Formalizing businesses in Bangladesh: How women entrepreneurs see the trade licensing process

Posted on by Saumya Dixit

Amina wants to transform her home-based craft business into a thriving enterprise in Dhaka. She is talented and pours her heart into every piece of her intricate, handcrafted jewelry. However, she has failed to expand her business as she cannot access credit because she lacks a trade license.

The lack of trade licenses significantly hinders the formalization of Bangladesh’s cottage, micro, small, and medium enterprises (CMSMEs). Women in Bangladesh have a majority ownership of only 1.7% of formal firms in Bangladesh, a stark contrast to the global and regional averages of 14.5% and 9.6%, respectively. More than 90% of Bangladesh’s 7.8 million businesses are informal, primarily due to the absence of trade licenses. Informal operation restricts access to formal finance and business development services, which limits growth potential, especially for women entrepreneurs.

Although the regulator allows small-scale traders to open bank accounts without trade licenses, businesses cannot obtain credit from banks without a trade license. Their choices become limited to their informal network or the higher-priced MFI loans. The acquisition of trade licenses typically requires significant time, cost, and effort and involves several steps, which include the submission of the necessary documentation to the local city corporation or municipal authority. Moreover, the license must be renewed annually. Only since September 2023 has Dhaka South City Corporation started to issue five-year business licenses. The government expects to roll out a similar program countrywide soon.

We conducted a comprehensive study of CMSMEs through the Women Business Diaries project, supported by the Bill & Melinda Gates Foundation. This research identified several demand- and supply-side barriers that hinder women’s access to formal credit. Among these, the lack of a trade license was a significant obstacle for women entrepreneurs. Only 48% of entrepreneurs from our sample of 413 female and 76 male entrepreneurs had ever possessed a trade license. However, this proportion varies significantly between male and female entrepreneurs, as male entrepreneurs are more likely to have a trade license (p=0.000).

However, gender is not the only factor that affects a woman entrepreneur’s ability to obtain a trade license. Our research examined factors, such as business location, type of premises (home-based or separate), business scale, owner’s education level and age category, type of business, and engagement in activities, such as securing bank loans or conducting sales beyond the local market. We employed a statistical comparison of proportions with Bonferroni correction for this analysis.

Our analysis revealed that location, type of premises, and type of business were not statistically significant factors that affect women entrepreneurs’ possession of a trade license.

However, several other factors showed statistically significant differences in their association with the possession of a trade license, as listed below.

  1. Business owners’ education level: Graduate or postgraduate women entrepreneurs are more likely to have a trade license than those who lack formal education (p=0.004) or have attained primary-level (p=0.004) or secondary-level education (p=0.044). Moreover, female business owners who lack formal education are significantly less aware of the trade application process than those who have received some education.
  2. Business owner’s age: Younger women entrepreneurs are less likely to have a trade license than those in the middle age (p=0.020) or older age categories (p=0.000). This could be because they realize the benefits of a trade license as they gain business experience. Moreover, a trade license becomes essential when owners want to scale their business and avail of credit and other formal support.
  3. Engagement in sales outside the local market: Women entrepreneurs who engage in sales outside their local market are more likely to have a trade license than those who only cater to their local market (p=0.016).
  4. The scale of business: Women entrepreneurs with average monthly revenue of more than BDT 100,000 (USD 837) are more likely to have a trade license than those with average monthly revenues that range from BDT 25,000 (USD 209) or below (p=0.000), 25,001 to 50,000 (USD 209 to USD 418) (p=0.000), and BDT 50,001 to 100,000 (USD 418 to USD 837) (p=0.001). This can, in part, be because women entrepreneurs with smaller businesses that generate monthly average revenue up to BDT 25,000 (USD 209) were more likely to report being unaware of the requirement for a trade license.
  5. Location of business: Similarly, female business owners in rural areas are more likely to be unaware of the trade license requirements than those in urban areas (p=0.009).

