Banking support and global connections for SMEs
SMEs are treated as the economic growth and primary drivers of innovation and playing a significant role in various economic and development activities. It's a key element in the development strategy for employment generation, GDP growth, reduction of poverty, effective tools for urban & rural development, and act as a declining regional and global disparity. They greatly contribute to economic diversification and social stability and they play an important role in private sector development.
In Bangladesh, it is a heart of our national economy and contributed more than 25 per cent of our GDP, whereas in India, Singapore and Malaysia, it ranges 40 per cent to 50 per cent. There is a huge scope for SMEs to contribute more profusely to GDP growth of Bangladesh as well as in the globe. SMEs are the backbone of economics anywhere in the globe, it can be a low income country like Bangladesh, and it can be a very high income developed country like Canada. SME's are reigning in the industrial and semi industrial sectors all over the globe; they are the dynamic operational force in the economics globally.
SMEs development also represent a major and difficult challenges and typically face more severe barriers to grow than large companies, their lack of critical size resulting in reduced access to markets, knowledge, skills and capital. We will assess the current situations of SME sectors in global economy and evaluate the means to integrate the SME sectors to overcome the existing constraints. The banking and financial sectors need to support them in accessing finance and articulate proper strategy for facilitating the development.
The development of the SME industry is considered more seriously as a result of which different countries central banks have been attempt to providing easy terms and financial services to aid the flourishment of SME sectors through the various commercial banks and concerned financial institutions.
We are considering the role of different stakeholders for SME's support and need of global connections. At the government level SME sector will need more support particularly in fiscal and policy support as well as rules and regulation. At the same time, to the firm level SME's will need special support to improve labour and management skills.
On the other hand, at the banking level the most crucial area, SME will need necessary support to increase the competitiveness of the entrepreneurs and ensure sustainable development, lessen the risk of the business, build up the insurance system, succeeding a single service centre where entrepreneurs get different approvals. Keep up the development of the working environment of small and medium industries, come up with information services related to marketing SME's products in local and international markets, support of SME entrepreneurs for mutual relations development and assistance in building bridges and establishing interconnection between SME entrepreneurs and consumers. Providing accurate book keeping records and proper cash flow management, encouraging the banks through introduction of credit guarantee scheme facility, providing banking services to the marginalized SME clients through agent banking channel and mobile banking operations which have been instrumental in achieving the growth of remote corners and rural area's economy of the globe.
Develop or transform a digital platform to increase the scope of business of entrepreneurs based on SME entrepreneurs from which the buyer can easily contact each other. Foster greater competition in this sector and create a level playing field for SME development. Invest in infrastructure and connectivity to improve transport, logistics, and trade facilitation including financial arrangement among the different stakeholders of the SME's participations, improve the access to finance for SMEs to adopt suitable liberal business policy with active prudential, business- friendly, speedy and required sound decisions of the policy makers.
Situations and things are rapidly changing in the world. The old concepts or ideas of very large companies or factories with thousands of employees working and changing hands. No matter covid or post- covid with the rise of digital economics, rise of super electronics, the rise of robotics, the rise of 4IR, the rise of modern technologies and so many things, we need to co-operate across the globe where ever we are.
SME sector is facing a tough situation at this moment and we must put our heads together to work together. We need to find new business model and tap new smart technologies to provide improved finance that is more cost effective throughout the whole life cycle of enterprises.
Now, SMEs are the worst affected amid Covid-19 pandemic. The banking and financial sectors at this moment need to support SMEs. The post Covid-19 SME business model is also required with proactive banking planning for SME support with international connection.
Together, we can reduce existing gaps in the banking support for SME's as part of the global connections innovators, banks & financial institutions of all shapes and sizes can create the conditions necessary for the market to offer affordable and convenient financial services for SME's to grow. So, we do need to direct our attention to the challenges and bottlenecks that are shifting SMEs worldwide with particular attention to do ease of doing business where SMEs banking requirements for full filling the optimum SME finance.
Bangladesh has been working steadily to connect key players around the globe, online and in person, to learn from one another and move the field forward. Still, we do have a long way to go.
The writer is a banker & consultant