CHAPTER -1

Introduction

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1.1 Introduction
Entrepreneurship has been regarded as one of the important determinants of industrial growth
both in the developed and in the under-developed countries. Despite its importance for the
economy, the emergence of women entrepreneurship is a new phenomenon all over the
world. Bangladesh is still a poor country, but she is rich in human resource. In Bangladesh
women constitute slightly less than half the population. The majority of them are
underprivileged, under nourished, illiterate and poor. According to the 1999/00 labour force
survey (LFS), the labour force of Bangladesh was estimated at 60 million, more than 20
million being women. There are not enough employment opportunities for women.
Therefore, economic activities, through self-employment have become essential for potential
working women. As a matter of fact, women entrepreneurship or “women in business” is a
very recent phenomenon in Bangladesh. Although women are taking to entrepreneurship in
many challenging fields, their activities in Bangladesh are not that extensive. In spite of fewer
opportunities, many women have succeeded in business, but they are still very small in
number. The Begum (1993) stated that before 1985, Bangladesh had very few women
entrepreneurs. Another study also shows that the number of women entrepreneurs is around
3000, representing only 2% of the total entrepreneurs in the country, although women
constitute about 50% of the population (Ahmed). In fact women entrepreneurship started
developing in Bangladesh after the liberation. Very few women entered the profession of
business before the nineteen hundred seventies.
According to the Bangladesh Economic Review 2009, around 6 percent of the country’s $ 90
billion economy comes from SMEs, which is also the largest sector in terms of employment
generation. (Daily Star December 29, 2009). Bangladesh is rightly dubbed as a country of the
SMEs. Bangladesh industrial economy is thickly populated by these industries which amount
for over 99 percent of the private sector industrial establishments and provide more than 80
percent of industrial employment. The relative SME shares in total GDP range between 25-30
percent and that in manufacturing value added vary between 40-45 percent (Ahmed Momtaz
Uddin 2008). The sector is currently exhibiting notable dynamism by registering an average
annual compound growth rate of over 7- 8 percent in their value added shares to GDP.
However, their potentials contributions to the country’s growth process vis-a-vis their
numerical dominance in the economy continue to remain unveiled. Their financial insolvency
because of restricted access to sources of institutional finance acts as a serious deterrent too
the sector’s prospective growth, expansion and dynamism. Various systemic and institutional
barriers cutting across supply as well as demand related factors inhibit credit flows to the
SME sector.

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1.2 Statement of the problem
In Bangladesh women constitute almost half the population, but the presence of women in the
SME sector is insignificant. The magnitude and momentum of women’s involvement in
economic activities is still very low. Many countries have made substantial progress and
achievement by involving women in economic activities specifically in the SME sector. But
in Bangladesh enhancing women participation in SME development is a great national
challenge. Gender equity in the SME sector is closely linked to various issues, like education
facilities, socio-cultural norms, customs, resource allocation, opportunities and policy
supports and programs. It is, therefore, necessary to provide supports in addressing these
issues in order to reduce the knowledge gaps of policy makers and their attitudinal problems
and practices.

1.3 Significance of the study

It is envisaged that the study will find a causal relationship between women entrepreneurship
and economic development of Bangladesh and demonstrate the effectiveness of women’s
participation in small economic activities to help gender equality. The study will also show
how to integrate entrepreneurial skills and attitude of women as one of the most valued assets
in creating enterprise and their continuation and how women as an indispensable part of the
reformist community are working under the same macro, regulatory and institutional
framework with their male counterparts. Thus, it is necessary to analyze in-depth the
problems in order to understand the gender parity embedded in society that eventually limits
women's mobility, interactions, active economic participation, access and control to business
development services.
1.4 Objective of the study
The overall objective of the study is to examine the key gender issues involved in women
entrepreneurship development in the SME sector with a view to addressing the problems of
exclusion of women from access to market, technology and finance and make
recommendations for the SME Foundation to support “Business Services for Women
Entrepreneurs”, who face an uphill battle in starting up and developing business, and includes
the following specifically:
 To identify the present status of women entrepreneurs in different sectors and the role
of women entrepreneurs in the national economy,
 To determine the women entrepreneurs profile, their success indicators with reference
to a particular sector
 To examine and assess the socio-cultural/educational and legal barriers to women's
entry into enterprise, as well as performance and growth in entrepreneurship
 To examine the issues need to address to increase access to economic opportunities
and formal inputs which promote entrepreneurship development.

