Terms of Reference (ToR) for the Study on

LDC Graduation of Bangladesh: Challenges and Opportunities for SMEs 

1. Background:

Small and medium enterprises (SMEs) have long been globally recognized as engines of growth and drivers of innovation. SMEs play a vital role in the overall production networks and are core to the economic growth of developing countries. They represent about 90% of businesses and more than 50% of employment worldwide. Formal SMEs contribute up to 40% of emerging economies’ national income (GDP).

In Bangladesh, SMEs are the backbone of the national economy as the sector plays a vital role in the country's accelerated industrialization and economic growth, employment generation and poverty alleviation. SMEs are particularly suitable for densely populated countries like Bangladesh, where the SME sector can provide huge employment opportunities with much lower investment.

Graduation from the least developed countries (LDC) group to developing country status is a milestone in our development journey, and it will certainly improve Bangladesh's image globally. The United Nations General Assembly (UNGA) has approved a resolution to allow Bangladesh to graduate to the developing country category from the least developed country (LDC) category 45 years after it was included in the category. The UNGA adopted the historic resolution at its 76th session following of the United Nations Committee for Development Policy (UN CDP) recommendation. Bangladesh is now scheduled to become a developing country on 24 November 2026 officially. The UN committee recommended that the country get five years, instead of three, to prepare for the transition due to the impact of Covid-19 on its economy.

Graduation from the LDC group brings both challenges and opportunities to a country. It will enhance the country's confidence in dealing with the international financial bodies, improve its credit rating and attract higher foreign direct investment (FDI) flow. However, graduation will affect official development assistance and concessional loans and include certain preferential treatments in trade, subsidies to agriculture and infant industries and access to some LDC-specific funds. There will be other implications for the country following the exit from the LDC group. The situation cannot be any different for Bangladesh.

After graduation from LDC in 2026, Bangladeshi SMEs will face growing challenges to be competitive in the international market. In this context, SME Foundation is planning to conduct a study on ‘LDC graduation of Bangladesh: Challenges and Opportunities for the SMEs’.

2. Objective:

The objective of the study is to evaluate the challenges and opportunities of SMEs in Bangladesh associated with LDC graduation.

2.1 Specific Objectives:

  • To analyze the post-graduation benefits and challenges of SMEs in Bangladesh;
  • To investigate the post-graduation impacts on SMEs;
  • To analyze the policy/strategy to cope with the economic transition for the SMEs;
  • To find out the global experiences of LDC graduation;
  • To analyze the scope of intervention and policy recommendation.

3. Scope of Work:

  • Review various government documents and policies for policy suggestions;
  • Review relevant academic studies and policy papers for the policy suggestions;
  • Collect data by interviewing key informants such as policymakers, experts, business leaders, representatives from chambers & associations, SME entrepreneurs, etc.;
  • Analyze the post-graduation scope of SMEs in Bangladesh;
  • Review the challenges and barriers to be faced by the SMEs;
  • Investigate the future opportunities for SMEs in Bangladesh;
  • Review the relevant programs & policies of other countries that graduated from LDC.

4. Methodology & Task Specification:

  • The consultant/researcher shall propose a detailed methodology and work plan of the study complying with the objectives and scope of work;
  • A statistically sound sampling methodology shall be designed;
  • The information shall be collected from primary sources like surveys, Key Informant Interviews (KIIs), Focus Group Discussions (FGDs) etc. and from secondary sources like published reports and journals, websites etc.
  • All data shall be collected following standards and best practices of research methodology;
  • A sound review of literature is to be conducted and presented;
  • The consultant/researcher shall propose a comprehensive work plan with every detailed activity including but not limited to planned tasks, person-days, schedule, duration etc.
  • The researcher shall propose a budget with every breakup detail (segment-wise).

5. Work Modalities:

  • A consultant/researcher will conduct the study. He/she will be responsible for drafting the reports and other deliverables;
  • The consultant/researcher will get feedback from the SME Foundation and FES Bangladesh from time to time on the way to finalizing the report;
  • There should be finalizing consultations between SME Foundation, FES Bangladesh and the researcher while carrying out the study.