In our sample, 82% of the 43% of women entrepreneurs who have obtained a trade license currently have active or renewed licenses, and 86% have licenses registered in their names. Among the 51% who never applied, 59% expressed uncertainty about the need for a trade license, while 27% cited the burdensome paperwork as a deterrent. The following figure outlines other reasons for non-application:

Additionally, we found several ecosystem-level complexities. The annual renewal process often requires multiple visits to licensing offices, which can be difficult for women who lack their family’s support or must travel to urban areas to apply for the license. Further, the acquisition of a trade license often involves registration fees, renewal fees, and other administrative costs. It may often also involve bribes to intermediaries. These costs present a significant barrier. Such challenges highlight the need for more accessible and streamlined licensing procedures that accommodate the unique circumstances of women entrepreneurs in Bangladesh. The section below outlines four recommendations for stakeholders to ease the process of issuing trade licenses for women entrepreneurs.

  1. Simplified processes to issue trade licenses: Countries, such as Singapore, New Zealand, the UK, and Australia, issue digital trade licenses in one to three steps. On the other hand, the acquisition of a trade license in Bangladesh requires seven to eight steps. Bangladesh may also consider the use of its national identity cards to issue trade licenses as several other countries currently do. The reduction of the steps to get a trade license will enable more businesses to move toward formalization.
  2. Extended channels: The use of existing channels, such as NGOs, mobile financial service (MFS) agents, and banking agents, to support women in the trade license application process could improve access for women entrepreneurs. Additionally, the establishment  of centers in rural areas could help women in underserved regions obtain and renew their licenses without traveling long distances to urban centers. This combined strategy will guide them throughout the application process and significantly enhance convenience and accessibility for women in business.
  3. Subsidized application and renewal fees: Fees for trade licenses in Bangladesh range from BDT 100 to BDT 40,000 (USD 0.84 to USD 335). Relevant incentives, for example, discounted rates for timely renewals, could reduce financial barriers for women entrepreneurs and encourage more businesses to formalize their operations. Additionally, nudges, such as free renewals before the license expiry, will encourage more small businesses to opt for a trade license. Kenya has adopted a similar approach to push the formalization of its small businesses.
  4. Awareness campaigns: Educational and outreach efforts can effectively inform women entrepreneurs about the benefits of obtaining a trade license, such as access to financial services, increased credibility, and legal protection. These efforts can feature success stories to demonstrate the advantages of formalized businesses, which would inspire others to follow suit. Additionally, the use of social media to guide women through the application process can create a supportive community for aspiring entrepreneurs.This approach promotes formalization and keeps women updated on developments, such as the government’s initiative to extend trade license validity.

This blog underscores that the trade license policy and approach must be reformed to promote women’s entrepreneurship in Bangladesh. The government can address the existing barriers and implement measures to facilitate greater participation of women in the formal economy. This would empower women and contribute to the broader economic growth and the successful graduation of Bangladesh from the Least Developed Country (LDC) status.

Gender-intelligent banking (part 1): A practitioner’s perspective on designing financial services for women

Posted on by Saumya Dixit

Women in Bangladesh own 37.2% of bank accounts and hold 33.5% of the country’s total bank deposits, per the Bangladesh Bank’s WFID Dashboard as of Q1 2024. Yet, they continue to grapple with significant barriers when they seek access to credit. They hold only 20% of bank loan accounts, which represents 19% of the total loans by value. The limited credit availability restricts women’s financial agency and business growth and undermines their potential contributions to economic growth.

MSC’s Women Business Diaries research, which involved around 500 business owners in Bangladesh, offers valuable insights into the development of gender-intentional products for women and women entrepreneurs. This two-part blog series discusses the challenges practitioners face in the creation of gender-intentional products and services.

We studied access to credit in-depth and spoke with multiple bankers from bank head offices, branches, and credit officers about their experiences and approaches to lending to women entrepreneurs. This blog summarizes our discussions with them and the challenges they face when they design financial products and services for women entrepreneurs.

