Micro-, small and medium-sized enterprises and self-employed workers are the backbone of economies.
According to world bank globally, they represent about 90 per cent of businesses and account for over
two thirds of employment. In 2021, 47 per cent of the global working population on average were self-
employed. Their share amounts to 81 per cent in low-income countries, 64 per cent in lower-middle
income countries, 39 per cent in upper-middle-income countries and 12 per cent in high-income
countries.1
The output of SMEs has been regarded as essential to achieve long-term development through
industrialization of bangladesh. According to the Bangladesh Bureau of Statistics (BBS), the contribution
of the manufacturing sector, which includes cottage, micro, small, and medium-sized enterprises, to GDP
was 24.45 percent in FY22, up from 23.36 percent in FY21. SMEs significantly contribute to the
development of domestic industry by supporting both major and minor economic activities that
generate employment. In FY20, this sector's contribution declined to 22.40 percent due to the pandemic
The time series data demonstrates that the output of small and medium-sized enterprises (SMEs)
remained steady from 1978 to 1992, while the GDP of Bangladesh expanded due to the other
1 International Labour Organization, World Employment and Social Outlook: Trends 2022 (Geneva, 2022)
2 http://www.worldbank.org/en/topic/smefinance *Base year 2005-06
determinants of GDP. After 1992, however, the output of SMEs began to rise; in 1994, the output of
SMEs was BDT 67.56 billion, and it rose to BDT 94.33 billion in 2000, which increased more than 100
percent to BDT 194.85 billion in 2005. Ten years later, it reached BDT 200.40 billion, and by 2020, it had
risen to BDT 437.8 billion. Similarly, the share of GDP contributed by SMEs has increased steadily over
the past two decades, from 2.55 percent in 1994 to 3.44 percent in 2015, and it was estimated at 3.74
percent in 2020.
Industry sector of Bangladesh economy has been gradually and consistently expanding over the few
years. In FY 2021-22 the contribution of manufacturing sector to GDP was 23.36 percent which increased
to 24.45 percent in FY 2021-22. The volume and growth performance of the manufacturing sector from
FY 2015-16 to FY 2021-22 is shown in Table 8.1.
Economic review theke table nibo
National Industrial Policy 2016
Considering industrialisation or industrial sector as the most important sectors, industrial policy, 2016,
was announced to speed up the pace of industrialisation in the country and inclusive industrial growth
through generation of productive employment to create new entrepreneurs, mainstreaming women in
the industrialisation process and international market linkage creation. In order to implement these
goals and objectives, proper strategies are outlined in the industrial policy. The necessary initiatives have
been taken in consultation with the concerned ministries and other beneficiaries in the integrated
initiatives in the implementation of the industrial policy and in the protection of consumer interest. To
secure a sustainable development through economic, social and environmental protection, the
government declares small and medium enterprises as the key sector for the growth of industrialisation.
In addition to that, the government also lays emphasize on heavy industry and few selected service
sectors. Short, medium and long-term activities will be taken to achieve the targets of National Industrial
Policy 2016. For planned industrial development in the country and to realise a sustainable industrial
growth in relation to continuous technology related innovation, followings issues have been included in
the National Industrial policy 2016:
For example, creating high priority sector, defining various sectors (handicrafts, creative industry, high
priority industry);( protection of intellectual property rights, management of industrial pollution,
creation of effective skill development programme, provision of pragmatic policy and strategic benefit to
develop a strong private sector). For the effective implementation of this Policy, a time bound Action
Plan has been incorporated in the Industrial Policy 2016. Practical, implementable and theoretical
knowledge and experiences of the experts and stakeholders of the industry sectors have been reflected
in the Industrial Policy 2016. It is expected, with implementation of this policy, industrial sector would be
revitalised by bringing noticeable advancement of the country as a whole.
Objective of the Study:
The main objective of this research is to investigate and understand the role of access to finance in
fostering entrepreneurship development within the micro and cottage sector in Bangladesh. The study
1 International Labour Organization, World Employment and Social Outlook: Trends 2022 (Geneva, 2022)
2 http://www.worldbank.org/en/topic/smefinance *Base year 2005-06
aims to explore the significance of financial inclusion for small-scale businesses and its impact on the
sector's growth and overall contribution to the country's economy. The specific objectives of the study
are as follows:
Identify Financial Challenges: To identify and examine the financial challenges faced by entrepreneurs
operating in the micro and cottage sector of Bangladesh. This includes understanding the barriers they
encounter while accessing formal financial services and exploring the reliance on informal sources of
finance.
Assess Impact on Growth: To assess the impact of limited access to finance on the growth, expansion,
and sustainability of small-scale businesses in the micro and cottage sector. The study aims to investigate
how financial constraints influence business decisions and hinder entrepreneurial ventures' potential.
Analyze Government and NGO Initiatives: To examine the initiatives and programs implemented by the
government and non-governmental organizations (NGOs) to enhance access to finance for micro and
cottage enterprises. The study aims to assess the effectiveness of these initiatives and their contribution
to fostering entrepreneurship development.
Measure Socio-Economic Impact: To explore the broader socio-economic impact of entrepreneurs, this
includes analyzing the sector's contribution to employment generation, income distribution, poverty
alleviation, and overall economic development.
Propose Policy Recommendations: To propose practical and actionable policy recommendations that
can enhance financial inclusion for entrepreneurs in the micro and cottage sector. The study aims to
provide evidence-based suggestions to policymakers, financial institutions, and other stakeholders to
improve the sector's access to finance.
Highlight Role of Government Institutions: To highlight the role of government institutions, particularly
the central bank, in promoting financial inclusion and supporting the growth of small-scale businesses.
The research aims to explore the regulatory framework and policy environment that can foster an
enabling ecosystem for entrepreneurship in the micro and cottage sector.
By achieving these objectives, this study seeks to contribute valuable insights to the existing knowledge
on access to finance for entrepreneurship development in the micro and cottage sector in Bangladesh.
The findings and recommendations can be used by stakeholders to design effective interventions and
policies that empower entrepreneurs, promote economic growth, and ensure inclusive development in
this crucial sector of the economy.
1 International Labour Organization, World Employment and Social Outlook: Trends 2022 (Geneva, 2022)
2 http://www.worldbank.org/en/topic/smefinance *Base year 2005-06
Entrepreneurship Policy
Framework and Implementation
Guidance
Explore the Key Components of the
Framework:
1 International Labour Organization, World Employment and Social Outlook: Trends 2022 (Geneva, 2022)
2 http://www.worldbank.org/en/topic/smefinance *Base year 2005-06
1 International Labour Organization, World Employment and Social Outlook: Trends 2022 (Geneva, 2022)
2 http://www.worldbank.org/en/topic/smefinance *Base year 2005-06
