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Handicraft makers struggling for capital shortfall: survey
MD ASADUZ ZAMAN
More than 82 percent of the handicraft makers in Bangladesh are struggling to run their activities due to a capital shortage, according to a survey by the Bangladesh Bureau of Statistics (BBS).
Local handicraft industries are mainly based in households but a few have separate establishments.
Of them, around 85 percent of those in separate establishments are facing a capital shortage.
The BBS yesterday released the findings of its survey, styled “Survey of Handicraft Establishments 2022”.
The study was conducted on 7,310 handicraft factories across the country from December 2022 to January 2023.
It also found that around 24 to 46 percent of handicraft makers are facing challenges for a lack of buyers, economic recession, marketing problems, and higher raw material and labour costs.
Around 1.48 lakh people are engaged in the handicrafts industry, with roughly 56 percent of them being female. Of the total workforce, 95.8 percent belong to household-based units while 4.2 percent work at separate establishments.
Two-thirds or 66.5 percent of the respondents opined that handicrafts is their main occupation while the rest 33.5 percent said it is their secondary source of income.
Md Mafizur Rahman, managing director of the SME Foundation, said banks in the country are notably reluctant to lend to small entrepreneurs like handicraft makers.
Like other small entrepreneurs, handicraft makers also have to arrange guarantors and trade licences as well as their business records in order to secure funds.
“So, in absence of these documents, most banks show reluctance in lending to them,” he said.
Rahman also said the SME Foundation is doing its best to provide small entrepreneurs access to finance.
“But we have limitations in lending capital,” he added.
On average, the industry’s employment cost stood at Tk 1.35 lakh in 2022. About Tk 1.32 lakh was paid by household-based units while Tk 2.66 lakh came from separate establishments.
Overall, the total employment cost was Tk 996.5 crore that year.
Selim Raihan, an economics professor at the University of Dhaka, said the lack of access to finance is a big issue for small entrepreneurs like handicraft makers.
“A huge number of small-and-medium enterprises (SMEs) cannot properly avail banking services from the country’s formal financial sector as they cannot afford the proper documentation,” he added.
As a result, they are usually compelled to take loans from various non-government organisations (NGOs) with higher interest rates.
“But ensuring it [formal banking for SMEs] is very crucial for the country’s inclusive growth,” said Raihan, also executive director of the South Asian Network on Economic Modeling.
With this backdrop, he suggested the government go for partnerships with NGOs to lend to small entrepreneurs with lower interest rates.