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1.5 Methodology of the Study
This report is based on the primary and secondary data. This report also bears the practical
knowledge of individual worked at the particular branch during the internee period. So the
methodology is the mixing of secondary data with practical knowledge.

I use only Secondary Source in this report.

 Journal
 Internet

1.6 Limitations of the study:

Although efforts will be made to make the report as comprehensive as possible, nevertheless,
the following limitations have been identified for the preparation of the report.
i. Time is main point of limitation for this wide range of study. Due to the time limit, the
scope and dimension of the report may not be broadened.
ii. There is a lack of sufficient secondary data
iii. All the concerned personnel of the bank’s different departments may not be
interviewed.
iv. Lack of in-depth knowledge and analytical ability for writing such report.
v. Organizational confidentiality of internal data has restricted me from putting or
disclosing some information.
vi. The personnel of the organization did not want to disclose the classified information to
the outsiders.
vii. Due to lack of experience, there is a chance of having some mistake in the report
though best effort has been applied to avoid any kind of mistake.

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 CHAPTER -2
Literature Review

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2.1 Literature Review
This chapter makes an attempt to present a brief summary of studies so far held on women
entrepreneurs, their activities in Bangladesh and the growth of the SME sector in Bangladesh.
Article No. 1:“Role of Institutional Financing in the Development of Small and Medium
Enterprise (SMEs) in Bangladesh” by Dr. Momtaz Uddin Ahmed, Professor of
Economics, Dhaka University and former Managing Director and CEO, SME
Foundation.
A great many articles have been written on the issue by Dr. Ahmed. In this article Dr.
Momtaz Uddin mentions that SMEs constitute one of the major driving forces of economic
growth in the developing countries. The development potentials of these industries in
Bangladesh are boundless. Characteristically, the SMEs are poised to create millions of low-
cost and productive job opportunities, add to national output and exports, promote
entrepreneurship and innovation, and spread industrial growth over wider geographic regions
and among vast number of potential business owners. These intrinsic merits of the SMEs
make them handy instruments for achieving employment intensive industrial growth,
“Socially inclusive” national economic growth and sustained poverty alleviation. He
identifies that the SME sector accounts for upwards of 90% of total industrial establishments,
60 to 70 percent or more of employment and provides livelihoods for three-fourths of the
workforce n most of the Asian courtiers. On “Institutional Financing of SMEs in
Bangladesh”, Dr. Ahmed mentions that there are broadly, four categories of institutions
which cater to the financial needs of the SMEs in Bangladesh. These are Commercial banks,
Non-bank financial institutions [NBF], (i.e., leasing companies), Specialized Banks and
Development Financial Institutions, (i.e. BASIC, MIDAS Financing Ltd. Etc) and Selected
Microfinance Institutions (MFLs, such as BRAC, ASA PKSF and Shakti Foundation).
Additionally, the Bangladesh Bank (BB), the central Bank of the country also arranges
various credit lines (i.e. refinancing schemes) from time to time to accelerate flow of
institutional funds to the SMEs in tandem with Governments strong policy support to SME
development as a “thrust sector” for achieving employment-intensive industrial growth.
The Small enterprise Fund (SEF) programme, a window of SME refinancing facilities for
commercial banks, NBFIs, and the Equity Entrepreneurship Fund (EEF) introduced by the
BB in the recent years constitute important BB programmes to expand and deliver better
financial services to the SME sector. Encouraged by these facilitating arrangements the banks
and NBIs are increasingly coming forward to extend financial support to the SME sector and
boost up their contributions to national economic growth.
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Another notable addition to SME financing landscape is the increasing participation by some
of the leading MFIs in providing micro enterprise loans to the graduating micro credit
borrowers involved in small-scale manufacturing, trade and service activities. These loans
generally constitute collateral-free working capital loans of 1-3 years duration which are
designed to promote growth of the popularly called “missing middle” SME categories at the
base of the SME pyramid which neither qualify as microcredit borrowers nor as credit-
worthy SME borrowers from the commercial banks, Educated guess is that these lending
operations currently provide loans to roughly 3% of the potential SME borrowers.
Dr. Momtaz Uddin says that despite Bangladesh Bank initiatives encouragements (and also
directives at times) provided to the banks to participate in SME lending the current
availability of institutional credits to the SME sector remains grossly inadequate which stifles
their growth efforts seriously. During the recent past fifteen years between 1992 and 2007,
the relative shares of the SMEs in both term loans and working capital loans extended by the
banks to the economic sectors hovered around only 2 to 5 percent and 4 to 10 percent
respectively. The situation leaves no choice but to depend greatly on borrowing from the no
institutional sources and internally generated funds, neither of which are adequate to boost
growth and implement business expansion plans.

