CMSME Innovation Challenge 2022

The Cottage, Micro, Small, and Medium Enterprises (CMSMEs) sector is the largest segment of the economy in Bangladesh, accounting for 25% of our GDP and creating employment for 7.8 million people directly. Despite much support from the government and private sectors, the CMSMEs sector, especially in rural settings, faces several challenges in starting and growing their business. Limited access to finance has been one of the core impediments to the sectors’ growth. Systematic use of digital financial services (DFS) and technology solutions in underserved markets can help grow CMSME sector. This challenge fund aims to support startups and incumbents with innovative digital solutions to improve financial access for CMSMEs by addressing the challenges they typically face, especially cottage and microenterprises in a rural setup.

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Problem Statement

Detailed description of the issue we're attempting to resolve

CMSMEs, especially cottage and micro-enterprises, including agriculturists, face great difficulty accessing financial facilities from formal financial institutions such as banks and NBFIs. Only 28.4% of the 8.1 Mn CMSMEs are being served by the existing formal financial channel³ . The problem goes beyond the formalization of CMSMEs, and there are limitations on both the CMSME and the financial service providers’ ends. The country's CMSMEs get access to only one-third of the fund they need for running businesses, while rural entrepreneurs receive only 19% of the funds disbursed. According to recent studies, 99% of all business units in Bangladesh are CMSMEs, and 94% experienced a significant loss in 2020 due to the COVID-19 pandemic⁴ . While the government supported entrepreneurs with a generous stimulus package, the finance ministry noted that only 10.8% of this went to cottage and micro-enterprises. A DCCI study found that 59% of CMSMEs found the stimulus application and disbursement process complex. Multiple studies point to the following barriers faced by the CMSMEs to access financial facilities:

Lack of identity and necessary business documents
Complexity in application and disbursement process
High operational cost of the financial institutions for processing small amount loans for CMSMEs
Little or no data exist for credit assessment of CMSMEs
Lack of digital footprints of CMSMEs

The Challenge:
There is a need for innovative digital solutions which will help CMSMEs get better access to finance, lower their cost of capital, and steer away from exploitative, high-cost, informal loans. In this solution, the FinLab BD, through a challenge for startups and incumbents, invites marketable solutions enabling CMSMEs to access a formal financial system.

Outcome/results expected

Increase the accessibility of CMSMEs in the formal financial system
Reduce operational cost of CMSME financing through digital solutions
Increase the percentage of CMSME financing to facilitate Significant growth in CMSME financing

Submission Deadline

15 October 2022

Process

Process Flow of the event:

Shortlisting

Bootcamp

Technical Evaluation

Selection Committee

Agreement and disbursement

Mentoring

Submission Deadline

15 October 2022

Submit Your Idea

FAQ

What is an Innovation Challenge?

Innovation Challenge is about solving a well-regarded problem. a2i circulates the problem and innovators are asked to submit their idea or solution to solve that.

How many days are required to get the final results?

It may take about three months from the launch date.

What are the evaluation stages?

Generally, 4 steps of the process, shortlisting, Bootcamp, technical evaluation, and approval from the Executive Committee.

What are the selection criteria?

innovative concept, feasibility, strategy, implementation plan, management team, etc.

What additional support will be given to the innovators?

Marketing, promotion, partnership, intellectual property support, fundraising, mentoring, training, etc. will be given from seed to growth and scale-up stages.

What is the winning prize?

Up to 1 crore BDT, considering the due diligence and technical evaluation.

Should I submit a technology-based solution?

a2i Innovation Fund invites innovators to solve problems with technology-based solutions.

Why should I participate in the Innovation Challenge?

Innovators have the opportunity to participate in national problem-solving as well as financial, technical, mentoring and other necessary support from a2i and industry leaders.

Who is eligible to submit an idea/solution?

Any individual/team/company/consortium/organization is eligible.

What to do if I don’t get a confirmation email?

It would usually mean that you have not been selected primarily.

Where to contact for any query or feedback?

Any query of generic nature related to content, design, service, or technological issues can be sent through email or contact form.

What to do if I face any problems regarding registration, login, password recovery or difficulty in submission?

Delete/clean your browser history, cache, or cookies and try again. If you still face difficulty, please email us at aif.support@a2i.gov.bd or contact us through the Contact Form.

What is FinLabBD?

The FinLab BD is an effort to build knowledge and foster innovation and entrepreneurial activity directed towards improving financial inclusion and livelihood for the lower and middle income segment. Taking an ecosystem development approach, the program aims to create and disseminate resources that help startups and entrepreneurs get the right knowledge, tools, funding, partners, and access to test markets to help develop inclusive solutions

aif.support@a2i.gov.bd

Phone

88 02 55006931-34

Fax

88 02 55006940

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