SMEs, sustainable rural development and local authorities






Traditionally, rural development in Bangladesh has been broadly defined as agricultural dependency, and the agricultural sector has remained an important part of rural development in Bangladesh to this day. Moreover, rural development is essentially complementary to the fight against poverty. The Government of Bangladesh has provided various types of financial assistance to the rural people since independence to ensure the sustainability of agricultural development and poverty alleviation activities. In a developing country like Bangladesh, where about 62% of the population lives in rural areas, they face various problems that negatively impact the economic growth of the country.

Rural development programs are visible through the various initiatives and approaches of community organizations, including NGOs. The history of small and medium enterprises (SMEs) in Bangladesh is long. In ancient times, Bengal was rich in various small cottage industries as well as trade and commerce. After Bangladesh’s independence in 1971, all successive governments made changes in trade and industrial policy.

At present, the SME sector has become an important sector for the economy of Bangladesh. Because about twenty-five percent of jobs are created by this sector. Currently, the wave of SMEs has hit the rural economy and SMEs are emerging as a promising sector in rural Bangladesh. SMEs are particularly suitable for densely populated countries like Bangladesh, as SMEs can guarantee a lot of jobs with much less investment.

SMEs are now considered an important sector in the economic development of the country. This sector has incredible potential for expansion in rural areas to drive economic growth by tackling the problem of unemployment in rural areas of Bangladesh. Unfortunately, SMEs are not growing in rural areas of Bangladesh due to limited access to real finance, lack of capital and skilled labor, poor training facilities, under-served sales channels. developed and low financial inclusion.

Sustainable development can be seen as an integrated program and fundamental policy aimed at addressing economic, social and environmental challenges. Achieving the SDGs requires relevant development priorities and programs where local governments are best placed to implement policies and programs to deliver improved services that can reduce poverty, reduce inequality, promote climate vulnerability and promote gender equality. Grassroots participatory local government is key to achieving the SDGs, especially in poor and marginal areas. The multi-stakeholder approach should be followed for sustainable rural development through the expansion of SMEs. The approach refers to collaborative efforts for the development and implementation of the proposed action plan. Like the SDGs, the localization plan for SMEs will be a quick and effective remedy to deal with the effects of Covid-19 in the medium and long term.

A clear institutional framework with participatory processes and regular financial negotiations at all levels in developing countries is crucial for integrating SMEs into rural development processes and initiatives. A clear institutional structure with management and planning capacity, a participatory process and regular financial discussions between government and local people are key to prioritizing the SDGs and establishing work plans accordingly. Innovative and holistic strategies should be encouraged to develop SMEs and provide an enabling environment for income generation and employment opportunities for the poor, as well as helping to link the rural economy to the market.

Additional training should be provided by the Department of Youth Development to build the skills of rural people for SMEs to grow. In order to incentivize investors to set up and operate rural SMEs in Bangladesh, they need exemplary changes in government to facilitate physical infrastructure (roads, electricity and others). The public sector must ensure an enabling environment so that local investors are encouraged to engage in SMEs.

Moreover, the popularization of PPP (Public-Private Partnership) for the expansion of SMEs is essential to contribute to sustainable development in rural Bangladesh. A multi-stakeholder approach to sustainable rural development should be followed in the expansion of SMEs. In addition, it is important to involve the local population in the development and implementation of policies – from the village level to the national and regional level -.

Public banks, especially agricultural banks, encourage SMEs to lend to promising investors with minimum interest rates. Similarly, the National Board for Industrial Development, National Board for Industrial Development, Bangladesh Small and Cottage Industries Corporation (BSIC) and the SME Foundation should work together for the localization of SMEs to create more jobs. The SME Foundation can play a coordination role.

Our local government agencies must be proactive in encouraging local people to develop small and medium enterprises. They should ensure an enabling environment in their areas and coordinate with relevant offices at the Upazila level as well as public and private credit institutions to provide better services to entrepreneurs. Local government representatives should work actively to activate public-private partnerships.

Above all, my suggestion is to form an SME expansion committee involving a number of people from different professional backgrounds in each Union Parishad to get the best return on small and medium investments in rural Bangladesh. The committee, headed by the relevant president of the UP, will meet at least once a month to address issues facing small and medium entrepreneurs. In this way, we can go further in achieving the Sustainable Development Goals under the leadership of the local government of Bangladesh.

Dr. Mohammad Tarikul Islam is Associate Professor of Government and Politics at Jahangirnagar University. He has been a visiting scholar at Oxford University, Cambridge University and SOAS (University of London). [email protected]

About Keneth T. Graves

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