Business and

Entrepreneurship
development and
promotion in
bangladesh



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Business and Entrepreneurship Development and Promotion in
Bangladesh




Prepared for
Dr. A. K. M. Saiful Majid
Professor
Institute of Business Administration
University of Dhaka


Prepared by
Nahian Rahman Rochi (ZR 14)
Tamjeed Sayeed Kashem (ZR 18)
Tanzeer Siddique (ZR 49)
Zeba Samiha (RQ 51)
Zyma Thaseen (RQ 54)
Mayesha Mehnaz (RQ 57)


Institute of Business Administration, University of Dhaka
07 February, 2014

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1 HISTORY OF ENTREPRENEURSHIP DEVELOPMENT IN BANGLADESH
According to Kuratko, An entrepeneur is an individual who recognizes and seizes opportunities,
converts them into workable & marketable ideas, adds value through time and effort, assumes all the
psychological & emotional risks and realizes rewards for his efforts. Indeed an entrepreneur is
someone who is ready to take risk and play the role of an innovator in the field of new business,
introduction of technology and production methods and effectively organize human resources and
agents of production and contribute meaningfully to the socio-economic development of the society. In
the context of Bangladesh, a developing country of the third world, an entrepreneur may not always be
an innovator but an imitator who would be tempted to copy the success stories of others. The
concept of entrepreneurship in Bangladesh is still at its infancy stage, however the traces of
entrepreneurship can be found from the early 1950s.
1.1 ENTREPRENEURSHIP IN THE PRE-PARTITION ERA
Pauperization of Bengal began as an effect of the industrial revolution at the later stages of the 18
th

century. Successive famines made capital accumulation impossible and the economy of Bengal gradually
passed on to the English traders and entrepreneurs. The existing small industries and businesses just
broke down & the growth of feudalism brought about a change in the social fabric of Bengal.
1.2 PARTITION AND BEYOND
Partition brought displacement of people and whatever entrepreneurship developed it was
concentrated in West Bengal. Jamindari System (feudalism) was abolished in 1950. Some now had
capital from the compensation paid to them by the government. The first five year plan of Pakistan was
formed in 1955 and new financial institution (IFC, HBFC, RRFC, ADFC, ADB, IDB) were created. The local
Bengali potential entrepreneurs did not get much assistance from them and thus entrepreneurship was
concentrated amongst the non-Bengalis of WP.
1.3 ENTREPRENEURSHIP IN INDEPENDENT BANGLADESH
Entrepreneurship concept slowly started developing in the independent Bangladesh. However new
problems like rehabilitation, reconstruction, administration and international relations started arising
with the inheritance of a new country. The period from 1972-75 was characterized by nationalization,
conversion of abondoned property to shops and factories & political and labour unrest. The period from
1975-81 saw a revision in our investment policy, black money whitening & de-nationalization. A new
Policy was formed during the 1981-90 period that ensured more involvement of the private Sector and
more focus on basic and heavy industries. There was the beginning of a new entrepreneurial era post
1990. New opportunities were discovered, mostly in small and medium scale in poultry farming, cattle
rearing, nursery and other industries. This rapid change in the entrepreneurial spirit was facilitated by
different factors like increasing awareness, informed and educated generation and a change in attitude
among the people. Since then the development of entrepreneurship in Bangladesh has been steady over
the last two and a half decades but more integrated approaches towards entrepreneurship
development from both public and private sectors are required in the coming years.

