Dr Matiur Rahman

World MSME Day 2025, observed on June 27, arrives at a pivotal moment in the global economy. It precedes two landmark events: the Fourth International Conference on Financing for Development (FfD4) in Sevilla and the Second World Summit for Social Development in Doha. Both of these conferences are poised to redefine international strategies in financing and inclusive social development. Against this backdrop, the theme for this year—Enhancing the Role of Micro-Small and Medium-sized Enterprises (MSMEs) as Drivers of Sustainable Growth and Innovation—resonates with urgency, especially for developing economies such as Bangladesh. With the global economic order undergoing seismic changes, the spotlight on MSMEs reflects a growing recognition of their indispensable role in shaping resilient, equitable, and sustainable societies.

In Bangladesh, MSMEs are more than just economic units—they are engines of employment, community resilience, and innovation. From bustling garment workshops in Narayanganj to rural cottage industries in Jessore, these enterprises form the pulse of the national economy. The Bangladesh Bureau of Statistics estimates that MSMEs contribute nearly 25 per cent to the country’s GDP and absorb over 80 per cent of industrial employment. They are the first job providers for youth finishing school, the lifeline for women entrepreneurs seeking economic independence, and the platform for marginalised communities to enter the financial mainstream. MSMEs are particularly instrumental in reducing rural-urban income disparity, as they often thrive outside the major cities and in traditionally underserved areas.

Yet, the promise of MSMEs is clouded by structural and systemic hurdles. A significant proportion of Bangladeshi MSMEs operate informally, lacking formal registration, licenses, or access to financial services. Operating outside the formal banking structure means limited access to credit, insurance, and legal protections. According to Bangladesh Bank data, formal financial institutions lend to fewer than 15 per cent of the country’s small and micro businesses. The rest rely on informal borrowing with high interest rates and predatory conditions, which stunts their potential to grow or innovate. Furthermore, poor infrastructure—ranging from unreliable electricity to inadequate transport networks—places a significant burden on operational efficiency, particularly in non-metropolitan areas.

The global context in which MSME Day 2025 is celebrated is shaped by volatility and transformation. Political tensions across regions, climate-induced disruptions, and rapid digitalisation are redrawing the contours of business and trade. For MSMEs in Bangladesh, these dynamics translate into fragile supply chains, rising input costs, and market unpredictability. For example, small-scale exporters have struggled to adapt to new EU green compliance rules, while domestic enterprises grapple with inflation and currency devaluation. Meanwhile, the digital shift—though offering new opportunities—also risks widening the digital divide, leaving behind those with limited access to technology or digital skills.

Despite these challenges, MSMEs are uniquely positioned to lead in innovation and sustainability if provided with the right conditions. Their relatively small scale allows for quicker adaptation, experimentation, and local customisation. In Bangladesh, MSMEs have demonstrated remarkable creativity in sectors such as agro-processing, eco-friendly textiles, renewable energy, and digital services. Initiatives like iFarmer, a tech-driven agri-financing startup, and the Jute Diversification Promotion Centre's support for eco-products demonstrate the flourishing of innovation in this sector. These examples highlight how MSMEs are not only beneficiaries of development but also active contributors to it.

This year’s theme stresses sustainable growth, and rightly so. Bangladesh’s development trajectory cannot afford to replicate the environmentally degrading models of the past. MSMEs, with their local embeddedness, have the potential to foster ecologically responsible production and consumption patterns. The widespread adoption of solar-powered irrigation in small farms and recycling initiatives in small-scale tanneries in Hazaribagh demonstrates that sustainability is not exclusive to large corporations. However, scaling such practices requires targeted financial and technical support.

Finance remains the Achilles' heel of MSME growth in Bangladesh. The unmet funding demand in this sector is estimated to be over USD 2.8 billion. Traditional collateral-based lending excludes most small entrepreneurs, especially women, who typically lack property in their names. The introduction of Credit Guarantee Schemes, digital credit scoring, and alternative lending models can widen access. In this regard, institutions such as the SME Foundation and Palli Karma-Sahayak Foundation (PKSF) have initiated efforts, but the scale is far from sufficient. Development partners and donors also play a role in co-financing de-risked lending to this segment.

