SME Sector: Lack of policy backing stifles youth-led startups

Muhammad Ayub Ali :

Imma Fahima, a graduate of Jagannath University, once envisioned building her own business. Driven by determination, she enrolled in several training programmes run by the SME Foundation and showcased her products at two SME fairs. Yet, despite her efforts, her entrepreneurial dream faltered – not for lack of ambition, but due to limited institutional support and discouragement at home.

Imma’s story is emblematic of a broader issue confronting aspiring young entrepreneurs across Bangladesh. While the ambition to launch businesses is growing among the youth, many are hindered by systemic obstacles such as inadequate training, lack of mentorship, weak access to finance, and insufficient market linkages.

Experts warn that these structural barriers are fuelling the country’s persistent youth unemployment crisis. According to the International Labour Organization (ILO), youth unemployment in Bangladesh is more than double the national average. Data from the Bangladesh Bureau of Statistics (BBS) shows that total unemployment reached 2.66 million in the third quarter of last year – an increase of 170,000 compared to the previous year. Among the unemployed, 1.79 million were men and 870,000 women.

The problem is particularly acute among educated youth. BBS figures indicate that the unemployment rate for graduates and postgraduates has surged to around 11 per cent, far exceeding the national average of 4.2 per cent.

Anwar Hossain Chowdhury, Managing Director of the SME Foundation, highlighted the urgency of the issue. “Each year, around 2.1 million young people enter the job market, but approximately 800,000 of them remain unemployed,” he said.

Despite these challenges, small and medium enterprises (SMEs) remain one of the most viable avenues for job creation and inclusive economic growth. In Bangladesh, SMEs contribute 28 per cent to the GDP and account for 85 per cent of industrial employment. Yet, this represents the lowest SME contribution in South Asia. By contrast, SMEs contribute 40 per cent to GDP in Pakistan, 52 per cent in Sri Lanka, 37 per cent in India, and 60 per cent in China.

Economists argue that Bangladesh’s SME sector holds significant untapped potential, particularly for youth empowerment. However, unleashing this potential requires more than rhetoric – it demands robust action.

Key interventions include tailored training, simplified financing schemes, targeted mentorship programmes, and enhanced access to markets. Integrating digital tools, reforming regulatory frameworks, and offering incentives – such as tax relief and exclusive product expos-are also seen as essential measures.

“Bangladeshi entrepreneurs need coherent policy support and sector-specific skills training to succeed,” said Mirza Nurul Ghani, President of the National Association of Small and Cottage Industries of Bangladesh (NASCIB). “Assistance must be practical and aligned with the real challenges faced by new entrepreneurs.”

Economist Muinul Islam echoed these concerns, noting that the contribution of the cottage, micro, small, and medium enterprise (CMSME) sector to the national economy remains limited. “We must enhance its impact through fiscal incentives, better market access, and more platforms to showcase SME products,” he said.

With the caretaker government signalling a focus on employment generation and entrepreneurship, many believe this is a pivotal moment to reform the SME ecosystem. If young visionaries like Imma Fahima are equipped with the right tools and support, they could play a transformative role in reducing youth unemployment and driving the country’s economic future.