Political Uncertainty Hits Bangladesh’s SMEs Hard

The cost of SME financing surged to 12.12% in December 2024, up from 6.17% in June 2023, as Bangladesh Bank raised interest rates to combat inflation. Small and medium enterprises (SMEs), which contribute 32% of GDP and employ 85% of the industrial workforce, are facing severe financial strain.

The expansion of women-led SMEs is strengthening Bangladesh’s poultry industry by boosting employment, production, and market competitiveness. On International Women's Day 2025, the Bangladesh Poultry Industries Central Council (BPICC) and the US Soybean Export Council (USSEC) highlighted the need to support women entrepreneurs and ensure adequate nutrition for their sustained contributions.

Loan disbursements to the CMSME sector dropped by 16% in the July-September quarter of FY25, falling to Tk 44,202 crore from Tk 52,654 crore in FY24, as per Bangladesh Bank data. Political instability, including protests and government unrest, contributed to the decline by dampening business confidence and investment.

Bangladesh's economic units, especially CMSMEs, face severe capital shortages, with 85.84% struggling to expand due to limited access to financing. The 2024 Bangladesh Economic Census reports that 34.41% of businesses lack access to loans, while 6.47 million out of 13.42 million economic units face capital shortfalls.

Pollution in the Balutikar canal in Sylhet has worsened due to untreated wastewater from factories in the Bangladesh Small and Cottage Industries Corporation (BSCIC) estates. Among 173 factories that discharge liquid waste, 10 have no effluent treatment plants (ETPs).

A study by the SME Foundation reveals that 57 percent of small and medium enterprises (SMEs) find Bangladesh's tax structure the most significant hurdle to conducting business lawfully, followed by issues with trade licence renewal (54 percent), trade licence costs (51 percent), and complex regulations (44 percent).