Restrictive socioeconomic norms and cultural barriers that prevent interaction with female customers

Bankers acknowledge that social norms hinder women’s access to formal financial products and services. Women entrepreneurs often struggle with limited financial independence and decision-making power due to restricted mobility, lack of control over resources, and traditional gender roles that confine them to domestic responsibilities. While women may legally own businesses, male household members frequently make the financial decisions. A credit officer from a prominent bank observed that despite the establishment of dedicated women’s banking desks, interactions with female account holders are often dominated by male relatives, particularly in loan negotiations. Due to security concerns and social norms, bankers and female customers prefer to speak with the husbands or men in the household. This dynamic limits women’s ability to express their financial needs effectively. In many instances, it leads to a situation where women prefer to avoid the use of formal bank accounts altogether.

The dependence on men is not limited to interactions. A product manager notes that even when women seek credit independently, their limited collateral and credit history often require male relatives, who usually control family assets, to co-sign loans.

The implications of this dependence on men result in many more challenges. For example, it undermines bankers’ trust in women’s financial decision-making and business management skills. Further, bankers’ limited experience interacting with women complicates their ability to evaluate women’s business potential and design tailored financial products. For instance, savings bank accounts in Bangladesh often require a minimum deposit of at least BDT 10,000 (USD 84), which is prohibitive for marginalized women who have small and irregular savings. This forces them to store money informally, which increases the risk of loss or theft.

A lack of understanding of female customers also affects credit services. Most women know that banks require lengthy documentation and take time to process applications but are unaware of credit guarantee programs that could ease access. Only 31% of female business owners know about programs that facilitate access to credit. Furthermore, bankers assume women do not maintain business records, yet our study finds that 63% of women entrepreneurs keep inventory records, while 68% track income and expenses.

Lack of trained staff who can build an understanding of women’s customer segments

By default, banks generally train their staff in banking and helping male customers. Many bankers have preconceived notions about women’s financial roles. Most banks do not have a gender-aware training system. They also lack female representation. As of December 2023, women comprised only 16.37% of the total workforce in Bangladesh’s banking industry. This amounts to 33,346 female employees compared to 170,350 male employees. This underrepresentation extends to decision-making levels. The proportion of women on bank boards declined from 14.22% in 2022 to 13.51% in 2023.

Moreover, more than 16% of women in banking left their jobs in 2023, which indicates a growing trend of female professionals who seek opportunities outside the sector. These statistics highlight a precarious environment where female customers have limited access to female staff for support and guidance and lack representation in leadership roles to advocate for their financial needs. As a result, banks are often perceived as male-dominated spaces and are not the first choice of cottage, micro, small, and medium enterprises (CMSMEs) when they apply for loans.

Most entrepreneurs want credit from banks. In our study, 72% of women and 76% of men seek credit from banks. However, microfinance institutions (MFIs) frequently outperform banks as they offer more accessible and relevant solutions focused primarily on female borrowers.

Poor implementation of policy measures that could enhance interaction with women entrepreneurs

Despite policymakers’ efforts, women in Bangladesh face barriers to financial inclusion, such as legal frameworks that restrict independent access to banking services or loans without male consent. Women find it particularly challenging to obtain a trade license due to complex bureaucratic procedures and gender bias. These barriers further restrict their access to formal financial services.

The Bangladesh Bank’s efforts to bridge the gender gap

The Bangladesh Bank (BB) has launched several initiatives to improve women’s access to formal finance. Key measures include:

  • The establishment of the Women Entrepreneurs Development Unit (WEDU) and dedicated desks in bank branches;
  • The introduction of a 1% cash incentive for timely loan repayment by women;
  • A mandate for banks to allocate 10% of their CMSME loan portfolio to women, which increased to 15% in 2024;
  • The provision of low-interest loans through a refinancing fund worth BDT 30 billion (USD 250.8 million) and the prioritization of women in other refinancing programs;
  • The reservation of 10% of the credit guarantee fund for women and the allowance of loans up to BDT 25,00,000 (USD 20,900) without collateral;
  • The simplification of loan applications and the development of financial literacy guidelines focused on women and;

The launch of entrepreneurship development programs with at least 30% female participation.

