Taking SMEs on the road to a Cashless Bangladesh
Consistent and synergistic innovation has powered Bangladesh's growth in the last few decades. Starting with reforms in agriculture, and rural infrastructure, all the way to finance, trade, and investment, the nation has now arrived at a point where it is ready for a cashless future.
The pursuit of a truly Cashless Bangladesh is supported by its vibrant demographic landscape, with a workforce of over 114 million individuals, a gig economy comprising nearly 11 million professionals, and a one million-strong community of freelancers, many in the IT sector.
Further, the country is home to 177 million mobile subscribers and more than 67 million internet users, who are taking the country to the next phase of its digital journey.
MSMEs as growth drivers
Post-pandemic, Bangladesh has seen a rapid rise in cashless transactions, primarily driven by mobile financial services, internet banking, and payment gateways. To continue this momentum and build a strong and cashless economy, the need of the hour is to bring micro, small, and medium enterprises (MSMEs) into the digital fold. Their business operations were among the most severely impacted during the pandemic.
Like in the rest of the world, the MSME sector in Bangladesh continues to play a critical role in driving economic growth and employment generation.
According to recent reports, from around 2.3 percent in the early 1990s, the contribution of the sector to the GDP increased to over 22 percent in 2020. Additionally, companies operating in this space generate nearly 80 percent of jobs in the industrial sector, covering over 25 percent of the total employed workforce.
Building trust through innovation
The reluctance to adopt digital tools and solutions primarily stems from "the fear of the unknown". A whole bunch of 'what if' scenarios prevent people and businesses from getting out of the clutches of informal moneylenders and building a credit footprint to access formal financial services.
At Mastercard, we understand these inhibitions and actively engage with small merchants, women entrepreneurs and MSMEs to build their trust in the digital ecosystem. We do that through innovation.
For instance, the debut of the first Social Media Mastercard prepaid card empowered women entrepreneurs to simplify processes and take their business into the virtual world via platforms like Facebook. The card enables Facebook commerce owners to receive funds in real-time, thereby eliminating their dependence on cash and ensuring quick and convenient payments.
As is often said, along with convenience, digitisation has to provide a competitive advantage to MSMEs in terms of cost, efficiency and resilience. Only then can we expect these enterprises to fully turn cashless. This can be achieved by developing and delivering customised tools and solutions.
Following this strategy, we supported our partners with the launch of Bangla QR, enabling even micro and small merchants to easily receive money from their end-customers directly into their bank accounts. This cost-effective solution ensures the safety and security of transactions for both merchants and consumers.
Taking collaborative route
Taking a collaborative route is key to contributing to the vision of a Smart Bangladesh by 2041. With the guidance and support of Bangladesh Bank, financial institutions, fintechs, and other players in the ecosystem are rolling out products and services covering multiple sectors of the economy and sections of society.
Recently, key players have embarked on a path of developing cashless hubs, where buyers and sellers engage in digital transactions. The bustling market in Khilgaon of Dhaka is the most recent success story on the road to a cashless Bangladesh. Such collaborations are what will drive the digital economy to new heights.
As Bangladesh continues to diversify its economy, it can become an example for other countries in the Global South on how to move up the value chain digitally.
The author is the division president for South Asia at Mastercard
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