• Wednesday, Dec 08, 2021
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What Covid-19 means for our start-ups

  • Published at 08:20 pm April 8th, 2020
Pathao relaunches essentials delivery service ‘Tong’
Photo: Dhaka Tribune

Why these unsung heroes need government support

Start-ups have played a transformative role in changing consumer lifestyles and in building a Digital Bangladesh. Homegrown technology companies such as Pathao, a digital platform built by local founders and a team of 300, have changed the way over six million people move, eat, buy, and engage in their everyday lives.  

The eco-system Pathao has created extends far beyond consumers: It touches over 300,000 drivers, food delivery and courier agents, over 25,000 e-commerce merchants, and over 5,000 restaurants. These partners have two things in common: (i) They rely upon this eco-system to earn an income; and (ii) they are all feeling the impact of the Covid-19 crisis.  

Here is how Covid-19 has affected our eco-system:

Like other ride-sharing companies, we have temporarily suspended our ride operations during the government-declared public holiday period in order to limit the spread of Covid-19. Our drivers come from all corners of the country, to earn a living and support their families. Now, like so many others, they are staying home, and struggling to make ends meet.

Along with our peers in the industry, we have continued food delivery as essentials are outside the scope of the movement restrictions. We have distributed protective gear and trained our delivery men to ensure that they stay safe while serving our customers. We have enabled contactless delivery for orders where payment is made digitally.  

Still, many restaurants are closed and most consumers are cooking at home. This means fewer orders and limited income for our delivery men.

We have continued courier deliveries on a limited scale inside Dhaka but, like other providers, have suspended operations outside Dhaka due to shutdown of inter-district transport. This means small businesses, led by young entrepreneurs, whom we serve by delivering their products, are not generating any revenue. 

During this crisis, we have moved fast to launch new services to meet our consumers’ needs, and to provide earnings opportunities for some of our delivery men. We have launched Tong, our on-demand essentials and grocery delivery service. We have also started delivery of pharmaceutical products such as non-prescription drugs and medical supplies.

Beyond our business operations, we are providing logistics support for Obhizatrik Foundation, Bidyanondo Foundation’s One Taka Meal Program, and Sheba.xyz, The Daily Star and Daily Samakal’s Mission Save Bangladesh, to deliver food to underprivileged members of our community.  

Like most start-ups around the globe, and indeed in Bangladesh, we are taking every action within our control to reduce our expenses, so we can continue to support our eco-system. For us, some of these come at a personal cost -- for example, our executive leadership team is not taking any salaries at this time.  

We know that Covid-19 has impacted many of our colleagues in the start-up community in Bangladesh, and through them, the millions of lives they touch. We stand together in this struggle.  

The government recently announced a Tk727.5 billion stimulus package for export-oriented industries, manufacturing sector, and for small and medium enterprises. This is undoubtedly a timely measure.  

However, the package comprises primarily of loans from commercial banks, out of the banks’ funds, and subject to their underwriting policies. Banks’ underwriting policies typically restrict them from lending to businesses that do not have fixed asset collateral and sufficient cash flows to cover monthly or quarterly loan repayments.  

Start-ups are early stage companies -- most have limited fixed assets and negative cash flows.  As a result, start-ups will largely be unable to access the stimulus package.

We, therefore, propose a specially designed assistance and relief program for start-ups, that would consist of the following components: (i) A concessionary loan program funded by the government, with loan amount based on last six months’ payroll, a tenor of five years with balloon repayments, and interest rate of 1%; (ii) a grant fund to support low-income earners, that will be disbursed through and accounted for by start-ups; and (iii) a full exemption of VAT and withholding taxes on revenue and expenses of start-ups for the current and next fiscal year.

Start-ups in Bangladesh have provided earnings opportunities to hundreds of thousands of unemployed and underemployed youth, who quite literally come from all over Bangladesh.

These unsung heroes that are building Digital Bangladesh now need the support of the visionaries and the architects of Digital Bangladesh: Our government.

Hussain M Elius is the co-founder and CEO of Pathao. Fahim Ahmed is the CFO of Pathao.

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