Uddokta: Paving a Pathway for MSMEs & VDOs

Introduction & Background of the Project

Uddokta – powering entrepreneurs, a project funded by Chevron and implemented by iDE Bangladesh, seeks to identify and support 1,100 MSMEs (Micro, Small, and Medium Enterprises) and 110 Village Development Organizations (VDOs) to start or help grow their businesses and achieve profitability through a market-based approach. The project aims to increase the income of these enterprises and VDOs, which will contribute to the sustainable growth of the community and strengthen Chevron’s relationship with the beneficiaries. iDE Bangladesh appointed LightCastle Partners to help assess, design, and deliver an enterprise accelerator program. The consulting firm was also responsible for developing mentorship guidelines by means of which iDE Bangladesh is planning to create a framework for these MSMEs and VDOs to operate sustainably in Sylhet, Moulvibazar, and Habiganj districts. iDE believes that the Uddokta Project will enable enterprises to achieve self-sufficiency through improved business management capacity and funds from investors.

Project Approach

As per iDE’s requirements, LightCastle Partners conducted a needs assessment to understand the deficiencies of the entrepreneurs and develop a conclusive strategic outline that would facilitate an effective enterprise accelerator program. Likewise, LightCastle Partners conducted a mentorship program for the iDE field team to get them acquainted with the necessary subjective understanding required to provide one-to-one consultation support to the entrepreneurs.

Needs Assessment Analysis

With assistance from LightCastle Partners, the iDE team conducted surveys of entrepreneurs from different regions in the Sylhet division. These regional data obtained from areas like Nabiganj, Komolganj, and Kalapur, were then collated for developing the needs assessment.

At first, LightCastle Partners developed a questionnaire based on the basic information of the entrepreneurs and their respective enterprises, including queries about their name, location, financial conditions, loan profile, and external accessibilities. As for deriving the need assessment, we then collected information based on their current and future government & local agency support, preferred time and date to participate in the accelerator program, and most importantly, their utmost learning requirement consisting of market linkage, access to finance, technical training, entrepreneurship, MSME financing as well as documentation. After developing the questionnaire, LightCastle Partners and the iDE field team visited enterprises consisting of dairy, cow fattening, poultry, goat rearing, fisheries, agriculture, and light-engineering subsectors in various regions of the Sylhet division. LightCastle Partners and iDE have conducted surveys of 15 entrepreneurs to understand the current and future need for capacity development. Among the 15 entrepreneurs, LightCastle Partners collected data from 7 entrepreneurs, and iDE collected the remaining data. From the provided questionnaire, it was evident that the entrepreneurs needed more training in business management to enhance their skillset and develop an entrepreneurial mindset. Furthermore, the need assessment survey helped us understand the requirements of these entrepreneurs and model our activities in a manner that would entail the maximum benefits.

From the analysis, we inferred the preferred learning requirements for these entrepreneurs for capacity building and investment readiness which are as follows (mentioned chronologically from highest to lowest preferred learning):
1. Access to Finance
2. Access to Market Linkage
3. Business Training
4. Technical Training
5. Mentorship.

Based on our findings, we developed a cohesive learning curriculum and structured our Enterprise Accelerator Program, which consisted of the following training sessions:

1. Business Fundamentals, Marketing, and Technical Training.
2. Access to Finance and Business Training.
3. Digital Literacy and Pitching Session.

Moreover, we also held a ‘Demo Day’ where the correspondents had to pitch their business proposition to our guests. This exercise provided the participants with a real-life scenario to understand formal business transactions.

Enterprise Accelerator Program

LightCastle Partners assisted an entrepreneurship scale-up program implemented by the International Development Enterprise (iDE) and funded by Chevron. The training program was conducted in two batches of MSME entrepreneurs from 4th Oct – 8th Oct 2021 and 10th Oct – 13th Oct 2021 at Upazila Krishi Office, Nabiganj and Friends in Village Development Bangladesh (FIVDB), Sylhet Sadar respectively.

A) Residential Training Program:

From 4th – 8th October, the 2-day residential training event took place for each region. The top 25 entrepreneurs from each batch were selected from an initial group of 100; based on their business, understanding of the market system, investment prospects, and market linkage potential. Each batch consisted of entrepreneurs from dairy, cow fattening, poultry, goat rearing, fisheries, agriculture, and light-engineering industries. The program’s prime objective was to provide these budding entrepreneurs with business development support and investment readiness training. The sessions were conducted by Omar Farhan Khan, Sr. Business Consultant, and Ilham Hasan Chowdhury, Business Analyst from LightCastle Partners. The sessions were conducted based on the LightCastle Partners MSME curriculum module. This course consists of understanding business and entrepreneurship, lean business model, marketing and branding, financial statement & MSME financing, application of loans, and digital literacy.

