Md. Joynal Abdin
The Financial Express on January 27, 2012
The economic growth rate of the country has been fluctuating between 4.0-6.0 per cent during the last two decades. If we look into the annual gross domestic product (GDP) growth statistics, we observe that the growth curve varied from year to year, dipping in some years while rising in others. Now the question is why the growth curve is not sustaining?
Although many new enterprises are being established every year, a large number of the established ones go out of business during the same period due to lack of adequate entrepreneurial skills. As a result, it has a negative impact on economic growth. According to the statistics, there were about 6.0 million small and medium enterprises (SME) in Bangladesh in 2003. The number of SMEs still remains the same today. Why is the number of SMEs not increasing?
It is primarily because the entrepreneurs lack adequate skills. Most of the small entrepreneurs enter the field of business after failing to land themselves a job on completion of their studies or having given up on their academic pursuits.
Some people may have natural entrepreneurial instincts but most people lack the required skills to make an enterprise successful. It has been proven that entrepreneurial skills can be developed through a properly designed academic curriculum.
In Bangladesh, we are producing engineers, doctors, lawyers, management experts, accountants and other professionals in our universities and colleges. But none of the existing educational institutions are producing skilled entrepreneurs, who can play an important role in the country’s economic development. There is a misconception that the existing business faculties are helping create entrepreneurs with the required skills. It is not true because the business faculties produce marketing, management, and finance or accounting graduates, each specialising in their respective fields.
But an entrepreneur is neither a marketing expert nor a financial analyst. He is someone who organises the factors of production to transform raw materials into finished goods and sells it in the market. He is a risk-taker. The essential character of an entrepreneur is to establish new enterprises to produce goods and services, thus increasing the size of the GDP.
Entrepreneurs require special skills to start and successfully run a business operation and none of the existing academic institutions in the country specifically provide such an education. Entrepreneurship development institutes have been set up in many countries while many foreign universities offer special academic courses on the subject.
Thus, we are very much in need of establishing an independent institute which will produce entrepreneurs only i.e. an Entrepreneurship Development Institute. Now, the question is who will establish such an institute? It may be established by the government for the sake of creating new enterprises which will generate employment.
On the other hand, an entrepreneurship development institution can be established by the private sector organizations like the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI), Dhaka Chamber of Commerce and Industries, Metropolitan Chamber of Commerce and Industries, either individually or collectively.
How to generate funds for establishing such an institution? There are about 54 commercial banks and financial institutions operating in Bangladesh. They are making huge profit every year. They are spending a considerable amount for humanitarian/philanthropic activities as part of their corporate social responsibility (CSR) programmes. The Association of Banks can be requested to provide the initial funds out of their CSR budget, to set up the institute.
The FBCCI had earlier taken up such an initiative a few years ago. A project profile for the FBCCI Entrepreneurship Development Institute was also prepared. But no progress has been made since.
Bankers may ask why they should give money to establish an entrepreneurship development institute. In fact, the banks will also greatly benefit by the creation of entrepreneurs with the required skills. A major function of the banks is to provide loan to the investors. If there are more new enterprises, demand for loans will also go up. More investment will ensure higher profit for the banks.
An entrepreneurship development institute will create skilled entrepreneurs. The rate of success of entrepreneurs with the required skills will be much higher than the current situation. More successful entrepreneurs will mean more new enterprises, higher economic growth, higher rate of employment and a sustainable development of the economy.
In this case, we can replicate the Indian model of entrepreneurship development. India has a long experience in entrepreneurship development. The Entrepreneurship Development Institute of India was established in 1983 at Ahmedabad. Currently, it has several branches in different states of India. The Indian model has been replicated by many developing countries in Africa and Southeast Asia.