6. Reporting Requirements:

  • The written report is expected to respond to all the tasks identified in the ToR and follow the standard reporting format;
  • The consultant/researcher shall be engaged and responsible for sharing research work, meeting with SME Foundation and FES Bangladesh, a consultation meeting/workshop preparation;
  • Necessary amendments, updates, and changes shall be done for the finalization of reports by the researcher in consultation with SME Foundation and FES Bangladesh.
  • The consultant/researcher shall prepare & submit a separate article from the report to publish in the international journal of SME development.

7. Time Frame:

SL
Activity
Months
1
2
3
1.
 Awarding the Task      
2.
 Review and collection of Secondary materials, reports, conducting surveys, FGDs, KIIs etc.      
3.
 Submission of Draft Report      
4.
 Submission    of    Final     report     (by    incorporating recommendations).      

8. Remuneration and payment:

  • A fixed amount of consultancy fees for the study will be finalized as per FES norms in consultation with the researcher and paid by FES Bangladesh;
  • The full amount of the honorarium will be paid per cheque to the name of the researcher in three instalments. The first instalment (10% of the contract price) shall be paid upon acceptance of the inception report, the second instalment (40% of the contract price) shall be paid upon acceptance of the draft report and the final one (50% of the contract price) shall be paid after finalization and acceptance of the final report by 30 November 2022;
  • The inception report and final report will be finalized/accepted upon certification from SME Foundation and FES Bangladesh;
  • Income tax will be inclusive of the amount. All the applicable TAX and VAT will be deducted at the source and deposited by the direct paying authority as per the Law. FES Bangladesh will reimburse the same (gross amount) to the direct paying authority on submission of such documentation after completion of the event within two weeks as per MoC;
  • A workshop will be organized jointly by SME Foundation, FES Bangladesh and the researcher. FES Bangladesh will bear all the costs related to the workshop;
  • Other than those, no cost for taking interviews, transport, organizing FGDs, KIIs, mobile bills, and related things will not be reimbursed.

9. Evaluation Criteria for consultant/researchers:

  • Senior Researcher / Professor (PhD holders will be preferred);
  • Experience in working in relevant field;
  • Having knowledge of SME development will be preferred;
  • Proven competency in research and publication.

10. Steps for selection of researchers:

  • Request for Expression of Interest (EOI) along with proposals (Research & Financial);
  • Evaluation of the documents (EoI & proposals);
  • Awarding the task.

11. Expected deliverables:

  • Draft Report;
  • Proceedings of the validation workshop; and
  • Final Report (Hard and soft copy).

12. Submission of the EoI & other documents:

  • Interested researcher shall respond to the expression of interest (EOI) and demonstrate that they are qualified to perform the task;
  • Researcher shall submit a technical and financial proposal including CV, TIN along with EoI;
  • Hard & Soft copy to:
    Managing Director, SME Foundation, Level 6 & 7, Parjatan Bhaban, E-5/C-1, Agargaon Administrative Area, Sher-e-Bangla Nagar, Dhaka-1207; e-mail: md@smef.gov.bd.
  • With a CC to: (masum.billah@smef.gov.bd, abu.syed@smef.gov.bd).
  • Documents must be submitted by 22 August 2022, Sunday.

13. Declarations and representations

  • By signing the contract, the researcher certify that they are not in a situation of conflict of interest in relation to this contract;
  • Confidentiality of every information that belongs to SME Foundation and FES Bangladesh should be maintained strictly by the researchers at all times;
  • SME Foundation and FES Bangladesh shall reserve all rights for adding any dimension to the study.

14. Copyright

  • FES Bangladesh will reserve the copyright of the study report prepared by the researchers under this contract.
  • Any part of the report cannot be shared, sold or reproduced in any manner without the prior written approval of SME Foundation and FES Bangladesh.

15. Termination of the contract

  • SME Foundation and FES Bangladesh reserve the right to terminate the contract without prior notice in case of failure to fulfil/complete the assignment satisfactorily.
  • Plagiarism and lack of authenticity of data will cause automatic termination of the contract. In case of fraud, money (paid) must be back to the authority.