2.2 Entrepreneurship
It is to be noted that entrepreneurship has been under discussion for more than two centuries.
Gloss, Steads and Lowry made an attempt to define entrepreneurship through four common
characteristics of an entrepreneur. These are as follows:

 Purposeful i.e. sets goals and strives to accomplish them

 Persuasive i.e. influences others to assist in reaching desired goals
 Presumptions i.e. strikes out boldly and acts when others hesitate to do so.
 Perceptive i.e. understands how each separate decision relates to accomplishing the
established goals.

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2.3 Concept of Entrepreneurship: A theoretical discussion
Karl H. Vesper defined the overall field of entrepreneurship as the creation of new business
ventures by individuals or small groups Marshal expanded entrepreneurship as:
a) Structuring of organization through division of labour,
b) formulating plans and policies to be executed by subordinate,
c) innovating and d) bearing risk.
E.E. Hagen described entrepreneurship as creating opportunities for investment and
production, establishing an organization capable of introducing non production process,
accumulation of capable, collection of raw materials, innovating new production techniques
and new products, searching for new sources of raw materials and above all the selection on
an efficient manager to run the day to day affairs of the organization.

2.4 Entrepreneurship in Bangladesh

Entrepreneurship is one of the indispensable ways to economic self-sufficiency around the
world. In the developing country like Bangladesh where well-paid employment is scarce,
entrepreneurship may be the only way that most individuals can rise above the poverty.
This problem is particularly severe for women. Society in Bangladesh tends to grant women
limited access to material resources, land capital, an education. It is historically true that
when half of the country’s population is not involving them with formal or informal
economic activities, the country will not progress further.
Now the time has come when we should emphasize on creating self employment
opportunities and on expansion of employment-generating small and medium business
enterprises and at the same time on active involvement of women in the economic
development process.

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 CHAPTER -3
WOMEN ENTREPRENEURSHIP IN
BANGLADESH

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3.1 Women Entrepreneurship in Bangladesh:
Women entrepreneurs constitute less than 10% of the total business entrepreneurs in
Bangladesh whereas women in advanced market economies own more than 25% of all
businesses. It is heartening to note that despite many barriers, a new women’s entrepreneur
class has risen in the country taking on the challenge to work in a male-dominated,
competitive and complex economic and business environment. Not only have their
entrepreneurship improved their living conditions and earned more respect in the family and
the society, but they are also contributing to business and export growth, supplies,
employment generation, productivity and skills development of Bangladesh. A recent United
Nations report concluded that economic development is closely related to the advancement of
women. (Hua Du, Asian Development Bank, 2006).
Although the Constitution of Bangladesh guarantees all citizens equal rights, in reality, the
society is highly stratified and services are rendered on the basis of class, gender location,
etc., which often results in disparities. Seventy percent (70%) of the women entrepreneurs are
micro and rural based. They are not given proper opportunity for expansion. On the other
hand, urban educated women already engaged in micro and small businesses, as well as
export-oriented enterprises are receiving comparatively less attention. As a result, they are
unable to expand their operations due to lack of technological support and expertise, fund
constraints, marketing techniques, and detachment from the international business arena,
especially in the context of today’s globalization and rapidly growing business world. After
the financial crisis in Asia, the governments of many countries in Asia has placed emphasis
on SMEs led by women entrepreneurs, which they believe will be the new thrust for
economic growth in the future. If adequate support can be provided, these small scale
business entrepreneurs would be able to generate employment and render training to women
of rural and slum areas. All these can help them to step into new ventures of their own. In
order to actively pursue the advancement of women, it is required to empower, upgrade and
uplift the women entrepreneurs in both rural and urban sectors. Special priority should be
given to the poor rural women. In new ventures, modern technology can be greatly helpful in
facing the competitive challenge of the age. Since technology is a strategic variable in the
modern business paradigm, women empowerment with technology will give rise to economic
advancement. A recent survey data of BBS revealed that women own only 2.8% of all
enterprises outside agriculture in Bangladesh. This figure exposed that while progress is
being made towards the equality of women and men in the decision-making level women
remain under-represented. (Akbory, Yeameen, 2008)

