67% of SMEs forced to shut businesses due to Covid-19

About 67% of Small and Medium Enterprises (SME) in the country face a shut down of their business operations due to Covid-19, finds a Business Initiative Leading Development (Build) survey.

Build Chief Executive Officer Ferdaus Ara Begum presented the survey report in a virtual meeting on Tuesday. Build and the United Nations Industrial Development Organization (UNIDO) jointly conducted the survey in April this year.

The report said economic activities worldwide were severely disrupted due to Covid-19 where cottage, micro, small and medium enterprises (CMSMEs) were the worst affected in Bangladesh.

According to the survey, 75% of cottage and micro, 58% of small and medium, and 44% of large enterprises in the country were likely to face more than a 50% revenue shortfall compared to last year.

48% of cottage and micro, 30% of small and medium, and 23% of large farms, were at risk of a business   shutdown, or a partial shutdown of their   operations within the next three months.

To beat this crisis, enterprises were now relying on loans to combat cash flow shortage, and 86% of large firms depend on commercial banks for their funding, said the report.

Ferdaus Ara recommended a quick and hassle free loan processing system for the private sector and   flexibility in distribution conditions so that banks felt secure in disbursing government announced stimulus packages.

She commended  the Bangladesh Bank for extending all manner of support and the issuance of a number of circulars to ease the lending process.

Speaking as co-chair, the Deputy Governor of Bangladesh Bank, Ahmed Jamal, said that already Tk18,500 crore had been disbursed under the working capital loan stimulus package for the large industries and services sectors.

"Governor of the central bank has also asked the banks to disburse the entire allocation of the stimulus package for small scale entrepreneurs within October this year, '' he added.

All the speakers participating in the event talked about the stimulus packages and better utilization of them to combat the pandemic.

Professor Jahangir Alam Chowdhury from the Finance Department of the University of Dhaka put emphasis on the balance between the demand and supply of stimulus packages.

He said loans should be allocated to actual enterprises so that proper utilization of the packages is ensured.

BUILD Chairman Abul Kasem Khan urged the Bangladesh Bank to consider their recommendations for better utilization of the packages.