Despite Bangladesh Bank’s various initiatives to improve access to formal credit for women, their impact at the grassroots level remains minimal. For example, the regulator has relaxed the requirement for personal guarantors through multiple circulars. However, the lack of practical enforcement of these regulations and the absence of viable alternatives to personal guarantees has led banks to demand multiple personal guarantees. This has become a significant barrier for thin-file borrowers when they seek access to formal credit. However, bank staff and credit officers maintain that such practices are necessary to safeguard the bank’s interest and ensure the timely repayment of loans.

Designing financial products for women must begin with a gender-intentional approach

The banking sector’s failure to engage with the female segment and understand it limits its ability to serve it effectively. A clear, streamlined, standardized, and action-oriented framework to assess the potential for services and their impact can complement efforts to develop gender-sensitive approaches within banks.

The process of designing financial products for women entrepreneurs must be both intentional and nuanced. These may include targeted initiatives, such as gender sensitization for staff through gender-disaggregated data, to create evidence-based strategies and adopt design thinking in product and service development.

Insights from our work have helped commercial banks in Bangladesh gain a deeper understanding of the women’s MSME segment. This has led to product innovations. We discuss this in the second part of this series: Gender-intelligent banking (part 2): Small changes, big wins: How small changes by FSPs can result in big wins. Read the next part here to learn more.

Gender-intelligent banking (part 2): Small changes, big wins: How small changes by FSPs can result in big wins

Posted on by Saumya Dixit

Gender-intelligent banking (part 2): Small changes, big wins: How small changes by FSPs can result in big wins

Lameesa Akter, a successful cosmetics shop owner in Kotuali, Rangpur, applied for a BDT 5,00,000 (USD 4,180) loan at a bank. She had to spend two months running around the bank, which led to significant opportunity costs and a direct cost of BDT 5,000 (USD 42) in upfront expenses. However, she soon learned her loan application was invalid, and hence the loan was denied.

Lameesa’s story is not unique, as countless women in Bangladesh like her struggle to access financial products tailored to their specific needs and context. In the first part of this two-part blog series, we discussed the challenges practitioners face when they create gender-intentional products and services.

This blog highlights two insights from our work that our partner banks have used to address these challenges. These efforts have translated into small yet impactful product and channel design adjustments to improve women’s access to financial products. For more insights, see Insights to innovations: Designing financial services for women entrepreneurs.

  1. Small ticket-size savings

Many banks in Bangladesh impose minimum deposit requirements, which range from BDT 10,000 (USD 84) to BDT 50,000 (USD 420). This is a significant barrier for women. Additionally, banks lack flexibility regarding savings product tenures and partial withdrawals.

Only 32% of women in our study saved at a bank. Many save informally at home or through other formal channels, such as microfinance institutions (MFIs), deposit pension scheme (DPS), and samitis, as these allow more flexible saving plans.

The table above presents the median amount saved by those who deposit a certain amount regularly through a savings instrument. It shows that this amount is the highest for savings in bank accounts, followed by DPS and MFI deposits. This implies that banks command the savers’ trust, but people save at banks only when they have substantial money to deposit in their accounts. Banks can introduce more flexibility in the amount that can customers can deposit and replicate a flexible model to attract savings from women entrepreneurs, which would help build their savings portfolio. Such a product would allow women who have just launched their businesses to gain banking experience and help banks onboard future credit-ready customers.

Mutual Trust Bank (MTB), one of our partner banks, built on these insights and designed a unique small savings product that specifically targets women entrepreneurs. Through a bundled, secured overdraft (SOD) facility in the accounts, MTB has enabled women to avail of low-cost, short-term, and readily accessible credit based on their savings accounts. The loan eligibility and amount would depend on their savings, which would also act as a nudge for these women entrepreneurs to save consistently.

  1. Last-mile outreach through the digitization of delivery channels

The complex and extensive application paperwork involved in loan processing can be overwhelming and may deter many potential applicants. The lengthy turnaround time for loan processing further increases opportunity costs, which makes it difficult for women to dedicate the time needed to complete the process. Many diarists mention bank officials offer little support when they handle the diarists’ queries, which adversely affects their trust and confidence in the banks.