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2 FOCUS ON SME DEVELOPMENT
Entrepreneurship as a tool for poverty alleviation has been given the utmost importance by the
Government of Bangladesh because of the pressing nature of the problem. Development of SMEs has
proved instrumental in the fight against extreme poverty, which has reduced to 23% of the population
who live under $2 a day. In Bangladesh, large enterprises account for only 7.05 per cent of industries
whereas small and medium-sized businesses account for 92.95 per cent. Along with the government,
around 650 registered Micro Finance Institutions (MFIs), and more than 5,000 unregistered MFIs are
currently working towards fostering micro-entrepreneurship development, in direct or indirect ways..
Among them some Govt. organizations are-
1. BSCIC,
2. Karmasangsthan Bank,
3. Krishi Bank,
4. Basic Bank Ltd.
Some NGOs are-
1. Grameen Bank Ltd.,
2. BRAC,
3. MIDAS Financing Ltd.,
4. BRAC Bank Ltd
Bangladesh Small and Cottage Industries Corporation (BSCIC) is the prime mover organization entrusted
with the responsibility of development of small and cottage industries (SCI) in Bangladesh. It is an
autonomous corporation under the Ministry of Industries and was established by an Act of the
parliament in 1957. BSCIC provides, in addition to credit facilities with other banks, pre-investment
counseling, post-investment extension services, technical information, design and prototype of
handicrafts, industrial profiles and fact sheets, marketing information, infrastructural facilities, skill
development training, entrepreneurship development training and in-plant advisory services.
The Karmashangsthan Bank, Krishi Bank and Basic Bank all provide credit facilities but only under given
conditions. For instance, loans are given with the interest rates 12 % simple interest rate in commercial
sector and 10 % simple interest rate in productive & service oriented sector. The limit of credit
facility/Loan limit is highest Tk. 5.00 Lac in case of person and Tk. 25.00 Lac in case of group. Security of
Loan is based on a personal guarantee against loan limit up to Tk. 50,000/-. It can be seen that these
institutions are not as conducive as BSCIC.
2.1 PRIVATE INITIATIVES
Grameen Bank Ltd, BRAC, MIDAS Financing Ltd and BRAC Bank Ltd are all financial institutions
supporting the funding of small enterprises. Some of them, like Grameen, use innovative group methods
to induce on time payment and reinforcement. However, none of these MFIs provide specialized
entrepreneurship grooming sessions or workshops for the entrepreneurs to be skilled in managing their
businesses.
2.1.1 VENTURE CAPITALISTS
Although personal or family members are often angel investors in Bangladesh, institutional Venture
Capitalists (VCs) are emerging to provide start-ups with their desired financing. One such VC, BD
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Ventures is a Bangladeshi venture capitalist that recently got merged with US venture capitalist firm
DEFTA partners to provide seed funding for budding entrepreneurship ventures in Bangladesh.
In addition, a number of private events like the Start Up Week and the Start Up Cup have evolved put of
a need to educate the new generation of entrepreneurs in high tech service industries the tips and tricks
of surviving and managing their new ventures.
2.2 GOVERNMENT POLICIES AND INITIATIVES:
Economic growth is broadly responsible for creating a conducive environment for entrepreneurship as
well as overall business development. And so, by 2010 - 2021, the Government of Bangladesh (GoB)
hopes to raise per capita income to USD 2,000. The industrialization process is expected to increase GDP
growth, which is targeted at 10 per cent in 2021. The manufacturing sector is expected to play a major
role and is aimed to expand considerably to 30 per cent in fiscal year 2021. The OPP (Outline Perspective
Plan) is pursuing SME-based industrialization to promote growth and generate employment for those
challenged by low education and/or skills
For making borrowing easier, the newly established 'SME and Special Programmes Department' at the
Bangladesh Bank will be responsible for policy formulation, facilitating fund, monitoring and
development of entrepreneurship in the SME sector. The Government of Bangladesh re-organized the
SME Task Force in 2010 in order to formulate a realistic strategy for promoting growth and
competitiveness among SMEs. This is in line with the core principles and parameters, set by the Poverty
Reduction Strategy Paper (PRSP) of 2004 as well as targets set under the Millennium Development Goals
(MDGs).
2.2.1 GAPS WITHIN THE GOVERNMENTS INITIATIVE
Instability of government policy and lack of adequate financial support are two most important
problems in the process of entrepreneurship development. The absence of entrepreneurship courses in
the curriculum of educational institutions affects the entrepreneurship development adversely. This
ultimately frustrates entrepreneurs in taking right decision in right time like shifting to new production
technology or expanding new ventures. Motivational programs offered by government and other
development agencies like The United Nations Development Programme (UNDP), the International
Development Agency (IDA) etc., do not cover many of the prospective entrepreneurs. The scope for
training to develop skill is far from satisfactory. Management Information System (MIS) and research in
the area of entrepreneurship development are almost nil.
The government of Bangladesh in its policies has awarded priority to privatization, by especially linking it
to small, medium and micro industries' development. The country features a number of innovative
grass-roots schemes for income-generating activities. However, entrepreneurship development
programs in the country at more advanced level of business operations are inadequate. Various
government and non-governmental organizations (NGOs) like Bangladesh Small & Cottage Industries
Corporation (BSCIC), Bangladesh Rural Development Board (BRDB), BMD, DWA, DYD, BMET, MIDASA,
BRAC, Grameen Bank, GK etc., all are involved in entrepreneurship development in Bangladesh, and
they are working for SME development at the grass-roots level. Their efforts have reduced poverty, but
created no significant incremental wealth. To accelerate growth and step into a middle-income country
by 2020, Bangladesh needs a large number of enterprises with more advanced level of business
operations and in quality. It is important for creating incremental wealth by undertaking productive
activities, particularly industrialization.
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3 ENTREPRENEURSHIP EDUCATION, TRAINING AND SELF EMPLOYMENT