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3.2 History of Women Entrepreneurship Development in Bangladesh
It is said that entrepreneurs are persons who bring about phenomenal economic changes,
through their risk taking innovativeness and constant agility. Bangladeshi women
entrepreneurs need to have an extra quality in the form of dogged determination and
resilience since this is greatly needed to fight with adverse situations which seem to confront
female entrepreneurs rather than their male counterparts in the present-day context. Women
in business in Bangladesh require more efforts than men to gain a foothold as economic
change agents. Sustained efforts are needed to enhance the capability of women
entrepreneurs as well as to create conditions for entrepreneurship to succeed in terms of
setting up and maintaining productive operations. Many organizations have assisted in the
formation of women entrepreneurs. WEDP of BSCIC under its project (1997-2002) has
identified 90,661 women entrepreneurs, developed 73,169, disbursed BDT 5,711.40 lac to
73,169 women and provided skill development training to 4,302 and management training to
32,995 women entrepreneurs.

3.3 Women Entrepreneurs of Bangladesh

The types of enterprises operated by women may be placed under following categories: (i)
Household or family trade (Cottage Enterprise or Industry), (ii) Small Enterprise or Industry
(iii) Medium Enterprise or Industry In general, the degree of TCA (Technology Content
Added) of Women SMEs is low. An important element of Women SMEs is that the
technologies or processes used are often relatively simple. These types of business include
food processing, tailoring, hot gram (chanachur) production, grocery stores, poultry farm,
cow rearing, sweetmeat shop, restaurants etc. Required skills for these kinds of SMEs are
generally picked up through observation and experience. The training facilities offered both
by the government, private organizations, NGOs, etc., can increase their efficiency and
competence especially in rural areas.

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3.4 Women Entrepreneurship in Urban Areas
Today in addition to the traditional “women sectors” like food, beauty, health, fashion,
animal husbandry, boutiques, handicraft and tailoring, women have entered into broader areas
such as garments, shipping, engineering, advertising travel agencies, interior decoration, IT,
agro-industry, educational institutions, restaurants etc. With trade liberalization, new market
opportunities will come up. Thus diversification will be essential for women entrepreneurs in
order to make best use of these opportunities.

3.5 Women Entrepreneurship in Rural Areas

Bangladesh has shown success in the arena of the rural women entrepreneurs operating micro
enterprises. Women in Bangladesh have the ability to flourish and contribute to society if
they are given the opportunity. It has observed that the rural and urban women entrepreneurs
are in dire need of many types of assistance. This assistance should revolve mainly around
product development, training, business incubation and marketing, etc. The driving force
behind this are the women, who, given the opportunity, may prove to be dynamic, hard
working and successful. Women SMEs, with their small size, lack of skill and absence of
technology development have disadvantages in competing with large firms in the local &
global sphere. For them, technology upgradation can accelerate growth and sustainability.
This study provides the conceptual setting as to how technology can spur growth of SMEs
especially belonging to women entrepreneurs. It also highlights the key elements required for
technology adoption, transfer and adaptation process for Women SMEs.

