• Wednesday, Jun 29, 2022
  • Last Update : 04:24 pm

Study: 24% of female online entrepreneurs shut down their businesses in June

  • Published at 02:20 pm August 23rd, 2020

The study says that within one month after the first round of survey in April, 121 employees were laid off

Around 24% of female online entrepreneurs shut down their businesses in June amid Covid-19 pandemic, a study has revealed.

According to the findings of the study, of the many who were trying to reduce the loss of revenue by cancelling orders and selling off their stock in April, 24% closed their businesses in June.

The study titled "Knocked Down, but Up Again: The Case of Female Online Entrepreneurs in Bangladesh" was unveiled through an online media briefing on Sunday.

It was conducted by the Brac Institute of Governance and Development (BIGD).

During the study, 200 female online entrepreneur respondents were reached from April to June this year.

Mehnaz Rabbani, program lead, research, policy, and governance of BIGD presented the findings. 

She said these online businesses usually saw a rise in their sales on special occasions, such as Eid and Pohela Boishakh. But this time around, as both the events had been observed under a nationwide lockdown, 79-84% of the entrepreneurs had experienced lower revenue earnings than last year’s Eid and Pohela Boishakh, she added.

“Though the impact of this decline in revenue has been nothing short acute on female entrepreneurs who rely on their online businesses as the only source of income, it also has knock-on effects on those employed in these businesses,” she added.

The study says that within one month after the first round of survey in April, 121 employees were laid off. If things do not improve for these businesses, the study suggests that within the next seven months, nearly 550 more people’s jobs could be at stake.

Nevertheless, a greater number of entrepreneurs now, in fact, do believe that their businesses will improve, the study says.

Study findings show that the percentage of entrepreneurs who are confident that their businesses will bounce back has increased from 15% in April to 21% in June. There has also been a decline in uncertainty with regard to overcoming this shock from 30% to 18%.

The study also says with this overall increase in confidence level, nearly half of the entrepreneurs now believe that it will take them from six months to nearly a year to recover from the loss incurred.

Meanwhile, these resilient female entrepreneurs are still practicing the same coping mechanisms they had adopted in April, such as cancelling orders, giving discounts, laying-off employees, or remaining the same.

According to the study, though fewer orders have been cancelled in June compared to April, there has been an increase in the percentage of entrepreneurs who were giving discounts—from about 13% in April to 33% June. Moreover, with a nearly 4% increase since April, about 14% of the businesses are also laying off their employees, it adds.

The alarming rise in these desperate coping mechanisms illustrate the scarcity of resources needed to sustain these online businesses, it says further.

As over 65% of these businesses do not have formal registration or a trade license, they remain ineligible for the government’s stimulus package. This has forced over 68% of the entrepreneurs to rely on their personal savings and about 20% to take loans from their friends and families, reveals the study report. 

Moreover, with 63% of the entrepreneurs being unaware of where to seek governance assistance from, many have turned to other support systems or avenues, such as online entrepreneur forums, webinars, family and friends, and other known entrepreneurs to receive guidance and help during these trying times.

The study has recommended that despite the entrepreneurs’ optimism, if they are not provided with adequate support, not only more employees will be laid-off—creating a surge in unemployment, but it will also put women’s empowerment in jeopardy.

The study findings also show that the financial issues due to insufficient support or access have contributed to their increased stress levels, while staying indoors resulted in most of them spending a significant amount of time in household chores. This has cut down the time spent in running businesses or office related-work.

Executive Director of BIGD Dr Imran Matin said “We believe this research can pave the way towards future strands of research in the digital space, which is our future thrust area. We are currently conducting a study on all kinds of MSMEs in Bangladesh - not just online businesses - and this research aims to be more representative in nature."

Senior Fellow of Practice at BIGD Maheen Sultan mentioned how the 5% allocated for women entrepreneurs in the Tk 2,000 crore stimulus package by Bangladesh Bank, was clearly not being translated or communicated with commercial banks. 

President of Bangladesh Women Chamber of Commerce and Industry (BWCCI) and Member of Parliament Selima Ahmed said, “There is no noticeable mention of women entrepreneurs in the COVID-19 stimulus package circulars published by the Bangladesh Bank, although women entrepreneurs continue to play an essential role in contributing to the economy of Bangladesh.”

She also said how the lack of digital literacy in for many women entrepreneurs who owned and operated small businesses in Bangladesh, continued to hamper their recovery in pandemic situations.

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