The importance of entrepreneurial education and Training for motivating educated youth to self-
employment is recognized by development economists, planners and policy makers, as well as
governments of most countries of the world. The entrepreneurial education traces its origin from the
growing ideas that entrepreneurial qualities of man can be improved or new skill can be developed
through special type of training and education among the potential persons in a society. The
entrepreneurship education course includes the contents that help the students to be aware of
economic opportunities, business environment, identification of project, preparation of business plan,
improving motivation for achievement, techniques of enterprise management, self- development
techniques, improving precision skill etc. Other objectives are concerned with building self-confidence,
opportunity sense sensitivity and analytical skills. The purpose of the courses is to develop or improve
skills that are vitally needed for self -employment as a career.
3.1 CURRICULUM OF THE EDUCATION SYSTEM
In order to create general awareness about Entrepreneurship as career plan, an alternative to salaried
employment the role of entrepreneurship education is most crucial. In Bangladesh, entrepreneurship
courses have been included in the curriculum of business education and technical education system very
recently. This course has been included in the curriculum of business education program of the
University for the last few years. It has been introduced as an optional course in the business education
curriculum of SSC & HSC programs. Similarly this course has been included in the curriculum of
Polytechnic & technical education system of the country. The contents of the Entrepreneurship
development course include, among others concept, entrepreneurship as career plan, entrepreneurship
theory, entrepreneurial motivation, business environment, the role of entrepreneurs in economic
development, project ideas generation, selection of project, preparation of business plan, Project
management, social responsibility of the Entrepreneurs in developed & newly industrialised countries,
Entrepreneurship, development programs. The courses for different levels of education have been
designed keeping in view the requirements and absorbing capacity of the students. However,
inconsistency exists in the course contents of the curriculum. Text books and reading materials for the
courses are very scarce.
In the Present curriculum teaching is mainly theory-based rather than practical. As a result this
education is not so effective for taking entrepreneurship as a Career.
Except for the M. Com. degree program, this course has been introduced very recently. As a result, it is
difficult to comment on the impact of the program. However, it is observed that some students who
have this course at graduate program have been motivated to start business as an alternative to salaried
employment. Some of them are doing quite well. It is also understood that given the financial support
without collateral, more graduates taking this course will be attracted to entrepreneurship as a career.
3.2 ENTREPRENEURSHIP DEVELOPMENT POLICY
More than three decades have passed since Bangladesh achieved independence after bloody liberation
war. The liberation generated great hope for accelerated economic growth through rapid
industrialization. The successive governments in power in order to guide the emerging entrepreneurs
announced Industrial Policies from time to time keeping in view the changing needs of the country; the
first Industrial Policy was announced in 1972 heavily emphasized the role of public sector dealing as well
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the role of private sector. The private sector investment was restricted to the investment of only Taka
25 lacs ceiling since the announcement of first Industrial Policy. The policy was revised and changed
several times. The last Industrial Policy was announced in 1999. In this policy the Government reiterated
its firm commitment to rapid industrialization and extended more liberal support services to
entrepreneurs and clearly stated in the policy the role of government which will be facilitator than
regulator. The small and cottage industries were provided with some special incentives. It has been
stated that in the next two decades there will be a 25% contribution to the GDP and also a 20% increase
in employment by the industry sector.
3. 3 ORGANI ZATI ONS I NVOLVED I N ENTREPRENEURSHI P DEVELOPMENT PROGRAM (EDP) I N BANGLADESH
As has been seen that EDP has since been implemented by the government organization and the non-
government organization, the Industrial Policy remains the major guide for the purpose.
Government Organizations include
Bangladesh Small and Cottage Industries Corporation (BSCIC)
Bangladesh Rural Development Board (BRDB)
Bangladesh Management Development Institute (BMDI)
Directorate of Women Affairs (DWA)
Development of Youth Development (DYD)
Bangladesh Manpower Training Bureau (BMTB)
Non-government Organizations
Micro-Industries Development and Assistance Services (MIDAS)
Bangladesh Rural Advancement Committee (BRAC)
Gono Shasthya Kendra (GK) etc.
Professional Association: Dhaka Chamber of Commerce and Industry (DCCI), Chittagong Chamber of
Commerce & Industry (CCCI), Sylhet Chamber of Commerce & Industry (SCCI) and the National
Association of Small and Cottage Industries of Bangladesh (NASCIB) in a limited scale. All these
organizations, among others, have been organizing training program for both men and women.
However, these programs in true sense of the term provide training assistance which is a part of the
total Entrepreneurship Development Program.
3.4 IMPACT OF THE PROGRAMS
The Government of Bangladesh in its policies has awarded priority to privatization especially to small,
medium and micro industries development. Human resources development efforts to existing and
potential entrepreneurs have to be supported by required appropriate implementation measures. The
country features a number of innovative grassroots schemes for income-generating activities; however,
entrepreneurship development programs at more advanced level of business operations were found
inadequate. Demand for education and training far exceeds supply and, notwithstanding the fact the
first-generation entrepreneurs predominate. There seems to be ample potential and talent for
entrepreneurial growth. A country like Bangladesh rich in human rather than natural resources, cannot
afford to this potential, particularly in view of serious unemployment and underemployment.
Overall performance of the training on entrepreneurship development programs differs according to
target groups. At all levels of income-generating programs organized both by governmental and non-
