MSME Development in Bangladesh: Digital Solutions, Financial Access, and Upskilling for Sustainable Growth

In 2022, Innovision Consulting conducted a comprehensive study on financial and digital financial services in Bangladesh, shedding light on the pressing challenges and promising opportunities confronting Micro, Small, and Medium Enterprises (MSMEs) across the nation. The study revealed striking disparities in accessing crucial government services, market insights, financial support, and essential skills among MSMEs. Despite the existing challenges, there exist promising opportunities for MSMEs to leverage digital solutions and alternative lending models for growth and development.


One of the key challenges identified is the low utilization of government services by MSME owners, with only 11% having availed of them. This underscores the need for enhanced awareness and outreach efforts to ensure MSMEs can benefit from available support programs and initiatives. Moreover, there is a clear demand for low-interest loans and hassle-free services, indicating an opportunity for government agencies, ministries, and banks to tailor their offerings to better serve MSMEs.


In terms of market access, MSMEs face knowledge gaps regarding their suppliers and customers, hindering their ability to procure quality raw materials and expand their customer base. However, efforts to address these challenges are underway, presenting opportunities for MSMEs to improve supply chain efficiency and enhance marketing/promotion efforts.


Financially, MSMEs in Bangladesh exhibit a desire for increased lending options, with 33% utilizing Mobile Financial Services (MFS), showcasing a willingness to embrace technology-driven solutions. While there is currently limited usage of Digital Financial Services (DFS), there is potential for growth, particularly as banking services become more accessible in rural areas and fintech companies expand their offerings to cater to the MSME sector.



Skills development is identified as imperative for MSME success in the current global and technology-driven environment. The study highlights a significant opportunity for skill development among MSMEs, with 38% expressing a desire for training and skill-building initiatives. This underscores the need for targeted programs aimed at enhancing the skills of MSME owners and employees.


The study also identified opportunities for alternative digital lending solutions tailored to the unique needs of MSMEs. Initiatives such as Nano loans and the PrimeAgrim app demonstrate the potential for non-traditional loan options to address the financing needs of MSMEs, albeit with a lack of awareness among stakeholders.


To address these challenges and capitalize on opportunities, the study proposes the establishment of one-stop service hubs aligned with existing digital center infrastructure. These hubs would provide MSMEs with access to a range of services, addressing gaps in skill, knowledge, and access. Additionally, the study recommends the development of innovative pilot models for digital lending, focusing on streamlining documentation processes, exploring alternative forms of collateral, and offering competitive interest rates.


Furthermore, enhancing financial literacy among MSMEs is identified as crucial for better decision-making and financial inclusion. In this regard, our recommendations include developing a digital financial literacy platform, with a focus on targeted content for women entrepreneurs, leveraging existing platforms like Muktopaath, and utilizing offline initiatives for broader reach.


Enhanced awareness and outreach efforts are imperative to ensure that MSMEs can effectively leverage available support programs. Moreover, ensuring tailored financial services, supply chain efficiency improvements, and skill development initiatives are critical for the country‚Äôs MSME development. By embracing digital solutions and innovative lending models, coupled with targeted interventions aimed at enhancing financial literacy and access, Bangladesh’s MSME sector can embark on a transformative journey toward sustainable growth and prosperity.


Author: Farzana Huda is a Senior Associate in the Inclusive Financial Solutions at Innovision Consulting