PKSF Plans Larger Loans to Boost Small Businesses, Jobs
The Palli Karma-Sahayak Foundation (PKSF) is planning to increase financing for small entrepreneurs to enhance production capacity, promote intermediate goods production and create new employment opportunities across the country.
Under the new financing strategy, the PKSF plans to provide loans of up to Tk 50 lakh to general small entrepreneurs and up to Tk two crore to entrepreneurs producing intermediate goods in selected business clusters.
PKSF Managing Director Md. Fazlul Kader disclosed the plan in a recent interview with Bangladesh Sangbad Sangstha (BSS).
He said a small enterprise that directly employs one person can create employment opportunities for around four more people through forward and backward linkages with production and marketing systems.
“So, we don’t want to focus only on increasing the number of entrepreneurs. We want to finance the entire production and supply system to increase employments,” he said.
The PKSF managing director said the organisation now focuses on employment generation, as increased production creates jobs among suppliers, distributors and other businesses linked to an enterprise.
He said the new financing strategy also aims to encourage entrepreneurs to add value to raw materials and produce higher-value products.
“Bangladesh should not remain merely a producer of primary products. We have to add as much value as possible to raw materials,” he said.
He cited the examples of processing milk into ghee, labang, cheese and various beverages, and processing mangoes into pulp, vinegar and other products.
Such businesses require higher capital than conventional microcredit, he said, adding that the PKSF therefore plans to raise the financing ceiling.
The PKSF managing director cited the footwear industry in Bhairab as an example of the potential for producing intermediate goods.
He said the area has several thousand footwear factories that require shoe soles. Entrepreneurs can produce soles from footwear waste, but such businesses require relatively higher investment.
“People do not buy soles only for personal use; footwear factories buy them. That is why we call them intermediate goods,” he said.
Supporting such small manufacturing enterprises can create new products while also generating employment in related industries, he added.
Fazlul Kader said the actual employment impact of a small enterprise cannot be assessed by looking at the enterprise in isolation.
An enterprise remains connected to several stages involving raw-material supply, production, transportation, marketing and distribution. Therefore, the PKSF wants to bring the entire value and supply chain under its financing framework to expand employment opportunities.
He said the PKSF has been working for around 36 years to develop entrepreneurs and create employment. The organisation now focuses not only on the volume of financing but also on its outcomes.
Alongside improving production and supply-chain efficiency, the PKSF is assessing how much employment its financing creates, he said.
Fazlul Kader said the Bangladesh Bank has arranged a Tk 5,000-crore credit line for the PKSF, and the first tranche of the funds has already been disbursed.
He said the PKSF has maintained a loan recovery rate of around 99 percent for a long period. While maintaining financial discipline, the organisation is now giving greater importance to the impact of its financing on production and employment.
Regarding the expansion of PKSF activities to improve value chains, he said some problems cannot be resolved through loans alone.
The government also needs to provide grants for necessary infrastructure and other support in value chains,” he said.
Fazlul Kader said the PKSF has already worked with more than 400 value chains.
Drawing on this experience, the organisation plans to expand its activities nationwide with government support, he said, expressing the hope that the initiative will increase production as well as create more employment opportunities.