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 CHAPTER-4
Findings and Analysis

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4.1 Definition and Classification Of Micro, Small And Medium Enterprises
Micro, small and medium enterprises (MSMEs) is considered as a thrust sector in many
developing countries with growing importance from all walks of life. It is generally
recognized that MSMEs have a significant role in employment generation, poverty reduction,
and overall economic growth, especially for a developing economy like Bangladesh. Rightly,
government of Bangladesh has given priority to develop MSME sector. It is noted that there
should have clear definition of Micro, Small and Medium Enterprise. The government of
Bangladesh provides an official definition of small and medium enterprise (SME) while there
is a lack of official definition of microenterprise. Hence, the microfinance industry applies
the following working definition for microenterprise: an enterprise that has capital (that is,
total investment, including fixed assets and working capital) between Tk. 30,000 and 1
million ($430 and 14,300) and has less than 10 workers (Haque and Mahmud, 2003).
Microenterprises generally have a single owner-operator structure, although some are
structured as partnerships (MIFA, 2009). On the other hand, small businesses in the
manufacturing industry are defined as those having fixed assets valued at less than Tk. 15
million (US$220,000), excluding the value of land. Nonmanufacturing businesses with fewer
than 25 workers are also considered small businesses (Table 1). Medium enterprise in the
manufacturing industry are defined as having fixed capital value between Tk. 15 and 100
million (US$220,000 and 1.4 million), excluding the value of any land or buildings. Non-
manufacturing medium-sized businesses are defined as employing between 25 and 100
workers (BB, 2010).

4.2 A Glimpse of Women Entrepreneurship Scenario in Bangladesh

Bangladesh is an overpopulated country with limited resources and higher social
stratification. Economic, political and social recognition are determined on the basis of
gender, class and location (WED, 2001). The urban areas have greater opportunities for
business development while rural areas lag behind. Nearly half of the population are women
(sex ratio 106). The enormous potentiality of the population has been unutilized as few
women participate in the mainstream of economic activities. For instance, only 16% of
women are self employed out of 66% self-employed citizen (based on entrepreneurship
status). Encouragingly, there is a rising of a new class in rural Bangladesh, they are the
women entrepreneurs who have accepted the challenges of life and have emerged as leaders
in the socio-economic development, thus earning for themselves and for their families and
contributing towards the socio-political upliftment of women. Consequently,
entrepreneurship has become an important profession among women in both rural and urban
areas. Women in rural areas are being self-employed through the agricultural and
nonagricultural sector, as entrepreneurs. These activities are cropping, livestock and poultry

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rearing, fish farming, nursery and tree planting, tool making, handcrafting, food processing,
tailoring, rice processing, etc.
Nevertheless, it is very difficult to quantify the contribution of micro, small and medium
enterprises (MSMEs), particularly estimation of the contribution of women due to lack of
available data. Alam and Miyagi (2004) reported that MSMEs contribute Tk. 741 billion
(US$10.15 billion), which is equivalent to 20 to 25% of gross domestic product (GDP).
About 40% of the population (above 15 years old) are employed in this sector in both rural
and urban areas. The International Consulting Group (ICG) comprehensive survey in 2003,
estimates.

the total number of MSMEs at 6 million enterprises. This enterprise employs 31 million
people and accounts for roughly 25% of GDP (Alam and Ullah, 2006). About 75% of these
enterprises are located in rural areas, reflecting the high proportion of the population residing
in rural areas. Ninety percent of all MSMEs have fewer than 10 workers, and just 2% have
between 51 and 100. Analyzing data from the sector, the survey finds that 40% of MSMEs
are in the wholesale and retail trade, and/or repairs sector; followed by 22% in agriculture;
and 14% in manufacturing, with each of the remaining sectors comprising less than 5% of
MSME businesses. According to World Bank estimation in 2004, 40% of the rural workforce
are employed in nonagricultural activities, which constitute more than 50% of the income of
rural households (MIFA, 2009; Siddique, 2008). Table 2 shows the distribution of SME
ownership by women and men and Table 3 shows the women contribution to the GDP,
quoted from Daniels study in 2003. Table 2 shows that women had lower percentages of
ownership of SMEs. Even the average number of workers for women owned enterprises had
only 2.3, which implies that women owned enterprise mostly fall under microenterprise
category. Daniel’s (2003) report also confirmed that women tend to be heavily concentrated
in manufacturing (clothing, retail sales not in stores, spinning and weaving of textile,
livestock and dairy production). Contribution to GDP by women owned enterprises is