Women entrepreneurs also reported that multiple visits to the bank branch for loan applications adversely affect their business and personal lives and pose opportunity costs. Per our mapped credit journeys, they incur as much as BDT 6,000 (USD 50) in direct costs and at least five days of revenue loss as opportunity costs. For some, the long turnaround time banks take to process applications can be even more costly, as seen through the customer journey of Lameesa, the Women Business Diaries Project diarist whom we met at the start of this blog.

Alternate service delivery channels, such as mobile banking and digital application systems, can emerge as a practical solution. These can help reach women entrepreneurs in remote areas and ensure that applications are accepted only when required documents are submitted, which increases the likelihood of conversion of these leads. Our research also finds that most women are comfortable using digital interfaces in their daily lives, and 87% use their phones for mobile payments.

A digital loan application and tracking system will potentially solve these issues for female applicants and enhance their accessibility to bank loans. Insights from the project have facilitated Bank Asia, another partner bank, to create an online lead generation and loan application system, which uses digital channels for credit lead sourcing and application.

Making gender-intelligent financial services a habit

MTB and Bank Asia’s gender-intelligent product design exemplifies two critical pillars of gender-intentional banking: Data-driven decision-making and gender-focused business strategies. A gender-intelligent approach ensures that products and services are more accessible to women and have a greater potential for long-term adoption.

Through the pilot of its goal-based savings product, MTB seeks to onboard at least 500 new clients in the first year, with each client expected to save between BDT 25,000 (USD 210) and BDT 50,000 (USD 420) annually. This would result in a total savings portfolio of approximately BDT 2.5 million (USD 21,000) within the first year. Meanwhile, Bank Asia plans to extend credit to 1,000 additional clients through its pilot of a new digital lead generation and loan application system, with a minimum loan size of BDT 200,000 (USD 1,675). This would enable the disbursement of an additional BDT 200 million (USD 1.68 million) in its first year.

Financial institutions can create a lasting cultural shift if they embed gender intentionality across their governance, operations, and impact measurement. While MTB and Bank Asia have taken the initial steps, they are well-positioned to harness the significant business opportunities that emerge from serving female customers, such as Lameesa, and so many others like her.

Tracking Success: The Women Business Diaries Project

Posted on by Saumya Dixit

Empowering women entrepreneurs: The Women Business Diaries project

Women entrepreneurs in Bangladesh are an essential force that drives economic growth and supports their communities. Even though they face numerous barriers, their resilience is inspiring. MSC launched the Women Business Diaries project with the Bill & Melinda Gates Foundation’s support to help women entrepreneurs take control of their finances and business growth.

Our latest video showcases the transformative power of the Diaries methodology through the lens of three remarkable women—Sriti Akhter, Sultana Begum, and Tahera Sharmin. After these entrepreneurs adopted the methodology in their business operations, they started to track daily income and expenses, understand cash flow, and plan for the future. These women are now equipped to navigate financial challenges, access credit, and reduce unnecessary expenses.

Impact of bank mergers on low to moderate income communities

Posted on by Deepesh Singh

The banking sector has played a crucial role in Bangladesh’s economic development by supporting businesses and fostering growth. The industry has expanded significantly over the past 30 years due to government initiatives that promote financial inclusion through MSME finance, agri-credit, and microcredit.

Despite all these achievements, the banking sector has been facing significant challenges, including irregularities, embezzlement, and a lack of effective governance.

Bangladesh struggles with a high rate of non-performing loans (NPLs) and ranks low on the financial inclusion index even though it has many banks and financial firms. Many people, especially from the low- and moderate-income groups in rural and semi-urban areas, are still unbanked or underbanked.

Bangladesh Bank recently warned that it would no longer provide unlimited liquidity support and expected banks to manage their finances carefully to maintain public trust.

The bank has introduced the Prompt Corrective Action (PCA) framework to address these issues. This framework requires banks to take corrective actions based on indicators, such as Capital-to-Risk Weighted Assets Ratio (CRAR), NPLs, and corporate governance.

Bangladesh Bank has also proposed a roadmap for bank mergers to improve stability and efficiency in the sector. These initiatives are part of the country’s efforts to maintain macroeconomic stability and continue receiving loan disbursements from the IMF.

