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Sme Financing in Bangladesh

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Sme Financing in Bangladesh contents 02 09-15 28-29 World Economic Cover Story Spotlight on Startup Indicator-March 2019 SME Financing in Bangladesh GARBAGEMAN Modus Operandi for sustainable growth in midst of challenges SMEs, being a backbone of economic 03 development, face distressing challenges 30-36 in accessing finance, so much needed for Startup Insight Month In Brief business growth. Financing gap is in severe state in Asia region, different studies by Why Mid-Level Managers from World Bank, OECD and other research Corporations Are Going for organization demonstrates that Asian region has the highest amount of financing Startups? 04 gap. Bangladesh is no exception from the Exclusive Interview: Economy At a Glance region having a total of financing gap of USD 1.28 billion. The gap is higher for the • Bijon Islam, Cofounder and CEO women owned enterprise in Bangladesh. of LightCastle Partners • Mustafizur Rahman Khan, 05 Founder & CEO, Startup Dhaka. Research In Focus 16-26 Exports to Jobs: Boosting the Gains EXCLUSIVE INTERVIEW from Trade in South Asia • Shaikh Md. Salim, General Manager, 37 Bangladesh Bank Bangladesh being strong in export growth • Ahmed Rashid Joy, GM and Head of For the Record SME at IDLC Finance Ltd. • A.K.M. Shahidul Hoque Khandaker, Senior Vice President & Head of SME, Islami Bank Bangladesh Limited 06-07 • Syed Abdul Momen, Head of SME, 38 BRAC Bank Idea Watch Financial Literacy • The Best Ways To Use Social Things to Know about Credit Card www.nymphea-bd.com Media To Expand Your l Network 27 • Why CEO’s devote So Much IDLC News nymphea Time to Their Hobbies? • IDLC approves 35% cash 39-44 dividend at its 34th AGM Capital Market Review Design & Printing: All rights reserved. No part of this journal may be reproduced in any form, by print, photoprint, microfilm or any other means without written permission from the publisher. FROM THE EDITOR Boosting SME lending: the need of an hour for Economic Growth Bangladesh made its place among the top three are scattered all across the country and are unstructured fastest growing economies of the world, with 7.3% in terms of account management. Therefore, GDP projection, equivalent to India, according to underwriting of SMEs is expensive and time-consuming International Monetary Fund (IMF). The growth is since the cost and underwriting process for all borrowers mainly ascribed to manufacturing industry, where SMEs (irrespective of size and value) are similar. FIs can come have 45% value addition. SMEs in Bangladesh, the up with scoring models for SME businesses by deploying “employment-generation hub” of the economy, accounts technology leveraging on the huge set of customer data. for 30% (Economic Survey, 2013) of the total labor Also, more than just funding, small businesses require force. This phenomenon gives the Financial Institutions business management tools and advice on how to a clear insight of the gravity of empowering SMEs by diligently manage working capital and FIs are the best fit creating adequate lending opportunities. Also, policy- to help them out in this scenario. level initiatives like credit guarantee scheme, refinance scheme and so on by Central Bank reinforces financing Lastly, this is worthy to mention that the whole financial access for SMEs. industry played a crucial role in building SME ecosystem and educating the market at this level, with prudent Banks/FIs deserve accolades for expanding their SME guidance from the Central Bank. Now, expanding the portfolio over the past years and thus exceeding the SME SME market reach in a low cost manner, by deploying disbursement target given by the Central Bank. However, technology should be the priority of Banks or FIs. the financial industry is still saddled with some concerns when SME lending is in question. Banks find it hard to Adnan Rashid consider SME loans as a core focus segment because of Assistant General Manager the higher cost of monitoring and underwriting, as SMEs IDLC Finance Limited INDUSTRY & EQUITY ANALYSIS TEAM ASIF SAAD BIN SHAMS ADNAN RASHID MD. KAMRUL ISLAM Email: [email protected] Email: [email protected] Email: [email protected] SUSHMITA SAHA FAHIM FAISAL TAMJID YAMEEN Email: [email protected] Email: [email protected] Email: [email protected] * NUZHAT