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illustrated in Table 3. The contribution from manufacturing enterprises was the highest with
50%, then agriculture with 18%, followed by wholesale retail trade with 15%, then hotels
restaurants with 8%.

4.3 Support Services For Women Entrepreneurship Development

Different types of organizations provide either direct or indirect supports to women
entrepreneurs besides the government. Among various supporting organizations, the financial
institutions are considered most important. A list of supporting organizations is given
subsequently but only government policy supports and financial institution’s supports are
illustrated broadly.
(a) Bangladesh Small and Cottage Industries Corporation (BSCIC)
(b) Bangladesh Bank
(c) State and private commercial banks
(d) Financial institutions
(e) Bangladesh Rural Development Board (BRDB)
(f) Bangladesh Management Development Institute (BMDI)
(g) Directorate of Women Affairs (DWA)
(h) Development of Youth Development (DYD)
(i) Bangladesh Manpower Training Bureau (BMTB)
(j) Micro-industries Development and Assistance Services (MIDAS)
(k) Job Opportunities and Business Support (JOBS)
(l) NGO-MFIs MSME program

4.4 Government supports

In the Millennium Development Goals (MDGs), goal 3 has distinctly mentioned to promote
gender equality and empowering women in respect to education, employment and political
representation. Meanwhile, the importance of women entrepreneurs in the national
development process has been legalized by the constitutions. Article 28 of the constitutions of
Bangladesh distinctly mentioned the issue of equal economic right and opportunities and
development of women entrepreneurs (Banglapedia, 2003). The national Fifth Five Year
Plans (1997 to 2002) has also been integrated into the macro framework and multi-sectoral
economy to bring women into the mainstream of economic development and encourage
potential women entrepreneurs (Fifth Five Year Plan, 1998). In addition, Poverty Reduction

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Strategy Paper (PRSP) focuses on reducing gender discrimination at significant level within
2015. Furthermore, National Action

Plan (NAP) has distinctly provided some guidelines to strengthening women

entrepreneurship development. The distinct strategies of National Action Plan (NAP) are:
1. Adoption of a comprehensive sustainable industrial policy that will promote equity for
women and men
2. Increase the number of women entrepreneurs
3. Ensure women’s easy access to markets
4. Develop entrepreneurial skills of the women
5. Provide infrastructure facilities for women entrepreneurs
6. Upgrade technical “know-how” of women and develop technology suitable for women
Responding to the issue, the government of Bangladesh has given due importance to this
SME sector by recognizing it as a thrust sector in the Industrial Policy 2005, formulating a
separate SME policy strategy 2005 and establishing SME Foundation. Bangladesh Bank has
already introduced several schemes and programs to flourish and expand MSME sector with
prioritize women entrepreneurs. Bangladesh bank has taken some crucial steps in stepping up
the process of enhancing access to finance by the SME sector development in 2009 by
creating a separate department named "SME and Special Programs Department (SPD)" and

