Women-led SMEs need easy loans: experts

Women entrepreneurs in Bangladesh still face hurdles in getting access to finance as financial institutions are reluctant to lend them, SME Foundation's Managing Director Shafiqul Islam said yesterday.

He said only 15 percent of women entrepreneurs have access to finance.

Of the total outstanding SME loan of Tk 140,000 crore, only Tk 5,000 crore goes to women entrepreneurs.

“This is very insignificant. Lenders should change their attitude towards women entrepreneurs,” he said.

He spoke at an expert group meeting on “Employment, equity and diversification of SMEs in Bangladesh: experiences from the German model” at the Pan Pacific Sonargaon hotel in Dhaka yesterday.

SME Foundation, the foreign ministry and the Bangladesh office of the Friedrich-Ebert-Stiftung, a non-profit state-run German foundation, jointly organised the programme.

Currently, the SME sector contributes roughly 28-29 percent to the Bangladesh economy, whereas this is nearly 52 percent for Germany, said State Minister for Foreign Affairs Shahriar Alam.

Loan disbursement to women entrepreneurs declined 24 percent year-on-year to Tk 2,333 crore in the first half of the current year, according to central bank data.

Only 2.7 percent of the Tk 83,506 crore SME loan disbursed in the six months to June went to women entrepreneurs, the data showed.

In the period, the number of women-led enterprises reached 28,892, up from 19,770 in the same period last year, central bank data shows.

The meeting identified high interest rate as a major obstacle for the success of SMEs.

Lending rate for SME loan is 12-16 percent in Bangladesh compared to 5-6 percent in Germany, according to a number of speakers.

“It is completely a failure of the market, which could not simplify the SME policies to cut the interest rate for small enterprises,” said Hansjörg Herr, a professor at Berlin School of Economics and Law.

“The policymakers should intervene to solve the problem.”

Industry experts attribute the production of low quality products by the SMEs to their lack of skilled labour force and low level of technical knowledge.

The small enterprises also face challenges when they try to get a space in big shopping malls to do business, Islam said.

A specific space should be reserved in the markets for SMEs, especially for women entrepreneurs, he suggested.

Herr and Zeynep Nettekoven, another professor of the German school, jointly presented a study report titled “Success factors of small- and medium enterprises (SMEs) - What is behind the success of German SMEs?”

Herr said access to finance, education, industrial clusters and value chains were the main drivers of success for German SMEs.

“German SMEs are very innovative, which helped the sector get success in the European country.”

The Bangladesh Investment Development Authority should open a window to provide special services to SMEs, said Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue.

The SME sector needs a social upgrade as child labour and wage discrimination still exist in the industry, he said.