PKSF's role extends far beyond financing. It works to strengthen the entrepreneurial capabilities and facilitate market linkages.
"We work to strengthen entrepreneurial capabilities, facilitate market linkages and improve the long-term sustainability of businesses, aligning closely with the government's broader objective of building a vibrant CMSME sector", said Md Fazlul Kader, Managing Director of the Palli Karma-Sahayak Foundation (PKSF).
One of the defining features of our model is blended financing.
As one of the world's largest microfinance support institutions, PKSF has learned that sustainable enterprise development cannot be achieved through credit alone. Financing must be complemented by technology adoption, market access, productivity enhancement and capacity building.
He said: "Our skills-development programmes have reached hundreds of thousands of people through initiatives such as the RAISE project and other specialised interventions.
The training goes beyond technical skills to include branding, marketing, product certification, quality assurance and market expansion, he went on.
This integrated approach has gained recognition both nationally and internationally.
Delegations from several countries visited value-chain intervention programmes and expressed interest in replicating aspects of the model.
The most pressing challenge is that many entrepreneurs remain trapped in what economists call a "low-equilibrium trap", a development theory which explains how underdeveloped economies remain stuck in a cycle of poverty.
He firmly believe the challenge of such trap cannot be addressed through credit alone.
"Entrepreneurs need a combination of financial and non-financial support, backed by a conducive macroeconomic environment".
At present, most financing available to the sector is debt-based. Interest rate structures are often not supportive of enterprise transformation or expansion.
"When entrepreneurs attempt to adopt new technologies or enter new markets, they are typically required to shoulder most of the risk themselves. Unsurprisingly, many become risk-averse".
He went on: "As a result, entrepreneurs frequently choose low-risk, low-return activities. Their incomes may increase marginally, but those gains are often insufficient to generate meaningful capital accumulation or business expansion".
The PKSF chief said that to break this cycle, Bangladesh must invest more heavily in value-added economic activities. New opportunities need to be created, and people must be equipped with the skills required to participate in higher-value sectors.
He said: "This requires greater investment in skills development, technology transfer, removal of value-chain bottlenecks and the development of new industries.
The experiences of countries such as South Korea and China show that successful enterprise development requires coordinated action by multiple public institutions by adding "In our country, the lack of coordination remains a significant constraint".
He said building a successful enterprise frequently requires support from local government authorities, financial institutions, training providers, quality-control agencies, law enforcement bodies and utility providers.
In practice, six or seven institutions may need to work together to support a single initiative.
"for examples, take tourism-based clusters built around street food, handicrafts or terracotta products. Financing alone is not enough. Entrepreneurs also require land allocation, utility services, security, licensing, food safety compliance and quality assurance".
Unfortunately, many institutions continue to operate in silos. In many cases, overcoming this coordination deficit may be even more important than expanding access to finance, the PKSF MD said in dismay.
Public discussion often focuses on SMEs as a whole. However, greater attention should be given to cottage and microenterprises (CMEs), which are the segment where PKSF primarily works.
He said: "We have long advocated treating CMEs and SMEs as distinct categories. Although Bangladesh Bank currently groups them under the CMSME framework, they operate in very different environments and face different challenges. We understand that the central bank is actively examining this issue".
The CME sector plays a pivotal role in Bangladesh's economy, accounting for roughly 54 per cent of total employment. Yet challenges remain in terms of productivity, job quality, technology adoption and market access.
Microenterprises should be viewed as the nucleus of broader value chains because of their extensive forward and backward linkages.
Rather than viewing the sector merely as a source of low-income employment, policymakers should recognise it as a potential engine of inclusive growth and quality job creation.
Bangladesh cannot achieve sustainable development without bringing women fully into the economic mainstream. Similarly, the country's demographic dividend presents a significant opportunity.
PKSF is to improve youth employability and entrepreneurship, it has implemented several specialised programmes, including the RAISE project. While the average entrepreneur is typically 34 or 35 years old, participants in the RAISE project have an average age of only 20 to 21.
Women also play a dominant role in our programmes. More than 90 per cent of PKSF's financing beneficiaries are women, while nearly 70 per cent of the entrepreneurs supported through our initiatives are female.
He said women's participation in business management is also rising. Around 22 per cent of women entrepreneurs are now directly involved in managing their enterprises, a significant increase from previous years.
"If Bangladesh can provide women and young entrepreneurs with the right skills, technology and market access, they can become one of the country's most powerful drivers of economic growth and employment generation".
On digitalisation he said: "We want to harness digital technology to transform the sector".
Digital systems can generate valuable insights into entrepreneurs' business behaviour, transaction patterns and financial capacity. Credit-scoring mechanisms can help assess borrowing capacity and business viability far more accurately.
"Our long-term vision is to create a system where entrepreneurs can access financial services directly through their digital devices and eventually complete much of the loan approval process themselves".
As businesses increasingly operate through digital merchant accounts, transaction data can be analysed automatically.
"Credit scores can then be generated based on repayment histories, business growth and transaction records".
This would make financing decisions more objective, transparent and efficient. Entrepreneurs would gain easier access to finance while avoiding excessive borrowing and unnecessary costs.
Bangladesh Bank's recent initiatives to expand digital transactions are important steps in that direction, he said.
"We are increasingly supporting green and circular-economy initiatives".
Projects involving textile and leather waste recycling in Bhairab, as well as plastic recycling initiatives in different parts of the country, have already received national recognition.
Our objective is simple: convert waste into wealth while creating environmentally sustainable business models, he explained.
"We are also promoting affordable wastewater-treatment technologies. Today, a commercial effluent treatment plant can be installed for around Tk2.0 million, creating new opportunities for microentrepreneurs while improving environmental compliance".
jasimharoon@yahoo.com