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announcing specific guidelines and directives for the financial sector. The newly formed
SME and SPD are fully engaged in providing institutional support to SMEs. SME and SPD
efficiently manage several refinance funds under which refinance facility is provided for
small enterprises financing by banks and financial institutions (FIs). The refinance facility
gives special focus on small and women entrepreneurs and cluster development. Monitoring
Division of SME and SPD has been set up to ensure trilevel monitoring (BB head office,
branch offices and bank/FIs head office based integrated monitoring system) of SME
financing activities and figuring out the fact and figures of SME development. Recently,
SME and SPD went further by forming help desk from which SME clients can get advice and
guidelines about getting SME loans, submit their objections against any obstacle faced by
them while approaching for SME loans and suggest ideas regarding identifying and
developing clusters. The following specific guidelines formulated for compliance of the
banks and financial institutions for the development of SME sector are enumerated as
follows:
(i) Based on “area approach method” banks/financial institutions should try to attain their
indicative targets separately by dividing it into branch wise, region wise and sector wise.
(ii) Each bank/financial institution should follow a separate business strategy in financing
SME loan with least formalities in executing documentation to ensure easy and speedy loan
sanction and disbursement process.
(iii) Priority should be given to small entrepreneurs; particularly, priority should have to be
given to potential women entrepreneurs in respect of SME credit disbursement.
(iv) For small entrepreneurs credit limit will be ranged from Tk. 50,000 to 5 million.
(v) Banks and financial institutions should put highest priority in receiving loan application
from small and medium women entrepreneurs.
(vi) Each bank and financial institution should establish a separate ‘Women Entrepreneurs’
Dedicated Desk’ with necessary and suitable manpower, provide them training on SME
financing and suitably appoint a lady officer as chief of the dedicated desk.
(vii) Branch wise list of ‘Women Entrepreneurs Dedicated Desk’ should be sent to SME and
Special Programs.
(viii) Banks and financial institutions may sanction up to Tk. 2500000 to women
entrepreneurs against personal guarantee. In that case, group security/social security may be
considered.
(ix) The success in SME loan disbursement will be considered as a yardstick for further
approval of new branches of the concerned bank.
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4.5 Financial intermediaries support to MSMEs and women entrepreneurs
Micro, Small and Medium Enterprises of Bangladesh are a heterogeneous group of
agricultural and industrial subsectors. MSME includes crops, fisheries, livestock and poultry,
rural non-farm, agro processing farms, handlooms and handicrafts, wood and steel furniture,
cartwheels, footwear, plastic products, textile dyeing and block printing (manual), computer
software and information technology, silk weaving, small grocery stores, etc. This sub-sector
is facing acute problem of finance towards smooth growth. According to Chowdhury and
Raihan (2001) survey report, about 50% of MSMEs have no access to formal source of
finance. Only 35.79% of MSMEs are enjoying unrestricted access to the formal credit. The
rest (13.68%) of them have restricted access to the formal credit. Bank credit is used by small
percentage of entrepreneurs and provides financing of generally less than 20% of their total
outlay (Raihan, 2001). Realizing the importance of MSME sector, Bangladesh Bank
encourages financial intermediaries to provide financial support to MSMEs. Accordingly,
state commercial banks (SCBs), specialized banks (SBs), private commercial banks (PCBs),
foreign commercial banks (FCBs), and microfinance institutions (MFIs) have been engaged
in micro, small and medium enterprise (MSME) lending programs. Encouragingly, private
and foreign commercial banks are engaged partnership agreement with locally active MFIs.
In fact, Bangladeshi MFIs are the key providers of small credit to micro enterprises
particularly to women. These programs are mainly designed to create productive new on-
farm/off-farm employment. Hence, this section gives MSMEs financing statistics of various
financial institutions. Unfortunately, there is a lack of separate lending data for women
entrepreneurs. So, overall SMEs lending statistics are given below. However, microcredit and
microenterprise lending are discussed separately for both scheduled banks and MFIs as most
of the MFIs credit goes to women.

4.6 Challenges Of Women Entrepreneurship Development In Bangladesh

Despite some visible achievements toward women entrepreneurship development, there are
still many challenges ahead for smooth development of MSMEs entrepreneurs particularly
women entrepreneurs. These include:
Financial problem
Inadequate starting capital is one of the main problems for the women entrepreneurs in
Bangladesh. Generally, women start their business with limited capital accumulated from
family savings and the relatives and other sources. For bank loans women need to put

