Micro-Entrepreneur Role in the Social and Economic Development of Bangladesh

Our country experiences several social, political, economic and environmental issues. These issues need to be addressed for the overall development of this country.

However, economic development is one of the prime factors, which can resolve many of its current problems. The growth of our micro-merchant businesses provides great opportunities for Bangladesh for further development.

Microentrepreneur plays an important role in social and economic development in Bangladesh. They play as a

• Wealth and Job creator.
• Helps in balancing Regional Development.
• Increasing GDP and Per capita income.
• Helps in improving the standard of living.
• Helps in developing a community.

Sketch of the Blog:

Socio-economic situation of our country needs simultaneous improvement in both social and economic perspectives. This can be identified through a number of social and economic indicators, including

• GDP growth,
• Poverty issues,
• Employment,
• Healthcare,
• Environment,
• Education,
• Trade, and
• Commerce etc.

The contribution of our entrepreneurs is playing a significant role in the development of this country.

However, some changes need to implement for the overall development of the merchant business.

Micro-entrepreneurs are now holding a large number of enterprises creating employment, fastening the speed of economic growth of our country. They are making social empowerment, in-spite of playing a significant role.

They work, as an individual who is thriving for economic independence, generates self-employment and opportunities for others. This all is done through initiating, establishing and running an enterprise by keeping pace with the vision.

Government action for developing entrepreneurship in Bangladesh is now a current need for reducing poverty.

More than 1.3 million micro-merchants operate in Bangladesh and almost 50,000 people enter the area each year.

Now some question can arise, such as:

Who are they?

A typical micro-merchant are mostly male. The average age of them is 38 and has been in business for nine years or less. Among them, 35.2% are youth micro-merchant age between 16 to 30.

65% of them are completed conventional primary education and can read in Bangla. 84% of them are married and have 9 years average period of experience in the business.

Their businesses are most commonly small neighborhood kiosks, shops or stores.

Their monthly sales ranging from $436 to $3,195.

In the past, the majority of micro-merchants came from student backgrounds.

But in recent years there has been a growing influx from other sectors entering the retail business.

How do they manage money and businesses?

Among 10, 6 of them had a trade license at some point, meaning that they were formalized businesses at some point.

However, micro-merchants are not leveraging any formalized structure to access formalized services such as bank loans, nor are other sectors leveraging micro-merchant segment to expand products and services.

Their initial source of investment comes from friends and family.

They are mainly sole proprietor and runs the business from a rented shop.

8% of them took loans from banks, 42% of them took a loan from MFIs and 85% does not keep any financial accounts of business expenses. But now the situation is now being changed.

Now they have:

• The greater amount of credit.
• More financial management training.
• A better understanding of marketing.
• Greater integration with FMCGs and Financial Sectors.

Are they digitally connected?

Almost all micro-merchants have mobile phones, and of those with phones, 3 in 10 micro- have a smartphone.

This number is likely to increase as smartphones become more affordable.

Currently, micro-merchants use smartphones to browse the internet and use social media. But in the future, this technology could be used to manage

• Business accounts,
• Accept payments from customers,
• Transact between businesses and people, as well as
• Pay suppliers and manage orders.

Micro-merchants are aware of digital financial services, especially mobile financial services (MFS). They appreciate the convenience of sending and receiving money through MFS.

However, only 3 in 10 micro-merchants are currently having an MFS account, with a very few using MFS to pay suppliers as the suppliers do not accept payments this way at the present time.

This appears to be a business opportunity with room to further digitize payments between businesses.

Role in Social and Economic Growth:

Microentrepreneur role in our social and economic development is immense.

They play as a:

Wealth and Job Creator:

1.3 million micro-merchants working in the Fast Moving Consumer Goods (FMCG) retail sector in Bangladesh. Retail micro-merchants represent an enormous market force, with a total market size in annual sales turnover of US$ 18.42 billion,

The retail sector as a whole represents 13 percent of the country’s GDP. Small and seemingly insignificant on an individual level. Micro-merchants as a group account for a substantial part of Bangladesh’s economy and provide an important source of employment and income for millions.

Helps in Balancing Regional Development:

Entrepreneurs new businesses help the regional development of our country, by locating in less developed and backward areas.

The growth of business in these areas leads to support improvements like

• Better roads and rail links,
• Airports,
• Stable electricity and water supply,
• Schools,
• Hospitals,
• Shopping malls, and
• Other public and private services.

Every new business that locates in a less developed area will create both direct and indirect jobs, helping lift regional economies in many different ways.
Which is to say,

The retail sector is poised to become the next booming sector in Bangladesh.
The micro-merchant segment of the retail sector is burgeoning, with an annual turnover of $18.42 billion in 2018.

Almost 2 million people are directly involved in micro-merchant businesses. And almost 50,000 people are entering this area each year. That suggesting increasing entrepreneurship and employment opportunities for Bangladesh.

Below picture will serve to better understand the present scenario:

Increasing GDP and Per Capita Income:

The retail sector scenario is changing. The sector which was assumed to have a little scope for expansion. But now it has contributed an average of 13 percent GDP each year since 2012/13.

Retail sector now becomes comparable with the RMG industry. RMG grew an average of 12.84 percent annually from 2007 to 2006.

This two sector provides employment for the people, who are unemployed and become a burden. The more people involved in micro-merchant, the more use of capital resources such as land, labor, capital will be increased. The resources are used for the development of products and services. It essentially adds value to the national income and national product and per-capita income of our country.

Advancing the standard of Living:

Increase in the standard of living of people in a community is yet another key goal of economic development. Micro-Entrepreneurs play a key role in increasing the standard of living in a community.

In society, entrepreneurship is important for the economic development of a country.

It opens up new roads for creating employment opportunities for women and men.
It is a matter of great encouragement that, a good number of women and men are contributing to the economic progress of Bangladesh. And making them involved in medium and small enterprises.

They do this not just by creating jobs, but also by developing and adopting innovations that lead to improvements in the quality of life of their

• Employees,
• Customers, and
• Other stakeholders in the community.

Helps in Developing the Community:

Micro-entrepreneurs work toward to build a better community for society.

Micro-merchant likely conducts millions of transactions with customers on a daily basis. As they are presenting everywhere, micro-merchants are becoming more instrumental in accessing millions of customers as well as developing brand and customer loyalty. Industries are increasingly looking at these micro-merchants to access a vast untapped customer base.

Conclusion:

Micro-entrepreneurs are an important source for our country. For the growing sector of Bangladesh economy- they are an economic force.

Yet it is a sector that needs action to stimulate its further growth and development.

Below some recommendations are provided to support this sector:

• Leverage micro-merchant to build brand loyalty and reach last-mile customers.
• Make them know they are valuable actors in the FMCG supply chain.
• Expand credit to micro-merchant.
• Improve understanding of the benefits of mobile financial services merchant accounts.
• Try to resolve the common risks that become a barrier in their growth.
• Involve more women in the micro-merchant industry. Because “No struggle can ever succeed without women participating side by side with men.”
• Manage training for micro-merchant.
• Promote the digitization of business.