I SPOKE in September to a fish-drying micro-enterprise owner at Koyra in Khulna, whose traditional sun-drying business has become a daily struggle against unpredictable weather. When prolonged monsoons or unseasonal rains spoil his catch, he often resorts to burning wood to dry fish, an illegal yet necessary measure for survival that, paradoxically, adds to environmental degradation. Consider also a small welding shop in Khulna, where temperatures recently soared to 41.2掳C, paralysing normal life and draining the energy of the working population.
In such suffocating heat, workers are forced into absenteeism and productivity drops drastically. For millions of entrepreneurs, climate change is no longer a distant threat; it is an immediate and daily reality that is reshaping the very foundations of economic survival. The future of cottage, micro, small, and medium enterprises will depend not only on market access or finance, but on how resilient they can become in the face of a changing climate.
CMSMEs are the unseen backbone of the nation, recognised by the government as the 鈥榙riving force of industrialisation鈥� and a priority sector. They are critical for employment generation, poverty alleviation and equality, playing a pivotal role in rural transformation and women鈥檚 economic empowerment. According to a Bangladesh Bank study (November 2022), the sector contributes approximately 24.45 per cent to the national gross domestic product, with the latest National SME Policy setting an ambitious target of 35 per cent by 2030.
Yet this ambition is increasingly challenged by rising climate vulnerability. Sea level rise and changing freshwater flows intensify riverine salinity, disrupting resource availability across coastal supply chains. Extreme weather is eroding productivity across the board; globally, the International Labour Organisation projects that high temperatures could result in productivity losses equivalent to 80 million full-time jobs by 2030. The absence of financial resilience deepens this crisis.
While the Secure Transactions Bill 2023 aims to allow entrepreneurs to use machinery and inventory as collateral, around 80 per cent of CMSME owners still lack the immovable assets required by banks. This barrier sustains a massive Micro, Small, and Medium Enterprises financing gap, estimated by the International Finance Corporation at $2.8 billion. For these small businesses, resilience is not merely an environmental issue, it is an economic imperative for survival.
Building adaptive capacity requires equipping CMSMEs with the technical knowledge, financial literacy, and climate-risk planning tools essential for survival. Yet this is where major gaps persist in research and policy implementation. Most training programmes remain generic, failing to address sector-specific, climate-focused needs, and micro-traders are often excluded from institutional support. For instance, while studies have explored the effects of salinity on primary fish sales, little research has been done on the economic stability and welfare of workers in secondary dried-fish processing and trade communities, those most exposed to rainfall and overcast conditions. Similarly, in urban centres such as Khulna and Dhaka, the vast informal workforce supporting manufacturing and services is increasingly vulnerable to rising heat stress. In the absence of institutional support or targeted subsidies for heat mitigation, many small enterprises are left to absorb the hidden operational costs of labour disruptions, unable to invest in basic ventilation or cooling systems.
Building resilience demands strategic investment in adaptation across the supply chain. Key interventions should begin with integrating climate-risk assessment into business planning, moving from reactive recovery to proactive adaptation. Expanding access to green finance and insurance mechanisms is paramount. Pilot programmes such as the Credit Guarantee Scheme, supported by the International Finance Corporation and Bangladesh Bank, have demonstrated that customised models can deliver results, increasing the number of first-time borrowers and raising the average loan size for women-owned enterprises. The SME Foundation continues to play a catalytic role in facilitating policy support, capacity-building initiatives and concessional finance that connect small entrepreneurs to sustainable market systems. Its recent focus on cluster-based development and climate-resilient enterprise upgrading represents a practical model for inclusive adaptation.
Promoting low-carbon and renewable technologies is equally essential, as seen in the adoption of solar power across 212 bank branches and 150 SME/ATM units nationwide. For non-agricultural businesses, adaptation could also involve producing jute-based packaging 鈥� an eco-friendly alternative to plastic 鈥� thereby enhancing both resilience and market competitiveness. Collective action through cooperatives and local networks can encourage shared learning and resource efficiency. Successful adoption of such models has proven that combining low-interest credit and simplified loans with embedded 鈥榞reen skills鈥� is a viable pathway for scaling up. Resilience, therefore, must be viewed not as a cost but as an investment in the longevity of small enterprises.
The greatest weakness lies not in policy intent but in implementation and equitable reach. The national financing gap of $2.8 billion indicates that existing credit programmes are hampered by rigid collateral requirements and institutional risk aversion. While a few successful programmes exist, their reach remains limited. For instance, the World Bank鈥搒upported Sustainable Enterprise Project, though highly effective, has benefited only 49,533 micro-enterprises, a tiny fraction of the country鈥檚 estimated 11.8 million economic units, according to the Economic Census 2024. Bridging this gap requires decisive government intervention.
Dedicated climate resilience funds for CMSMEs should simplify eligibility and documentation processes to ensure accessibility for rural and small-scale entrepreneurs. Institutional capacity, especially within state-owned banks, must be modernised to improve risk assessment, credit outreach and service delivery to vulnerable groups. Promoting formalisation through simplified licensing and record keeping is also crucial for efficient financial disbursement. Additionally, integrating climate-risk indicators into SME development strategies, alongside targeted training for entrepreneurs and local government officials, can enhance adaptive capacity and ensure that climate finance reaches those most exposed to climate shocks.
The future of Bangladesh鈥檚 economy and its ambition for sustained, inclusive growth depends on how swiftly and effectively CMSMEs can adapt to climate uncertainty. The combined pressures of salinity, heat stress and financial exclusion are eroding the foundations of job creation and supply chain stability. What is urgently needed is dedicated, subsidised capital and technical support to turn these vulnerabilities into opportunities for innovation. If we can equip our smallest enterprises with the knowledge, tools and resilience to confront the climate crisis, Bangladesh will not merely survive the storm, it will lead by example.
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Mohibbullah Al Maruf works at Innovision Consulting Private Limited.