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collateral except those loans coming from MFIs. Unfortunately, they do not have enough
fixed capital to put as collateral or a guarantor to get a small loan from the bank. Hence,
government has to take some risk of distributing collateral free bank loan to the SME
entrepreneurs particularly for women entrepreneurs. On the other hand, bank charges around
13% for SMEs loans and 10% for women entrepreneurs which is higher compared to
neighboring countries (India charges 5 to 7%), thus making it difficult for the sustainability
of MSMEs in a competitive global market. It is suggested to have single digit bank interest
rate for MSMEs.
Lack of market information
Lack of market information is also one of the major

problems of women entrepreneurs. They lack of information on where, what price and when
the product should be sold. They do not know how to get domestic, as well as export market

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access. Even they lack knowledge of using market promotion activities. Thus, government
should take the lead in promoting MSME products at home and abroad.
Poor infrastructure and utility supply
Infrastructure facility is miserable in most rural areas of Bangladesh. The supply of electricity
and gas are not available in many rural and even sub-urban areas. Hence, existing MSMEs
are suffering badly due to load shedding of electricity and gas. So, government should
improve the infrastructure and utility services in considering the need of MSME sector.
Traditional technology
SME owners generally use local technologies to produce goods but these are not productive
enough to fulfill market demand, produce quality/ beautiful products to compete with the
international products available in the local market. As a result, SME entrepreneurs are losing
their livelihood due to poor technical know-how. Immediate actions should be taken for
replicating global success stories in SME sector of Bangladesh.

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 CHAPTER -5
Recommendations and Conclusion

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5.1 Recommendations:
Lack of skilled/trained manpower
There are no agencies, even not a single special institution in Bangladesh to produce qualified
graduates or trained manpower that can serve as entrepreneurs. Basically to create
entrepreneurs no hard and fast facility is required; but for an effective entrepreneurship
generation, entrepreneurship education is necessary. The statistics proves that Bangladeshi
labors are low productive (Abdin, 2010). So, training for the existing manpower is essential
for greater output.

Complicated bureaucratic procedures

Starting a manufacturing plant needs a series of license, registrations and clearances. For
example to start an SME requires: (a) Trade license issued by the local government office
(UP Chairman, City Corporation office), (b) trademark registration register by the Office of
Patent, Design and Trademark Register under the Ministry of Industry, (c) Tax Identification
Number (TIN) from NBR or Income tax office under Ministry of Finance, (d) value added
tax (VAT) registration from the same authority, (e) Membership of any trade body (district
chamber or sectoral association), (f) import registration certificate from Ministry of
Commerce, (g) environment clearance from the Ministry of Environment, (h) fire clearance
from the Fire Bridget and many more. Completing all these formality is not so easy and every
desk needs bribe for proper passing on of the file (Abdin, 2010). This time consuming and
corruption promoting system should be made easier.

SME support centers

Recently, banks and financial institutions opened SME branch or support centres but this is
not enough considering the growing need. A few consulting firms are providing consultation
services but with high charges. There should have more SME support centres to give advice
to the potential entrepreneurs on preparing project proposal, formulating marketing strategy,
designing products, upgrading products quality for the SMEs.

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5.2 Conclusion
Women entrepreneurship is not only a source of income generation but also a way of
achieving economic independence. Women that are involved in enterprise are better off
compared to those that are not. Realizing the importance of women entrepreneurship,
Bangladesh government has taken several initiatives to encourage women getting involved in
various micro, small and medium enterprises. Meanwhile, banks, financial institutions and
MFIs have also given importance to developing women entrepreneurs in Bangladesh. These
financial intermediaries provide credits to MSMEs sector particularly the women
entrepreneurs, in line with Bangladesh Bank guidelines. However, there is a greater lack of
integration among various supportive organizations and lack of communal efforts to have
sustainable benefits.
The remaining challenges are lack of collateral free loans, traditional technology, skilled and
trained manpower, training and educational institutions, and infrastructure and utility services
and so on. Hence, there should have rights policy adjustment, their proper implementation
and others necessary initiatives will pave the way for the emergence and development to
women entrepreneurs’ development in Bangladesh. These actions will not only contribute
significantly to national economy but will economically and socio-culturally empower
women assisting in their gender role liberalization.

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available at: http://theindependentbd.com/paperedition/ others/panorama/2385-
bangladeshs-smes-facing-so-manychallenges. html (accessed on 16 October, 2011).
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