Impact of Corona Pandemic
Golam Mostafa Jibon : As the working people of country are trying to turn around again with the ease of corona pandemic, many small and medium entrepreneurs have been facing trouble due to price hike of raw materials and difficulties in getting bank loan. Many professionals can’t join in their workplaces as many small and medium industries are now on the verge of closure due to financial crisis.
Bangladesh Handloom and Powerloom Owners Association’ Central Committee Vice-President Haider Ali said, 4 lakh looms out of 6 lakh in Pabna and Sirajganj, also the largest loom rich areas of the country, have been shut down due to clutch of Corona pandemic. The same scenario of weaving industries is found in many districts including Kushtia, Jamalpur, Narsingdi and Tangail. Not just looms; other small and medium industries in the country are closing down day after day. As a result, workers in various small and medium industries are losing their jobs.
According to the victims, these industries are in dire straits due to price hike of every commodity including raw materials and lack of credit assistance and financial incentives. The contribution of small and medium enterprises (SMEs) to the gross domestic product (GDP) is 25 percent. Although, 90 percent of the country’s employment is contributed by this sector, the entrepreneurs of this sector managed to cope with the Corona’s injury from time to time.
Even though, the last one and a half years have been spent on loans, the dreams of small entrepreneurs have been shattered in Corona. Over the last few months, the country’s export earnings have returned to a positive trend, which has a negative impact on the country’s small and medium sector business.
Entrepreneurs said, the business is recovering from the loss of Corona. But they are in various difficulties. The prices of raw materials and costs of transports have been increased compared to the previous period. Concerned people said, there is no alternative of SMEs to improve the country’s economy in the future. In the overall assessment, this sector is the lifeblood of the economy. But the grief of the entrepreneurs in this sector seems to have no end. Despite the government’s announcement of incentives to keep the economy afloat in the wake of the global epidemic, small entrepreneurs remain on the list of the most deprived.
Industry insiders said, the rich traders are continuing the factory in an effort to survive. However, many small organizations have already closed. They are very worried about repaying the loan before taking re-loan.
Mirza Nurul Gani Shovon, president of National Association of Small & Cottage Industries of Bangladesh (NASCIB) said, “We have more than 10,000 entrepreneurs in the small and medium sector. Of them, more than 3,000 entrepreneurs have been forced to close their businesses. Others are not good either. There are constant losses. These entrepreneurs need financial support now. Otherwise, they will be forced to close their businesses. If it is possible to pay them loan from the PM’s incentive package, they will be able to overcome the financial crisis.”
On the other hand, bankers, as always, are reluctant to lend to small customers. Bangladesh Bank said, many SME entrepreneurs did not get loan even after going to the banks. Many small entrepreneurs are not even getting loan assurance even after moving from the door to door of the banks for months. Declining the allegation, many bankers said they are not getting suitable loan seekers.
Swapna Sen, owner of Rangpur Craft, said, she went to Prime Bank to get a loan. The bank assured to provide loan. But in fact, it did not pay any loan even after passing over a month.
Later, she moved to Southeast Bank after the bank offered to take a loan at 9 percent interest. From there, Rangpur Craft got a loan of Tk 15 lakh at low interest.
Swapna Sen said, “Leaving my business works, I moved from the door to door of the bank and sat there day after day.”
Besides, there are many other small entrepreneurs, who have to go to the banks and come back with frustration as they do not have the required documents. Especially informal small entrepreneurs are not getting loan facility enough. But, the number of these entrepreneurs is not less. This is because during the Corona period, there are many entrepreneurs who have developed online marketing products, who do not have all the documents including trade license. These traders are losing their capital in a short time due to lack of credit facilities. Meanwhile, the country’s economy has become somewhat dynamic as the Corona situation is under control. However, small and medium entrepreneurs are in trouble due to high raw material prices and rising transport costs.
Amirul Islam, managing partner of BAG said, “It is very difficult for small entrepreneurs like us to take loans from banks. I don’t think, we can do very well with money for a year or one and half year. We should work on a money plan for at least four to five years.”
“I am doing business in the same country, but there is one policy for leather products and another policy for textile products. I think, coordination is needed in these matters,” he added.
Entrepreneurs said, the new post-Corona prospects are now tied to the high prices of raw materials in the international market and the increased rent of containers. In this situation, the entrepreneurs of the small and medium sector want various business benefits just like the ready-made garment sector to exploit the commercial potential.
Nasreen Awal, the founding president of WEB, an organization of women entrepreneurs, has claimed that women entrepreneurs in the SME sector are facing more crisis due to Corona. The SME’s women entrepreneurs affected by the Corona need to be provided with government funds as soon as possible. In this way, they will be able to overcome the losses. In the meantime, many SME women entrepreneurs have closed down due to the financial crisis.
More than half a crore small and micro traders have been forced to close their businesses after losing capital last year due to losses in Corona, said Bangladesh Shop Owners Association President Md. Helal Uddin.
He said, the same situation has been created in the current year. Many are on the verge of closing the businesses. Most of them do not have the necessary business documents. Many do not have a bank account. So they are deprived of bank loan facility. On the other hand, those who have documents are also being harassed. According to a survey conducted by private research institute South Asian Network on Economic Modeling (SANEM) titled ‘Covid-19 and Business Confidence in Bangladesh’, 79 per cent of businesses did not receive money from the government-announced incentive package for overcoming the Corona crisis. Eighty-five percent of them did not receive any money. 14 percent of company owners do not know about the incentive package. Institutions like the remaining 21 percent have received incentive money. Smaller organizations are getting less money from incentive packages than rich businessmen.
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