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governmental agencies are mostly related to orientation and motivation sessions and in some cases skill
development training efforts and impact achieved through distribution of micro loans to needy
beneficiaries. A crude estimate suggests that over 65% of rural under- unemployment are not reached
by these schemes. Nevertheless, outreach has been quite substantial. BSCIC has undertaken some
training schemes to assist small entrepreneurs in the form of starting small business, small business
management training, etc, but those were inadequate in relation to demand. MIDAS has done some
commendable work with regard to entrepreneurship development but those were too inadequate.
3.5 WEAKNESSES OF ENTREPRENEURSHIP DEVELOPMENT PROGRAMS
In Bangladesh, there is no specialized Institution organizing entrepreneurship development program.
The Institution mentioned above offers entrepreneurship development programs. They are designed to
help individuals achieve income generating and self-employment or skill development. The following are
some of the problems of these programs:
The concept of entrepreneurship development through formal training programs is completely
new to the participants. The entrepreneurship development course, has been introduced in
some courses, say, business education, technical education system. However, this course has
not been introduced in other disciplines.
Lack of awareness that business could be a good profession is another problem for the training.
Most training programs were designed without formal assessment of the needs of the trainees.
Neither the trainers are well trained to give training nor methodology used in the program is
appropriate. Training programs are not followed by appropriate provision of support assistance.
3.6 IMPORTANCE OF ENTREPRENEURSHIP DEVELOPMENT IN BANGLADESH
Bangladesh needs a large number of entrepreneurs and in quality. It is important for creating
incremental wealth by undertaking productive activities particularly industrialization. Rapid
industrialization is an inescapable necessity to generate employment opportunities to meet crucial
educated unemployment and underemployment problems. Every year thousands of educated
unemployed is joining the labor force. In addition there are thousands of dropouts from different levels
of our education system. Who are the wealth as well as job creators? Definitely the existing as well as
emerging entrepreneurs. Among three important sources (the individuals, the spin off and
Entrepreneurs) the most important source is individual entrepreneurs. The major source of
entrepreneurs is the college and university graduates and educated youths.
Bangladesh is predominantly an agricultural country in search of employment to a large number of
individuals start business with great enthusiasm but retire soon facing innumerable problems. As a
result our first generation entrepreneurs having no family or industry / business experience go ahead to
operate their promotion. Excepting few vulnerable industries all sectors were open to local foreign
investors. Despite generous support and encouragement the overall performance has remained
unsatisfactory. The impact is reflected in the share of contribution in GDP and employment.
3.7 ENTREPRENEURSHIP DEVELOPMENT PROCESS
Major assistance requirements of the new entrepreneurs are worth mentioning while discussing the
entrepreneurial development as a tool of economic growth of a nation. They need multiple assistance
which may be offered in a package form. To set up an enterprise and run it successfully an entrepreneur
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need these types of assistance.
These three groups of assistance
form an Entrepreneurship
Development Cycle. The groups of
assistance are:
a. Stimulatory;
b. Support; and
c. Sustaining.
In the context of Bangladesh,
a. The stimulatory activities
comprise entrepreneurial
education, provision of
entrepreneurial opportunities
and guidance in selecting
industries are needed to help
emergence of
entrepreneurship in the
Society. This support ensures a
good supply of entrepreneurs
to start a new venture and
develop potentiality to succeed
in a venture.
b. The support activities refer to
those which enable the
entrepreneurs in setting up
and running the enterprises
successfully. They help in
mobilizing resources and assistance.
c. The sustaining activities include efforts which help the entrepreneurs sustain themselves against the
challenges of actual operation. Many enterprises starting well, meet immature death subsequently
because of some problems. Such cases are many and they are particularly more significant in the field of
small enterprises.
The above groups of activities play complementary roles to each other. In the absence or negligence of
one, others may be rendered infructuous. If the stimulatory activities are over- emphasized, there may
be better supply in failure and frustration. This causes national wastage of resources in terms of men
and materials. Similarly, if support activities are over emphasized and the other two are neglected, then
there may be facilities available with no or few entrepreneurs to avail such facilities. When sustaining
activities are over-emphasized the growth in the number of enterprises is bound to be stagnant. It is
thus imperative that the needs of enterprises are required to be identified in the total perspective
before devising package of assistance.
To sum up experiences of the programs of entrepreneurship education and training, it may be stated
that it has not yet received due attention at the policy level as a strategy of human resource
development. This is also reflected in the educational curriculum and inadequate training provisions in
the country. General awareness of entrepreneurial attitude and motivation are required to be
developed during the learning periods of the students. Entrepreneurship course has not yet been
included in the curriculum at all levels of education system in our country. This shortfall can be dealt by
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bringing reforms in the Education system of our country. Lack of trained and experienced teachers,
absence of text books and reading materials exposing Bangladesh situation, inconsistencies and over-
lapping of course contents and absence of positive attitude of concerned authorities appear to be major
problems for effective delivery of entrepreneurship education. However, it is observed from the
experience of few seminars organized by Technical Education Board for teachers and institutional heads
that the attitude towards entrepreneurship education is changing in a positive direction.

