DHAKA, July 4, 2024 (BSS) - The SME Foundation and Oxfam in Bangladesh have signed a Memorandum of Understanding (MoU) for SMEs to empower their businesses, promote and influence the ecosystem, and enhance financial inclusion to strengthen Bangladesh's SME sector, which covers 90 per cent of all enterprises.

According to the Bangladesh Bureau of Statistics (BBS), an estimated 7.8 million SMEs in Bangladesh comprise 25 percent of the total labour force and 80 percent of industry employment.

The MoU, signed at the SME Foundation in Dhaka today, marked a significant step towards enhancing business support services and entrepreneurship development programmes for SMEs, said a press release.

By leveraging the expertise, both organizations will provide SMEs, particularly at the incubation and growth stages, with essential awareness and skills on entrepreneurial business and financial management, digital and physical market integration and available financial sources.

Prof. Dr. Md. Masudur Rahman, Chairperson of SME Foundation, expressed his optimism about the partnership, saying, "This MoU marks a significant step forward in our mission to support the growth and sustainability of SMEs in Bangladesh."

"By working with Oxfam, we will provide comprehensive support to SMEs, helping them overcome financial barriers and achieve long-term success." he added.

This initiative aims to enhance SMEs' transparency and traceability, making them more appealing to commercial lenders.

A key focus will be on supporting and piloting youth-inclusive financial business models. Leveraging the SME Foundation's extensive network with pioneering lenders, the collaboration will facilitate financial integration for target populations.

For instance, the SME Foundation's Incubation and Acceleration Programme, with centers in Dhaka and Chattogram, will be collaborating with Oxfam's Social Incubation and Acceleration Programme to help young innovators pursue entrepreneurial careers, fostering a new generation of business leaders.

Ashish Damle, Country Director of Oxfam in Bangladesh, said, "SMEs play a crucial role in reducing poverty and driving economic growth in Bangladesh. Through this partnership, we aim to create an enabling environment for SMEs, particularly those led by young entrepreneurs, women, and marginalized communities."

"Our joint efforts will contribute to a more inclusive and resilient economy," added Ashish.

Recognizing the financial challenges SMEs face, the partnership will connect financial institutions (FIs) with SMEs using alternative credit scores and market linkages to extend affordable and adequate credit to deserved clients.
 
The collaboration will focus on strengthening business support services, piloting youth-inclusive financial models, advocating for better SME funding policies, and connecting FIs with the SMEs.

Despite Bangladesh's progress in poverty reduction and economic growth, many, especially in rural areas, remain below the poverty line.

The release said SMEs can drive economic development and improve livelihoods. The SME Foundation and Oxfam aim to support SMEs and address their challenges to foster sustainable and inclusive growth.