SME employment soared to 105.7% since start of businesses: Study

Employment generation in small and medium enterprises (SMEs) grew by up to 105.7% since the inception of their businesses, reveals a study conducted by IDLC Finance Limited and Policy Research Institute (PRI), Bangladesh.

The quantitative research, titled Access to Finance for SMEs and Impact on Job Creation: Empirical Evidence Based on IDLC Finance Ltd, assessed 782 IDLC SME clients across the country and covered information from their inception to 2019.

Senior Economist, Academician and Member of PRI Dr Bazlul Haque Khondker presented the findings supported by his analysis over a virtual press conference on Tuesday.

The objective of the study was to assess the employment impacts of IDLC loans to the SMEs considering gender of entrepreneurs; types of enterprises; major job categories; loan sizes; and locations or regions of their operations.

Growth in employment generation in IDLC assisted SMEs were large — over 100%, reads a press release.

Employment generation in female-owned sample enterprises was also significantly higher; 40.5 percentage points above the overall average increase in employment for the whole sample.

Highest employment growth was recorded in the service enterprises at 174.2% and manufacturing enterprises at 131% over the entire period.

The highest growth rate has been found for salaried jobs with 134% over the period.

“This is an extremely trying time for both the MSMEs and IDLC itself, like all other lending institutions in Bangladesh. Financial institutions including IDLC would need to help the MSME clients to help them get out of the difficult situation," said Ahsan H Mansur.

“Most MSMEs will need rapid disbursing financial support from the lending institutions, including from IDLC. In this extremely difficult time, all stakeholders must work together in their mutual interest and the interest of the country,” he added.

Arif Khan, CEO and managing director of IDLC Finance, said the findings of the study reinstate the fact that funding SMEs is not only profitable, but this also has important macro-economic impact such as employment creation.

IDLC’s 46% portfolio consists of SME business and the empirical evidence from this study is further inspiring for IDLC as a key SME financier, the press release adds.

The session was moderated by Dr Sayema Haque Bidisha, professor of the Department of Economics at Dhaka University.