4 RECOMMENDATIONS
The relationship between entrepreneurs and development outcomes is complex, with entrepreneurship
as much depending on economic development and growth and vice versa. While a lot of policies have
been established in Bangladesh aimed towards greater economic development, in order to create a
beneficial and symbiotic relationship between the two, certain policies need to be made in favor of
encouraging the entrepreneurial spirit as well. Below are some of the recommendations suggested by
us:
Government should Facilitating technology exchange and innovation: The government should begin by
strengthening the means of communication and diffusion of policies and programs in information and
communications technology. Then they should conduct a diagnosis of the state of entrepreneurship,
technology and innovation that provides a clearer picture of the current state of affairs in Bangladesh
Enhancing entrepreneurship education and skills: Include within schools a curricula that promotes the
development of the skills and attitudes that are the hallmark of entrepreneurship, such as: Creating a
vision, perseverance, creativity, spotting needs, empathy, leadership, dealing with ambiguity, risk-
taking, and follow-through. The curricula should include, interactive teaching methodology which makes
use of case studies that are adapted to the local reality.
Develop an organization which promotes entrepreneurship in the different regions of the country:
Introduce new-style entrepreneurship-friendly support institutions that provide technological
knowledge, market information, business know-how, certification services, access to capital, and other
essential business support.
Improving access to finance: The government can do this by facilitating access to SMEs to the stock
market and Including the recognition of both tangible and intangible goods as guarantees into the
regulation. They should also develop a database with complete information and details on available
credit lines and services for entrepreneurs.
Promote Proper Governance: Set forth a governance framework which unambiguously encourages risk-
taking, while also ensuring that ethics lapses, corruption, and neglect of environmental sustainability
carry a high cost to reputation.
Empower Entrepreneurial Women, Minorities and the Disadvantaged: Since Women in Bangladesh has
been the backbone of our development in recent years. There must be support programs that
specifically target women, minorities, and the disadvantaged. Further, governments should implement
laws and policies that ensure that entrepreneurs are sensitive to gender empowerment as well as
diversity promotion.