Capital injection and mergers are viable options for struggling banks. New shareholders can provide additional capital, while mergers can help consolidate resources.

However, these banks must handle mergers carefully, as these can adversely impact low-income customers in rural and urban areas who have recently started to access formal financial services.

Mergers can be troublesome if not handled well. The lack of transparency surrounding their causes and the resulting uncertainty have already led to a loss of depositors’ trust.

Recently, panicked bank depositors withdrew money from their accounts after merger announcements indicated a shift toward holding cash outside the banking system. This erosion of trust and high inflation can further exacerbate the move toward a cashless economy.

This can reduce the local currency’s purchasing power and make financial transactions ineffective.

The acquiring bank’s more conservative lending approach may tighten credit policies and affect borrowers associated with weaker banks. Such changes can limit access to vital funds for low- and moderate-income customers, who often rely on flexible lending terms.

Mergers can disrupt the established relationships between customers and their local branches, especially if the acquiring bank shifts its focus toward larger corporate clients.  Additionally, the amalgamation of different banking software and interfaces can lead to temporary inconvenience.

The integration process can lead to changes in account procedures, branch closures, or service disruptions. These disruptions can be particularly challenging for low-income customers who may lack easy access to alternative financial services. Employment in the MSME sector may suffer if entrepreneurs cannot access funds to continue business as usual.

The following measures will be critical to mitigate the adverse impact of forced mergers on low-income customers:

1. Ensure transparency: Communicate the merger’s processes and objectives to build confidence among depositors.

2. Assess asset quality: Assess the asset quality of weak banks before a merger to protect the interests of strong banks and depositors. This will prevent the transfer of bad assets to healthier banks, which can undermine the entire banking sector.

3. Develop detailed guidelines: Create comprehensive guidelines on mergers and acquisitions based on exemplary international practices. These guidelines should outline a clear roadmap for banks to ensure a smooth merger process.

4. Prioritise low-income customers: Ensure that the merger process does not disproportionately affect low-income customers’ access to financial services. Special measures should be taken to protect their interests and maintain their trust in the banking system.

5. Implement strong corporate governance: Apply robust corporate governance measures to address the root causes of the banking sector’s problems, such as the spike in bad loans and the culture of wilful defaulting. This can help restore confidence in the sector and ensure its long-term stability.

6. Provide policy support and liquidity assistance: Provide policy support and liquidity assistance to help banks integrate smoothly during mergers and maintain stability in the sector.

Well-managed mergers can strengthen the banking sector, contribute to Bangladesh’s development agenda, promote formal banking among MSMEs, and ultimately contribute to long-term economic growth and prosperity.

The new government and leadership at the Bangladesh Bank make now an ideal time to revisit and strengthen banking reforms. These reforms should include effective governance and informed decision-making for a healthy recovery of the financial system.

The article was first published on the TBS News website on 7th November 2024.

Digital platforms: Catalysts for growth and sustainability among Bangladesh’s microentrepreneurs: Part 2

Posted on by Saumya Dixit

Our earlier blog explored how microenterprises use digital platforms in Bangladesh. In this part, we dive deeper into the factors that influence platform adoption, female microentrepreneurs’ unique motivation to onboard digital platforms, the broader social and economic impact of these digital platforms, and the way ahead for these small businesses.

Factors that influence platform adoption

Various factors influence microentrepreneurs’ decision to adopt digital platforms, which differ across sectors. An understanding of these factors can help stakeholders design targeted interventions to increase platform adoption among microentrepreneurs.

Retail trade: Microentrepreneurs in retail trade prefer the convenience of having goods delivered directly to their shops and being able to access goods affordably. Additionally, comparing prices between suppliers is crucial for making informed purchasing decisions. Moreover, user-friendly interfaces play a significant role as they enable entrepreneurs to navigate the platform efficiently without requiring extensive technical expertise.

