The Bangladesh Small and Cottage Industries Corporation (BSCIC) has sought a new stimulus package of Tk2,500 crore from the government at low interest to boost the hardest-hit cottage, micro, small and medium entrepreneurs (CMSMEs) in the country.
The corporation sought another Tk1,000 crore in favour of BSCIC as a loan – Tk500 crore for start-ups and Tk500 crore for women entrepreneurs.
BSCIC – the government agency geared to promoting the development and expansion of small and cottage industries – recently sent a letter to the finance ministry and the Bangladesh Bank seeking the stimulus and fund support, its Chairman Mostaque Hossain has said.
Small and cottage industries need more capital support to breathe right in the pandemic shock and if the government allows new packages, around 7-8 lakh entrepreneurs will be benefited, he added.
According to sources, BSCIC sought Tk2,000 crore from the government for CMSMEs and Tk500 crore for women entrepreneurs under a new stimulus package.
The loans may be similar to the previous incentive package at the rate of 4%.
BSCIC will take the Tk1,000 crore fund from the Bangladesh Bank and will supply them to the market through its own channel by its district offices.
Besides, the corporation has disbursed around Tk70-80 crore of its own funds among entrepreneurs throughout the country at a low-interest rate and mostly without collateral.
"The demand for loans in the market is around Tk5,000 crore among CMSMEs across the country. Small and cottage industry entrepreneurs are now facing capital shortage and all the SME entrepreneurs are moving to BSCIC for capital loan support," said Mostaque Hossain.
On 17 January 2021, the government approved a special stimulus package of Tk1,500 crore and engaged non-governmental organizations, including BSCIC, to disburse loans to marginal traders, entrepreneurs and farmers as part of financial support.
Though the corporation sought Tk600 crore for CMSMEs as they faced a crisis caused by a halt in production and products remaining unsold due to the pandemic, it got only Tk100 crore under that stimulus package.
BSCIC had received Tk50 crore in fiscal 2020-2021, which was disbursed among 1,416 entrepreneurs in Dhaka, Chattogram, Rajshahi and Khulna divisions.
According to data available with BSCIC, around 70% of the fund was availed by rural entrepreneurs from three divisions except for Dhaka division.
It is due to receive the remaining Tk50cr in fiscal 2021-2022.
"As there is a huge demand for loan support from entrepreneurs, the Tk50 stimulus was disbursed within seven days," said the BSCIC chairman.
Speaking to TBS over phone, Mostaque Hossain said, "The start-up fund of the Bangladesh Bank amounting Tk1,000 remains unused. The interest rate of the fund is very low. So, we sent a letter for the chance to be availed by new entrepreneurs from small and cottage industries."
Around 50% of small and cottage industries have been shut down and many of them have fallen into crises as their products have remained unsold, said Mirza Nurul Ghani Shovon, president of the National Association of Small and Cottage Industries of Bangladesh (NASCIB).
"SMEs need more cash support to overcome the crisis. BSCIC and SME Foundation are facilitating fund support under a stimulus package. But the support must be adequate," he added.
According to BSCIC, including cottages there are 78 lakh micro, small and medium industries in the country, 70% of which are in the rural areas.
SMEs' contribution to the gross domestic product (GDP) is 25%, according to a report by the ADB in 2015.
In the SME policy 2019, the contribution was targeted to be 32% by 2024.
Citing the data of Bangladesh Economic Review 2013, BSCIC said, among the 7.8 million industries in the country, cottage industries constitute 87.52%, micro 1.3%, small 10.99%, medium 0.09%, and large industries around 0.07%.
The SME industries manage around 70-80% of total industrial employment.