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After all that being said, it is also recommended that the Bangladesh government be cautious about any
unintended negative consequences that might arise due to these well-intended support policies for
entrepreneurship. These include, patronage, corruption and rent-seeking and prolonging the life of
inefficient and low productivity firms. Therefore, along with policy formulation and implementation a
feedback mechanism for these policies should be developed in order to avoid the negative
consequences.

5 CONCLUSION
Bangladesh has come a long way and emerged as a seed bed for entrepreneurs. Originally
entrepreneurship in Bangladesh was micro enterprises with rarity of medium and large enterprises. In
the early ages, entrepreneurs in Bangladesh were mainly traders of silk, rice and cotton. After the
liberation war, the country was hit by famine. This worked as a triggering factor for growth of
entrepreneurs of the country. Though the current entrepreneurship situation is looking up for
Bangladesh, few issues still remain: lack of awareness of incentives provided by the government, lack of
campaign about areas of entrepreneurship, lack of proper training facilities of entrepreneurs, lack of
integrated package assistance/stimulating, support and sustaining activities needed for SMEs. There is
lack of a comprehensive package that encompasses the three phases of the entrepreneurship
development cycle. Such package is to be engineered and made conveniently available to SMEs. In order
to enhance the entrepreneurial picture of Bangladesh we may consider the following: facilitating
technology exchange and innovation, enhancing entrepreneurship education and skills, improving
access to finance, and facilitating access of SMEs to the stock market. By undertaking the above and
sticking to the guidelines of the entrepreneurship development cycle, Bangladesh can expect a brighter
future with empowered entrepreneurs.