68pc SMEs to permanently cease procedures if lockdown prolongs: study

11 May 2020 11:11 AM
An estimated 68 per cent small and medium enterprises reported that they might have to permanently turn off their businesses if the lockdown persisted for more than four a few months, according to a survey.

LightCastle Partners and Sheba.xyz collaborated on an independent study on the ‘COVID-19 Effect on the SMEs of Bangladesh’.

The survey was conducted in later April with over 230 SME respondents from around Bangladesh covering industries from trading and production which includes poultry, dairy, fisheries, jute products and retail store and service industry which includes food catering, electrician services, laundry, beauty salon, and restaurants.

The study found that 28 % of the SMEs saw revenue stop by at least 50 per cent while 52 % of the SMEs had their doorways shut, generating no revenue at all.

Two-thirds of the SMEs had a good window of less than four a few months to survive beneath the current circumstances before they exhausted all their cash reserves.

In order to tackle the pandemic crisis, 14 % of the SMEs laid off all their employees while 46 per cent were established to layoff at least 50 per cent employees within four months if the problem did not improve.

The problem engendered concern as SMEs are one of the primary employers in Bangladesh, which route could finish up with thousands of men and women becoming unemployed in a matter of months.

Moreover, 42 % of the enterprises had cut their marketing bills down due to zero implementation of the stimulus offer to uplift the overall economy, the survey found.

The virus-centric distress put into existing complications such as for example lack of usage of finance, poor industry linkage, lack of skilled labour, and insufficient export market.

The SMEs voiced their needs for soft loans, moratorium and wanted existing loans to be rescheduled without fines.

Tax exemptions would take away significant additional economical burdens on the SMEs.

The SMEs and micro-merchants would want holistic solutions integrated with an electronic supply chain, digital financial solutions and usage of credit to survive over time during this scenario.

The federal government had allocated a Tk 20,000-crore financial stimulus for the cottage, micro, small and medium enterprise sector.

The enterprises wanted more liquidity injection to provide cheaper working capital, demanded increased accountability by leveraging mobile monetary services for transparency and traceability and extend their reach to the SMEs all over the country in collaboration with the portable financial services.

Six million SMEs contribute $79 billion to the country’s economy. 1 / 4 of Bangladesh’s GDP is certainly contributed by the SMEs who have the potential for more contribution.