Entrepreneurship held back by poor access to finance: analysts
The private sector as an engine of economic growth is playing a key role in Bangladesh's progress, but limited access to finance still remains as a major barrier to developing new entrepreneurs, analysts said yesterday.
They also suggested creating an 'entrepreneurial ecosystem' to develop and promote entrepreneurship in Bangladesh.
The entrepreneurial ecosystem concept refers to the collective nature of entrepreneurship, as new enterprises emerge and grow not only because of heroic, talented and visionary individuals.
New ventures emerge also because they are located in an environment or 'ecosystem' made of private and public players, which nurture and sustain them, making the action of new entrepreneurs easier.
The analysts spoke at a discussion on how to develop entrepreneurs in Bangladesh', organised by the Prothom Alo in association with Daffodil International University. Abdul Quayum, associate editor of the newspaper, moderated the discussion.
It is the private entrepreneurs who brought changes to the economy for the last 44 years. “It proves that we are on track, but we need some fine-tuning,” said Humayun Rashid, senior vice-president of Dhaka Chamber of Commerce and Industry.
Limited access to finance, bureaucratic tangles in licencing, inadequate infrastructure and limited utility supply are the major challenges for the entrepreneurs, he said.
Apart from addressing the challenges, innovative education at the university level is a must to develop new entrepreneurship, said Rashid, also managing director of Energypac.
Md Fazlul Hoque, former president of Bangladesh Knitwear Manufacturers and Exporters Association, said banks are chasing entrepreneurs who do not need funds, while new entrepreneurs who need money are often ignored by the banks.
“So, financing is the biggest challenge for new entrepreneurs or start-up businesses,” he said, suggesting the use of remittance in developing and promoting the new entrepreneurs.
Simultaneously, Hoque said, young or new entrepreneurs would need to have a risk-taking behaviour among them. “There are many who do not want to take challenges in business,” said Hoque, also the managing director of Plummy Fashions.
Mir Nasir Hossain, former president of Federation of Bangladesh Chambers of Commerce and Industry, advised the government to change the education system, citing that most students want to be doctors. “But we need textile engineers.”
“If we cannot ensure a need-based educational system, it will not work whatever the number of GPA-5 may be.”
Easy access to finance, an enabling business environment, government policy, utility supply and simple licencing processes help create new entrepreneurs, said Hossain, who is also the managing director of Mir Akhter Hossain.
Mustafa Jabbar, president of Bangladesh Association of Software and Information Services, said intellectual labour is replacing physical labour worldwide. “But we are heading backwards. We are yet to see an updated patent and design law, in place of the ones enacted in 1911.”
He alleged that local IT companies and software developers cannot take part in the bidding of government IT projects. If local companies cannot get the opportunities, entrepreneurship will not develop,” said Jabbar, also the owner of Ananda Computers.
In response, Industries Secretary Md Mosharraf Hossain Bhuiyan said the cabinet committee has already approved the patent act in principle. “We will also place a separate law on design before the cabinet committee within two or three weeks.”
He hoped that these two acts will be passed in parliament and then come into effect this year.
Syed Abdul Momen, head of small business of Brac Bank, said it is difficult for a bank to finance a new entrepreneur, as a bank will have to lend its depositors' money. “Venture capital is the best option for new entrepreneurs to get the initial finance.”
And after reaching an acceptable stage, bank financing may not be a problem, he said.
Shahana Jefrin, a member of Bangladesh Women Chamber of Commerce and Industry, said getting soft loans is the biggest problem for women entrepreneurs. “We request the government to formulate a guideline on women entrepreneurship.” Wahid Sharif, vice-president of Bangladesh Association of Call Centre and Outsourcing, said huge opportunities exist in the outsourcing sector, which has a $500 billion market worldwide. Neighbouring India generates $140 billion in revenue from outsourcing, while Bangladesh's is only around $180 million, he cited.
“We need policy support from the government that it gives to the garment industry.” Addressing the discussion, State Minister for ICT Junaid Ahmed Palak said the government is setting up an 'Innovation Design and Entrepreneurship Academy' this year to facilitate the IT companies and start-up businesses.
“We are also working to help the ICT industry earn $1 billion in software exports and outsourcing by 2018, and take the figure to $5 billion by 2021.”
Lila Rashid, general manager of Bangladesh Bank, SM Shaheen Anwar, general manager of SME Foundation, Nurul Islam, president of the American Chamber of Commerce in Bangladesh, Md Sabur Khan, chairman of Daffodil International University, and Prof Yousuf Mahbubul Islam, vice-chancellor of Daffodil International University, also spoke.
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