Monday, 20 September, 2021

37pc SME workers lose job during pandemic

21pc SMEs shut down, 16pc entrepreneurs find other option

  • Staff Correspondent
  • 28 July, 2021 12:00 AM
  • Print news
37pc SME workers lose job during pandemic

Thirty seven percent workers of SMEs have lost job while 70 percent workers’ jobs are at stake by the onslaught of corona pandemic, says an SME Foundation report.

83 percent small entrepreneurs have incurred loss while operating their businesses during the pandemic that has hit the economy across the board.

The findings were revealed in a recent report of SME Foundation that was prepared based on combining studies conducted by local and international organisations.

A2I, IFC, Brac University, UNDP, WRF, LankaBangla, Light Castle and Asia Foundation conducted the studies to assess corona impact on SMEs in Bangaldesh.

SME entrepreneurs witnessed 94 percent fall in their sales, putting 33 percent SME entrepreneurs under immense pressure and they are not in a position to repay bank loans, according to the report. 

As a result, 21 percent such entrepreneurs have shut down their businesses and another 16 percent have shifted to alternative professions. 

Only 3 percent small entrepreneurs have been able to keep their business running, but 59 percent entrepreneurs of small and cottage industries are dependent on their deposits. 

Although all types of businesses and industries faced trouble amid the pandemic, small, medium and cottage industries and businesses were the worst sufferers, according to industry insiders.

The government first announced stimulus packages of Tk 1.28 trillion of which Tk 200 billion was set aside for SMEs. But it has been alleged that money from the stimulus packages has not been so much effectively transferred to the affected SMEs. 

Bangladesh Bank data suggest that until May this year Tk 146.54 billion out of the Tk 200 billion stimulus loans could be disbursed among the SMEs, which means 73 percent of the loan package was implemented. Still, Tk 53.46 billion remained undisbursed.

“It is true that the low income people and small entrepreneurs are the most affected people. And they also have not got enough support. Even the government announced stimulus package has not effectively reached them,” said Syed Abu Naser, a senior banker. 

Alongside banks, the bankers also see problem among SME entrepreneurs for the slow disbursement of the loan package.

They blame that small entrepreneurs feel shy in going to banks and sometimes they don’t have trade license and necessary documents. 

However, they acknowledged that bankers usually show weakness to larger businessmen as banks see profit in a single large investment.

Currently, 2.40 lakh people of SME sector have been left jobless by the pandemic and 55 lakh more are on the verge of losing job by 2021, showed the studies done highlighting 11 sectors. Under the second stimulus package of Tk 30 billion for SMEs, SME Foundation has been tasked with disbursing Tk3 billion loans among the SMEs.

SME Foundation was supposed to disburse Tk 1 billion in 2020-21 fiscal year and the rest of Tk 2 billion in 2021-22 fiscal year. Of the money, the foundation could disburse Tk 1.15 billion from May 11 to 30 June. It disbursed Tk 150 million more from its own fund.

SMEs are entitled to get Tk 1 lakh to Tk 75 lakh loans from the loan package to overcome corona crisis. The loans bear 4 percent interest and have to be repaid in two years and in 24 installments.