Resource information
The major constraints to RNF growth,
according to a large survey of rural entrepreneurs,'
include (1) flood and natural disasters; (2) access to
electricity; (3) road conditions, (4) access to finance and
(5) transportation to markets. Bangladesh's
vulnerability to frequent floods and other natural disasters
severely hampers operations of more than a third of rural
firms. The next most important constraint to RNF growth is
the lack of access to electricity, which is available to
only 19 percent of rural households (as compared to 31
percent of all households). Third, Bangladesh ranks quite
high in terms of road density; however - because of poor
construction of roads and bridges, lack of maintenance of
roads and waterways, lack of integration of different modes
of transportation due to inefficiencies at the container
port and in the rail system - road conditions and
transportation to markets are reported to be severe problems
by 36 and 18 percent of rural firms, respectively. In
addition, inadequate access to investment finance and t o
working capital disproportionately affects small and
medium-sized firms(the "missing middles"). The
lack of access to telecommunications adversely affects the
start up, growth, and performance of the micro small and
medium sized (MSM) firms. As most of the constraints
impeding RNF growth relate to the provision of public goods
and services, and to macroeconomic and trade policies, the
government has a critical role in removing these
constraints. Actual actions to remove these constraints have
lagged significantly because of the country's lack of:
(1) an institutional mechanism to mainstream RNF issues into
rural development; and (2) a decentralized local government
structure capable of ensuring the efficient delivery of
services to rural entrepreneurs. To unleash the growth
potential of the RNF sector and create a pro-poor virtuous
circle of rural growth, Bangladesh will need to implement
the two-pronged strategy of (1) maintaining an enabling
rural investment climate, and (2) ensuring an institutional
set-up for the efficient delivery of services.
