A new survey by Policy Exchange Bangladesh has found that many local businesses face serious challenges in securing loans from formal financial institutions, forcing them to rely heavily on personal savings. The findings, drawn from the Municipality Competitiveness Index (MCI) and presented at a high-level roundtable in Dhaka, highlight a major financing gap that constrains business growth and limits access to diversified financial instruments.
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The MCI, developed jointly by Policy Exchange Bangladesh and the PRABRIDDHI project of Swisscontact with support from the Bangladesh Investment Development Authority (BIDA), is the country’s first business environment index tailored for municipalities. Under its “Economic Potential and Sectors” pillar, the survey identified loan access as a critical hurdle, with many entrepreneurs facing complex and time-consuming documentation requirements. BRAC Bank’s Additional Managing Director Syed Abdul Momen noted that SME owners often need to visit 10 to 15 offices to collect required documents, leading to delays and discouraging loan applications.
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BIDA Director General Jibon Krishna Saha Roy described the MCI as a “vital data-driven tool” for shaping access-to-finance programmes, calling for targeted policy reforms to close the gaps. Swisscontact’s Country Director Helal Hussain underscored that the index is aligned with global best practices, having been implemented in countries like Honduras, and can guide evidence-based interventions to strengthen municipal economies. The roundtable brought together senior government officials, financial sector leaders, development partners, and local business representatives to chart solutions for one of the most pressing challenges facing local enterprises by improving access to finance.