Problems of Rural Entrepreneurship

Developing entrepreneurship especially rural entrepreneurship is as important is not so easy. It is constrained with several problems. Most of the rural entrepreneurs face peculiar problems like illiteracy, fear of risk, lack of training and experience, limited purchasing power and competition from urban entrepreneurs. Some of the major problems faced by rural entrepreneurs are as under.

  1. Paucity of funds: Most of the rural entrepreneurs fail to get external funds due to absence of tangible security and credit in the market. The procedure to avail the loan facility is too time-consuming that its delay often disappoints the rural entrepreneurs.
  2. Competition: Rural entrepreneurs face severe completion from large sized organizations and urban entrepreneurs. They incur high cost of production due to high input cost.
  3. Middlemen: Middlemen exploit rural entrepreneurs. The rural entrepreneurs are heavily dependent on middlemen for marketing of their products who pocket large amount of profit.
  4. Legal formalities: Rural entrepreneurs find it extremely difficult in complying with various legal formalities in obtaining licenses due to illiteracy and ignorance.
  5. Procurement of raw materials: Procurement of raw materials is really a tough task for rural entrepreneur. They may end up with poor quality raw materials, may also face the problem of storage and warehousing.
  6. Risk element: Rural entrepreneurs have less risk bearing capacity due to lack of financial resources and external support.
  7. Lack of technical knowledge: Rural entrepreneurs suffer a severe problem of lack of technical knowledge. Lack of training facilities and extension services crate a hurdle for the development of rural entrepreneurship.
  8. Lack of infrastructural facilities: The growth of rural entrepreneurs is not very healthy in spite of efforts made by government due to lack of proper and adequate infrastructural facilities.
  9. Poor quality of products: Another important problem is growth of rural entrepreneurship is the inferior quality of products produced due to lack of availability of standard tools and equipment and poor quality of raw materials.
  10. Negative attitude: The environment in the family, society and support system is not conducive to encourage rural people to take up entrepreneurship as a career. It may be due to lack of awareness and knowledge of entrepreneurial opportunities.

Need for Rural Entrepreneurship

  1. Labor intensive: Rural Industries have high potential Employment generation. Thus they serve as an antidote to the widespread problems of unemployment.
    2. Income generation rural Industries have high potential of income generation in rural areas. Thus it helps in reducing disparities and income between rural and urban areas.
    3. Balanced regional development these industries encourage dispersal of economic activities in rural areas which helps in promoting balanced regional development.
    4. Village republics Development of industries in the rural areas also helps in building up village Republic.
    5. Art and creativity rural industries also helps in protecting and promoting the art and creativity i.e. the age old rich heritage of the country.
    6. Environment friendly rural Industries being ecofriendly lead to development without destruction.

How to Develop Rural Entrepreneurship?

Establishing an industry and, thereby developing entrepreneurship is not one-man activity. Infect, it involves multi-pronged activities. Though the answer to the question how to develop entrepreneurship lies in the solutions of the problems faced in this regard, yet the following measures are suggested for developing entrepreneurship in the rural areas in the country.

  1. Raw material is a must for any industry: However, the non-availability of raw materials accompanied by their prohibitive cost has weakened the viability of these industries. Past experience bears evidence that rural industries with employment potential cannot be sustained for long unless a strong raw material-base is created in rural areas itself. Therefore, an urgent policy is called for to strengthen the raw material base in rural areas.
  2. Finance is considered as lubricant for setting up and running an industry: Funds, therefore, need to be made available on time at soft terms and conditions to those who really need it.
  3. In order to solve the problem of marketing for rural industries, common productions cum-marketing centers need to be set up and developed with modern infrastructural facilities,. Particularly, in the areas having good production and growth potential. This would help in promoting expert business. On the one hand, and bringing the buyers and sellers is close interaction avoiding middleman in between them, on the other, Legislative measures have to be taken to make the government purchases compulsory from rural industries.
  4. One peculiarity of rural entrepreneurs so that most of them join their entrepreneurial career not by choice but by chance. Lace of aptitude and competency on the part of such venations like entrepreneurship development programs, Women Entrepreneurship Development programmers and TRYSEM.
  5. One effective way to inculcate the entrepreneurial acumen and attitude\de may be imparting entrepreneurial education in the schools, colleges and universities. That younger minds are more susceptive to be molded is well evidenced by the proper known ‘Kakinada Experiment’ in Andhra Pradesh.
  6. Sometimes the real problem in setting up industries is not the non-availability of facilities, but non-awareness of facilities whatever is available. The need is, therefore, to disseminate information about all what is available to provide to the entrepreneurs to facilitate them in setting up industries.
  7. Proper provisions need to be made to impart the institutional training to orient the entrepreneurs in specific products and trades so that the local resources can be harnessed properly.
  8. Out accumulated experience bars ample evidences to the fact that the non-governmental organizations, popularly known as NGOs, can prove instrumental in entrepreneurship.

