The cottage, micro, small and medium enterprises (CMSMEs) suffered the most during the COVID-19 pandemic because they had poor market access and were not digitally enabled, despite Government relief measures such as large subsidies in the form of low-interest loans. To tackle this issue, the Project will explore experiments and sandboxes around policy and regulatory reforms, ensuring CMSMEs’ access to information about new businesses, new types of skills, markets (especially digital markets), finance, technology and innovation, and business support services. In addition, a CMSME Hub for Digital Acceleration was built to implement the policy reforms, leaves no business behind.
● Virtual Workshop on CMSMEs in Bangladesh
The virtual workshop on CMSMEs in Bangladesh was held on 13 June 2022, aiming to engage stakeholders from different agencies to discuss the existing challenges and opportunities for the digitalization of CMSMEs in four areas: (a) Access to Market; (b) Access to Service; (c) Access to Finance and (d) Access to Skills.
Access to Market - Participants came up with solutions that emphasis on open networks, open source, opening up the network and digital public goods: Open Network for Digital Commerce (ONDC) Model; Central Complaint Management System; Online to Offline E-commerce System; and Public Procurement Rules (PPR)
Access to Service - Participants mainly discussed the current state of the CMSMEs in accessing different types of public services and the challenges in receiving these services, and the role of the government and private sectors in mitigating the challenges.
Access to Finance - Participants stressed the four main challenges of CMSMEs' access to Finance, including the disorganization of financial system, the complicated documentation process, the loan limitation and the barriers of the current policy and regulatory framework.
Access to Skills - Participants discussed existing initiatives to enable skills development for the CMSME entrepreneurs, existing major barriers in the skills development landscape and recommendations to strengthen the country’s CMSME sector.
● Physical Workshop on CMSMEs in Bangladesh
The physical workshop on CMSMEs in Bangladesh was held from 22 June to 23 June, aiming to engage the stakeholders and facilitate official dialogue and knowledge sharing on policy experimentation, including but not limited to identifying the gaps and opportunities as well as partaking in the mapping of the policy experimentation framework to tackle them.
Through three brainstorming sessions throughout the workshop, participants developed six regulatory sandboxes to help support CMSMEs across four distinct areas:
Access to Market: Participants developed two sandbox ideas to develop CMSMEs’ access to market - (a)Open Network for Digital Commerce (ONDC) Model, which is an open network protocol to bring all types of sellers together on one platform; and the implementation of a compulsory Unique Business ID (UBID) for all e-commerce trading on digital platforms to increase trust, credibility, and transparency.
Access to Finance: Participants developed a regulatory sandbox to implement a central Know-Your-Customer (KYC) system which would incorporate data from MFIs, MFS, as well as banks and NBFIs, along with a central credit database to form a comprehensive credit footprint for CMSMEs to access loans and finance better.
Access to Skills: Discussions involved the challenges leading to the inadequate provisions for skills development for CMSMEs, and the scope for public-private interventions to cultivate entrepreneurship knowledge to drive a better business environment.
Access to Service: Participants developed sandbox ideas for public and private initiatives to increase CMSMEs’ access to service. Recommendations included further developments of the myGov platform, as well as sandboxing to experiment with artificial intelligence, frontier technologies, and streamlined policymaking to further access to service.
● Focus Group Discussions (FGDs)
As a follow-up to the results from the workshops,a Focus Group Discussion (FGD) series on “Regulatory Sandboxes to Help Support Bangladesh’s CMSMEs” was launched to to develop the capacities of Bangladesh for promoting the implementation of the proposed six regulatory sandboxes.
The first session was held on 13 September 2022, to ideate effective implementation of regulatory sandboxes to support CMSMEs’ access to finance. Through an engaging discussion, stakeholders considered the practical implications of creating a single identification number, to reduce the burden of bureaucratic processes for CMSMEs. In particular, participants considered how the development of such systems can be made inclusive, while paying equal attention to data privacy. Leading fintech players and development organizations shared their experiences of working with CMSMEs and the need for an incentive structure to align different stakeholders to collaborate on a central database.
The second session that emphasised on CMSMEs' Access to Market, was held on 18 October 2022, to discuss the viability and the implementation strategies for a regulatory sandbox on Open Network for Digital Commerce (ONDC) Model in Bangladesh. Participants aligned on whether the e-commerce industry had the financial and logistical capacities to support such an ONDC model, as well as how such a model would impact the nascent e-commerce market in Bangladesh.