That means we have knife in hand but sharpness is required. Government has to come up to provide this sharpness to the SME entrepreneurs / professional of Bangladesh for making them globally competitive. To digitize SMEs internet bandwidth should be free or with a minimum cost. Internet speed is required for satisfactory performance of outsourcing / freelancing sector. Few adjustments are required in banking sector for making them SMEs friendly. Thus government, yes it is government who can bring the change and promote the revolution for economic liberty of Bangladesh by 2021.
The writer is Deputy Manager, SME Foundation