Transport and logistics: The adoption of digital platforms hinges on specific factors essential for operational efficiency. Microentrepreneurs in the transport and logistics sector prioritize ease of finding customers, fair treatment of drivers, and reliable tracking and reporting systems. Platforms that facilitate quick connections between drivers and customers, ensure transparent policies for drivers, and provide real-time tracking information are highly sought after, as they enhance operational efficiency and foster trust among users.

Social selling: Microentrepreneurs engaged in social selling consider certain features indispensable for success, which include robust marketing tools, secure payment processing mechanisms, and effective customer support services. These enabling factors help microentrepreneurs promote their products effectively, reach a wider audience, ensure secure transactions, and address customer inquiries and concerns promptly.

Additionally, perceptions of digital platforms’ usefulness vary. A slightly higher percentage of women, especially in rural areas, believe the platforms are not helpful. Notably, women in rural areas are motivated to join digital platforms for networking, safety, and visibility, while both genders value market access benefits.

If providers understand and address each sector’s unique needs, they can create targeted strategies to increase microentrepreneurs’ use of digital platforms. This is crucial for the growth of microenterprises across various industries, alongside economic development and empowerment.

Women microentrepreneurs’ perception and motivation to join and onboard digital platforms

Female microentrepreneurs are motivated to embrace digital platforms when they find networking opportunities, enhanced safety and security, and amplified visibility for their businesses. This need for connection and exposure is crucial to influencing women entrepreneurs, empowering them to expand their presence and engage with a broader audience.

Both male and female microentrepreneurs perceive access to the market as the primary benefit for women who participate in digital platforms. However, a difference emerges based on location. Rural female microentrepreneurs prioritize access to peer networks as the most crucial benefit, while both male and female urban entrepreneurs emphasize market access.

Interestingly, when they joined a digital platform, most women in both urban and rural settings did not encounter significant challenges or barriers related to cultural norms, societal biases, or other social factors. This suggests that women in both settings quickly embrace digital platforms for business purposes, despite potential societal constraints.

Broader economic and social impacts of using digital platforms

The broader economic and social implications of digital platforms extend far beyond mere financial gains for microentrepreneurs. While the increase in income and profits is undoubtedly significant, we must also recognize these platforms’ non-monetary advantages.

One key benefit of digital platforms is the access to training facilities provided by digital platforms. These resources empower microentrepreneurs, especially women, by equipping them with the skills and knowledge needed to succeed in their businesses. Microentrepreneurs can enhance their capabilities and drive business growth with access to training on marketing strategies, financial management, and customer relations.

Furthermore, digital platforms increase safety for microentrepreneurs, particularly women, who may face unique challenges and risks in their business operations. These platforms facilitate secure transactions and provide safety measures, such as real-time tracking and reporting, to create a safer environment for conducting business and thus promote confidence and peace of mind among microentrepreneurs.

Another significant advantage digital platforms offer is visibility. Microentrepreneurs can reach a broader audience beyond their local communities when they showcase products and services on online platforms. This increased visibility expands market opportunities and enhances the reputation and credibility of microentrepreneurs, which ultimately contributes to their long-term business success.

Moreover, digital platforms enable microentrepreneurs to make informed business decisions. The platforms provide reliable financial insights and analytics that empower entrepreneurs to assess performance, identify trends, and strategize for the future. This data-driven approach fosters better decision-making and improves business outcomes and long-term sustainability.

Digital platforms hold great transformative potential for Bangladesh’s microentrepreneurs. The platforms provide microentrepreneurs access to new markets, formal financial services, and valuable business insights, which empower them to grow their businesses and improve their livelihoods. However, to maximize their impact, stakeholders must address barriers to adoption, such as increasing platform awareness and ensuring user comfort. This can create a difference between traditional ways of doing business and the adoption of digital methods.

Targeted interventions, such as collateral-free credit, alongside supportive policies, such as faster registration, can help bridge these gaps to ensure more microentrepreneurs can benefit from the digital revolution. As we continue to explore the transformative potential of digital platforms, it is clear they hold the key to unlock new opportunities for Bangladesh’s microentrepreneurs, drive inclusive and sustainable economic growth, and capitalize on the opportunities of the digital age.