Alongside financing, robust policy interventions are needed to create an enabling environment. Simplifying business registration processes, easing tax compliance, and extending labour law protections to small businesses would formalise more of the sector. In Bangladesh, the cost and complexity of starting a business remain high, discouraging many from moving out of the informal economy. One-stop digital portals, equipped with local language interfaces and mobile access, could significantly enhance participation. Legal reforms to recognise alternative forms of collateral—such as inventory or receivables—could also bridge the credit gap.

Human capital development is equally vital. MSMEs in Bangladesh often lack trained staff or managerial capacity to scale operations. Skills training in digital literacy, business planning, and environmentally friendly practices can enhance productivity and compliance with global standards. Public-private partnerships, especially with NGOs and training institutes, can create regional training hubs tailored to local enterprise needs. Moreover, integrating entrepreneurship training in secondary and tertiary education can prepare the next generation of MSME leaders.

Digitalisation is a major frontier for transformation. E-commerce, mobile banking, cloud accounting, and AI-enabled services are transforming the way businesses operate. However, in Bangladesh, the digital divide remains stark. Urban companies have taken greater advantage of digital platforms like Daraz or Facebook Marketplace, whereas many rural MSMEs continue to struggle with basic internet access. Government efforts to expand broadband coverage, coupled with digital literacy programs and affordable digital tools, are crucial to ensuring that all MSMEs can participate in the digital economy. In this context, initiatives like the “Digital Bangladesh” vision need recalibration to include MSME digital readiness as a core outcome explicitly.

Gender inclusivity must also be at the centre of MSME policies. While women-led MSMEs are on the rise in Bangladesh, particularly in the home-based business and service sectors, they face steeper barriers, including social norms, mobility constraints, and gendered access to finance, which continue to limit their growth. Empowering women entrepreneurs through gender-sensitive loan products, mentoring networks, and market linkages can unlock tremendous economic value. Policies should also ensure that public procurement includes targets for women-owned businesses, creating a guaranteed demand base for their products and services.

On World MSME Day 2025, the call is not only to recognise the contributions of these enterprises, but also to shape an ecosystem in which they can thrive actively. The upcoming FfD4 in Sevilla and the World Summit in Doha provide rare opportunities to influence global financing rules, development aid allocations, and trade frameworks. Bangladesh must advocate strongly for MSME-focused agendas—such as preferential financing, technology transfer, and fair trade terms—that align with its national development priorities.

The role of local governments and city corporations also warrants attention. In Dhaka, Chattogram, and other major urban centres, municipal authorities can create MSME-friendly zones, streamline licensing procedures, and facilitate access to utilities. In peri-urban and rural areas, Union Digital Centres and local chambers of commerce can act as nodes of support and information. Decentralised governance models that engage MSMEs as stakeholders—not just beneficiaries—are key to responsive policymaking.

In a rapidly changing world, Bangladesh’s future competitiveness will depend on how it empowers its smallest businesses. As the country graduates from Least Developed Country status, the challenges of global integration will mount. Tariff-free advantages will diminish, and non-tariff barriers will rise. To navigate this transition, MSMEs must become more productive, sustainable, and innovative. But they cannot do this alone. Government ministries, development partners, the private sector, and civil society must collaborate to create a cohesive ecosystem that removes obstacles and expands opportunities.

The observance of World MSME Day 2025 should be more than symbolic. It should be a turning point in how MSMEs are valued, supported, and celebrated. For Bangladesh, this means transforming national vision documents into actionable programs, scaling up pilot projects into sustainable models, and translating policy intent into measurable impact. It means understanding that MSMEs are not peripheral to the economy—they are its living, breathing core.

In the stories of the small fish farm in Mymensingh using smart sensors, the boutique in Khulna exporting handmade sarees via social media, or the mobile repair shop in Rangpur training out-of-school youth, lies the blueprint of an inclusive and resilient Bangladesh. On this World MSME Day, the message is clear: investing in MSMEs is investing in a better future for all.

The writer is a researcher and development worker.He can be reached at email matiurrahman588@gmail.com