ISLAM NAZMUS SHAKIB UL ISLAM MD ROKNUJJAMAN Email: [email protected] Email: [email protected] Email: [email protected] * IDLC MBR team conducted IDLC ThinkTank- Spring Research Associate Program in North South University where the Spring Research Associates are selected through case competition. WORLD ECONOMIC INDICATOR-MARCH 2019 Current Account Currency Unemployment Interest Country CPI (%) Balance Units Rate (%) Rates (%) (% of GDP 2018) (per USD) Frontier Market Argentina 50.7 9.1 -4.7 11.3 37.1 Sri Lanka 127.1 4.4 -5.1 7 175.47 Vietnam 110.85 3.18 0.5 4.8 23199.5 Bangladesh 5.3 4.3 -1.1 5.26 84.03 Emerging Markets Brazil 3.9 12 -0.8 7.5 3.71 Colombia 3 12.8 -3.2 6.7 3,132 Mexico 3.9 3.4 -1.6 8.7 19 Egypt 14.3 8.9 -1.1 - 17.9 Poland 1.2 6.1 -0.4 2.8 3.75 Saudi Arabia -2.2 6 8 - 3.75 India 2.6 7.2 -2.8 7.6 71 Indonesia 2.6 5.3 -2.8 8 14,093 Malaysia -0.4 3.3 2.3 4.1 4.11 Phillipines 3.8 5.2 -2.4 6.5 52.1 South Africa 4.1 27.1 -3.1 8.8 13.8 Turkey 19.7 13.5 -4.6 16.1 5.44 Thailand 0.7 1 6.8 2.2 31.9 Russia 5.2 4.9 5.6 8.4 66.9 Developed Markets France 1.3 8.8 -0.8 0.6 0.87 Germany 1.5 3.2 7.6 0.2 0.87 Italy 1 10.5 2.6 2.8 0.87 Spain 1.1 14.1 1 1.4 0.87 Hong Kong 2.1 2.8 2.3 2 7.84 Singapore 0.5 2.2 19.1 2.2 1.35 Denmark 1.1 3.7 6.2 0.2 6.53 Netherlands 2.6 4.3 10.3 0.3 0.87 Australia 1.8 4.9 -2.4 2.3 1.39 Switzerland 0.6 2.4 9.6 -0.1 0.99 2 of 44 MONTH IN BRIEF Per capita income hits USD Exports Overseas jobs 1,909 to US soar drop by 23% 1,909.00 by 17.78% for Bangladeshi workers in Jan- to USD4.59 Feb period, 940.00 billion in July- during which 420.00 Feb on US- Bangladesh sent 240.00 320.00 120.00 China trade 109,607 workers. FY 1972 FY 1982 FY 1992 FY 2002 FY 2012 FY 2019 war. Mobile Country’s Bangladesh Bangladeshi subscribers first three Post Office companies increased years T bond brings Nagad, paid BDT 197 by 8.94 lakh based on crore in digital advertisement bills in February, interest rate heating up to global internet increasing total determined by the MFS giants. mobile phone the market is market. subscribers to launched in the 15.84 crore. market. Deposit growth falls despite high High China and interest production cost India grab huge Deposit Growth a bar to ceramic local helmet 12.73 exports. Raw market amid 12.58 12.5 materials have operations 12.05 minimum of different 27–87% duties 11.59 ridesharing including services and customs, a comparative regulatory and tightening of supplementary traffic rules. duties. 3 of 44 ECONOMY AT A GLANCE Remittance inflow up Private investment BDT 6,002.85 was 23.4% of GDP for crore net sales of 9.31% saving certificates in fiscal year 2018-19 y-o-y in July-January 2019 January EXPORT-IMPORT INFLATION (USD in million) 6.50% 6.18% 5,546 5.97% 6.00% 5.90% 5,160 5,081 5,079 5.45% 4,744 5.49% 5.45% 5.50% 4,458 3,711 5.00% 5.42% 5.29% 5.28% 3,581 3,421 3,426 5.08% 3,213 3,145 4.50% 4.73% 4.49% 4.00% 3.50% 3.00% Jul 18 Aug 18 Sep 18 Oct 18 Nov 18 Dec 18 Jul 18 Aug 18 Sep 18 Oct 18 Nov 18 Dec 18 Non-food Inflation (point-to-point) Food inflation (point-to-point) Export Import REMITTANCE SECTOR-WISE EXPORT (USD in million) 13.80% 13.87% 2.59% JAN 19 1,590 3.33% DEC 18 1,206 41.67% 41.03% NOV 18 1,180 OCT 18 1,239 41.94% 41.77% SEP 18 1,139 AUG 18 1,411 July-December 2018 July-December 2017 Knitwear Woven Garments Leather Others 4 of 44 Exports to Jobs: Boosting the Gains from Trade in South Asia Bangladesh being strong in export growth RESEARCH IN FOCUS Bangladesh went through 56% population increase from 106 million in 1990 to 166 million people Insight of Bangladesh’s in 2018. The rate will be lower than the growth Export Sector of working age population growth in near future. In Bangladesh labor force participation rate Exports grew steadily from 3.4 declined from 60 to 58 percent, which indicates to 20.2 % of GDP between 1984 and 2012 that Bangladesh needs additional labor force. Bangladesh managed to improve the gender balance Imports surged from 13 to 28 % with increase of women’s participation in different of GDP sector. Female LFPR rose from 23 percent in 2005 to 36 percent in 2015. Exports as a share of GDP dropped According to it, increasing exports per worker in to 16% by 2016 South Asia would result in higher wages for workers Bangladesh’s apparel export generally found in the formal sector and falling informality for many marginalized groups.
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