Steps to salvage vulnerable micro and small businesses urgent

07 April 2021

When small businessmen were eyeing a rebound of their trading in the forthcoming Pahela Baishakh and Eid-ul-Fitr festivals, the fresh lockdown has pushed them to the verge of despair. Hundreds of small and micro traders across the country are unable to comply with the lockdown but take risk of life for their livelihood. They risk infection instead of risking starvation. Businessmen are staging demonstrations demanding of the government to keep their entities open by maintaining health regulations.
Last year, the general holidays gave the micro and small businesses a bitter experience as most of them hardly got any financial support from the stimulus packages when their capital depleted. They breathed a sigh of relief after the partial withdrawal of the restriction in June. Small businesses resumed operations by borrowing from their relatives, and other sources, as bankers were reluctant to extend them loans. But their dream to make a turnaround on their own faded away after the second corona wave hit the country, compelling the government to bring back strict restrictions on movement for a week from Monday.
There are about 78 lakh micro, small, and medium enterprises that contribute about 25 per cent to the GDP. But the micro-businesses were left alone to manage their own recovery although the government announced Tk 121,353 crores worth of stimulus packages, which is 4.3 per cent of the country's GDP. Last year, the central bank declared a stimulus fund of Tk 20,000 crore for small and medium enterprises. But banks disbursed 65 per cent of the fund as of March 18. Economists said the government should have taken a number of fiscal measures before declaring the present restrictions. The government has not taken any preparation to fulfil the needs of small traders during the lockdown period.
Banks are now under pressure. It is difficult for them to implement new stimulus packages become of their existing financial health. The government should expand the credit guarantee scheme from the current limit of Tk 2,000 crore so that banks can lend to micro and small enterprises without hesitation. We must raise fund to support the most vulnerable businesses including the SMEs by drawing attention of global lenders and mobilising CSR funds of affluent business organisations. Otherwise micro and small business might stand bankrupt by taking the shock of the current lockdown.

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