Small and Medium Enterprise Digitization in Bangladesh, Nepal, Sri Lanka, and India

By Emily Allen , Laurence Audenaerd, PH.D. , Liv Blackmon, Ph.D. , Theresa Dillon , Jennifer Heath , Amanda Hardy , Cody Johnson , Isaiah Murray , Travis Williams , Chris Zimmer

The South Asia Regional Digital Initiative (SARDI) is a USAID program that aims to improve digital connectivity across South Asia, while strengthening the digital capacity of both the private sector and civil society. It also focuses on improving these key stakeholders’ ability to influence ICT policy. In support of that effort, the purpose of this paper is to look at the countries of Bangladesh, India, Nepal, and Sri Lanka and provide insights on digitization among regional small and medium enterprises (SMEs).

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The United States Department of State (State) the United States Agency for International Development (USAID), the governments of Bangladesh, India, Nepal, and Sri Lanka, the people of those nations, numerous nongovernmental organizations (NGOs), private institutions, and other interested parties all made great strides over the last two decades to support small and medium enterprises (SMEs) in their establishment and growth.

During this time, stakeholders—both in and on behalf of each of the four countries addressed in this report—have made significant investments in infrastructure and information and communication technology (ICT). Further, they designed policy strategies and programs to increase access and use of technologies and improved business environments by streamlining regulations, promoting exports, and creating or updating legal definitions of SMEs.

Each of these nations are eager for their SMEs to thrive and digitize. State and USAID can further the momentum of the progress of recent years by pursuing or supporting the following:

Stronger intergovernmental collaboration National awareness campaigns Outreach and targeted education for marginalized groups Investment in infrastructure and digital security Public/private partnerships

To produce this paper, the MITRE research team explored both primary and secondary sources. After synthesizing and analyzing the data, we created a series of general recommendations for State and USAID’s consideration that revolve around policy, outreach, digital literacy, and digital infrastructure. Chief among these recommendations are: 1) that State and USAID form a joint committee to work together on SME digitization. The two agencies will make greater headway in SME digitization with deeper collaboration. 2) that the definition of digital literacy must expand to include cybersecurity. Cybersecurity training to raise awareness and understanding must be an integral part of all digital literacy efforts. 3) that partner nations who do not currently have an agency dedicated to coordinating SMEs establish one, and 4) that State and USAID assist the partner nations in communicating exemplars for SME digitization and upskilling in each nation.

None of these recommendations can be achieved by any single stakeholder; they require collaboration not only between State and USAID, but also partner governments, the SMEs themselves, and other key stakeholders referenced throughout this paper. We highly recommend this multi-stakeholder collaboration to the extent possible. What follows here is a table of general recommendations that apply to each of the four partner nations at a high level. In addition to these general recommendations, this paper is divided into sections by country, with specific recommendations for each country. We divided the paper into two parts, the first of which focuses on Bangladesh, Sri Lanka, and Nepal, and the second of which focuses exclusively on India.