These detailed lectures helped prepare the 25 shortlisted entrepreneurs from each batch for the Investment-readiness and Demo Day. The event took place in the 2nd week of October 2021, in both Nabiganj and Sylhet Sadar, where they pitched their business details in front of the Industry experts.

B) Investment Readiness & Demo Day:

Within 10-13th October, the investment readiness and Demo Day event took place. From 10th to 11th October, entrepreneurs practiced their pitches and were given a refresher of the earlier lectures to develop a strong foothold in their learnings. On the last two days of the training, 12th – 13th October, LightCastle invited Kazi Abdul Azim, Business Development Manager at Brac Bank, Nabiganj Branch, and Rukan Uddin, Business Development Manager at Brac Bank, Sylhet Sadar Branch to provide insights on MSME financing and application of loans from banks for MSME entrepreneurs in Nabiganj and Sylhet Sadar respectively.

Two prominent individuals from Dana Fintech, Zia Hassan Siddique, Co-founder & COO & Gazi Yar Mohammed, CEO, were present as our judges for the Demo Day event. In this event, the entrepreneurs pitched their business plan and model to the respective judges to provide an insight into their current asset valuation, revenue stream, risk, opportunities & future capital, and training requirements.

Market Linkage & Financial Partnerships with MSMEs

A) Financial Partnership:

During the accelerator program, LightCastle Partners invited the founders of Dana and MSME bankers from BRAC bank to initiate a conversation on financial partnership with the MSMEs and the respective organizations. The representatives from these organizations conducted illustrious sessions on raising capital and MSME governance during the Demo-Day program. Moreover, our financial partners are inclined to provide loans and have also developed an innovative financial instrument – Buy Now Pay Later (BNPL) to invest in selected MSMEs from the accelerator program.LightCastle is also working with microfinance institutions to facilitate micro-credit loans to these MSMEs. Furthermore, Dana is willing to invest BDT 1.2 Lacs to these MSMEs in our accelerator program in a buy now pay later model. They are currently analyzing the top 12 selected entrepreneurs and the scope of the investment model.

B) Market Linkage:

LightCastle Partners contacted Khaas Food and Parmeeda, two organic food companies that operate on the e-commerce platform. LightCastle Partners understands the value of digitalization and diversification required for MSMEs to grow and develop a market. Currently, almost all MSMEs are undiversified in e-commerce or social media channels. So, LightCastle Partners is trying to develop a platform where entrepreneurs can be a supplier of products and services to the value chain model of these e-commerce platforms.

On-The-Job Mentorship program

LightCastle Partners has conducted an extensive five-day online mentorship program for the iDE field team across five weeks from 20th January to 17th February 2022. This mentorship program aims to enhance the capacity knowledge of the iDE field team so that the field team can provide one-on-one consultation support to the MSMEs when they are at a point of contact with the entrepreneurs. The mentorship program mainly focused on developing the business capacity of MSMEs. The program consisted of structuring a business plan and a model, access to the market, access to finance, and MSME governance.

LightCastle Partners’ Reflections & Way Forward

From assessing the skill levels of the entrepreneurs and understanding their enterprise management, LightCastle Partners believes that the entrepreneurs are not yet investment-ready for access to loans and finances. As family expenditures impede any scope of self-sufficiency, these enterprises still have a long way to go before using debt financing to repay the loan. Moreover, current MSME loan products do not align with the requirements of entrepreneurs, making it very difficult to gain access to loans.

Overall, we advise entrepreneurs to focus on making their enterprises self-sufficient before approaching debt financing. And they can achieve this self-reliance by forming a structured enterprise model in collaboration with other entrepreneurs. Other financial investment tools like ‘the profit-sharing model’ and ‘the buy now pay later’ should be encouraged among entrepreneurs as these can provide a considerable capital boost. As for the market linkage, a structured supply-chain system is required to facilitate the supply of the enterprises’ productions to the e-commerce platforms. This strategy will diversify the current selling linkages of the entrepreneurs.

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