An Enquiry into the Role of Small and Medium Enterprises for Sustainable Development of Bangladesh

Abstract

The development of Small & Medium Enterprises (SMEs) in developing countries is generally believed to be a desirable end view of their perceived dominant source of industrial employment. In the context of Bangladesh, the development of Small & Medium Enterprises (SMEs) can be considered as a vital instrument for poverty alleviation and ensure the rapid industrialization. Small & Medium Enterprises are accounting for 25% of GDP and 25% of the total labor force in Bangladesh. The actual Performance of SMEs however varies depending on the relative economic efficiency, the macroeconomic policy environment and the specific promotion policies pursued for their benefit. The performance of SMEs of Bangladesh in terms of employee turnover rate, quality assurance, allocation of funds, marketing activities have been found significantly below the international standard. There are various constraints that hinder the development of SMEs in Bangladesh such as medium to long term credit, limited access to opportunities, technology, expertise, lack of training and business information, lack of suitable incentives, inefficient and limited services from relevant government agencies as well as poor capacity of entrepreneurs are other reasons for slow growth of SMEs. Obviously, the government has many things to do to flourish the SMEs because if they flourish the SMEs will create new entrepreneurs, generate more jobs and contribute a great extent to the national economy. This paper is an academic analysis in the light of the performance and consequences of SME activities as well as the factors that affect the performance of SMEs. SME loan program launched by the financial institutions have been able to keep impacts upon the rural & urban society of Bangladesh. Development of SME sector might have probably kept significant impacts in creating economic growth and social structure suitable for sustainable development of rural and urban society in Bangladesh. This study therefore reveals a new dimension of the impact of SME activities on sustainable socio-economic development of Bangladesh as well as environment friendly development. This study has explored the policy patterns & contributions of the financial institutions, constraints & success of the SME system and also it has proposed some recommendations to extend the SME in Bangladesh for the sustainable socio-economic development as well as environmental sustainability.