What are the major categories of village industries?

All the village industries have been grouped into seven major categories as follows:

  1. Mineral- based industry,
  2. Forest- based industry,
  3. Agro- based industry,
  4. Polymer and chemical- based industry,
  5. Engineering and non-conventional industry,
  6. Textile industry (including Khadi), and
  7. Service industry.

For understanding the meaning of these industries deeply, I’ll give some description of each point.

  1. Mineral- based industry: Minerals industries are geological materials which are mined for their commercial value, which are not fuel (fuel minerals or mineral fuels) and are not sources of metals (metallic minerals). They are used in their natural state or after beneficiation either as raw materials or as additives in a wide range of applications.

List of some industrial minarals are Aggregates, Alunite, Asbestos, Asphale, Ball clays, Baryte, Bentonite, Borates, Brines, Carbonatites, Corundum, Diamond etc.

  1. Forest- based Industry: Forest based industry though not much fossil evidence is available; studies indicate that extensive forest under tropical range existed in the tertiary period in parts of Bangladesh. Glutaxylon, Dipterocarpoxylon, Cynometroxylon fossils, all from Miocene beds, discovered in adjacent areas have affinities with species found today in tropical conditions.
  2. Agro- based Industry: Bangladesh is primarily an agrarian economy. Agriculture is the single largest producing sector of economy since it comprises about 30% of the country’s GDP and employing around 60% of the total labor force. The performance of this sector has an overwhelming impact on major macroeconomic objectives like employment generation, poverty alleviation, human resources development and food security. Agricultural holdings in Bangladesh are generally small. Through Cooperatives the use of modern machinery is gradually gaining popularity. Rice, Jute, Sugarcane, Potato, Pulses, Wheat, Tea and Tobacco are the principal crops. The crop sub-sector dominates the agriculture sector contributing about 72% of total production. Fisheries, livestock and forestry sub-sectors are 10.33%, 10.11% and 7.33% respectively.
  3. Polymer and Chemical- based Industry: While many of the products from the industry, such as detergents, soaps and perfumes, are purchased directly by the consumer, 70% of chemicals manufactured are used to make products by other industries including other branches of the chemical industry itself. The industry uses a wide range of raw materials, from air and minerals to oil. With increasing competition worldwide, innovation remains crucial in finding new ways for the industry to satisfy its increasingly sophisticated, demanding and environmentally-conscious consumers. The products of the chemical industry can be divided into three categories: Basic chemicals, Specialty chemicals, and Consumer chemicals.
  4. Textile Industry (Including Khadi): The textile industry or apparel industry is primarily concerned with the design and production of yarn, cloth, clothing, and their distribution. The raw material may be natural or synthetic using products of the chemical industry.

The textile and clothing (T&C) industries provide the single source of economic growth in Bangladesh’s rapidly developing economy. Exports of textiles and garments are the principal source of foreign exchange earnings. Agriculture for domestic consumption is Bangladesh’s largest employment sector. By 2002 exports of textiles, clothing, and ready-made garments (RMG) accounted for 77% of Bangladesh’s total merchandise exports. By 2013, about 4 million people, mostly women, worked in Bangladesh’s $19 billion-a-year industry, export-oriented ready-made garment (RMG) industry. Bangladesh is second only to China, the world’s second-largest apparel exporter of western brands. Sixty percent of the export contracts of western brands are with European buyers and about forty percent with American buyers. Only 5% of textile factories are owned by foreign investors, with most of the production being controlled by local investors.

Bangladesh’s textile industry has been part of the trade versus aid debate. The encouragement of the garment industry of Bangladesh as an open trade regime is argued to be a much more effective form of assistance than foreign aid. Tools such as quotas through the WTO Agreement on Textiles and Clothing (ATC) and Everything but Arms (EBA) and the US 2009 Tariff Relief Assistance in the global clothing market have benefited entrepreneurs in Bangladesh’s ready-made garments (RMG) industry. Bangladesh, with a population of about 156 million, is among the most densely populated countries in the world. In 2012 the textile industry accounted for 45% of all industrial employment in the country yet only contributed 5% of the Bangladesh’s total national income.

  1. Service Industry: A business that does work for a customer, and occasionally provides goods, but is not involved in manufacturing. The service industries (More formally termed: ‘tertiary sector of industry‘ by economists) involve the provision of services to businesses as well as final consumers. Such, therefore, include accounting, tradesman ship (like mechanic or plumber services), computer services, restaurants, tourism, etc