Here's why:
* Gerund phrases start with a gerund (a verb ending in "-ing" used as a noun).
* In the sentence, "providing" is not present.
* "An interesting novel" is a noun phrase, and "provides good entertainment" is the verb phrase.
To make a gerund phrase out of this sentence, you could say:
* Reading an interesting novel provides good entertainment. (Here, "reading" is the gerund, and the entire phrase acts as the subject of the sentence).