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Experts: SME sector needs 20,000C more to recover from Covid-19

  • Published at 02:21 pm August 31st, 2021
SME weaving loom
Due to the coronavirus pandemic, the revenue of SMEs has decreased by 66% and 76% of the products have remained unsold Syed Zakir Hossain/Dhaka Tribune

Contribution of the SME sector to the national economy of Bangladesh is more than 25% and it also employs more than 8 million people, experts say

The small and medium enterprise (SME) sector needs policy support and Tk20,000 crore more to recover from losses and other effects of Covid-19, say experts. 

They made this recommendation during the publication of a report and discussion program titled “The Future of SMEs after the Corona Crisis: Challenges and Opportunities,” organized by the SME Foundation and FES Bangladesh.

Dr Atiur Rahman, former governor of Bangladesh Bank and Bangabandhu Chair Professor at Dhaka University, presented the report. 

Rahman said the contribution of the SME sector to the national economy of Bangladesh is more than 25% and it also employs more than 8 million people. 

“The SME Policy 2019 is an effective initiative for development of the infrastructure and clusters of this sector. Moreover, the policy has also kept an eye on the market connectivity of SME products,” he added. 

Also Read - SME Foundation gets another 200C from incentive package

He also said that due to the coronavirus pandemic, the revenue of SMEs has decreased by 66% and 76% of the products have remained unsold. 

“42% workers of this sector have received partial salaries, whereas 4% of the workers have not received any salary,” Rahman added.

To offset these losses, he suggested allocating at least Tk20,000 crore more for the sector.

He also said that most of the funds of the International Monetary Fund (IMF) are going to the developed countries, and called for allocating funds for development of the SME sector in developing countries including Bangladesh through the World Bank and Asian Development Bank.

According to the report, India has allocated 38% of the total incentive package for the SME sector, Thailand 33%, and Malaysia has allocated 24% to offset the losses from coronavirus. 

But Bangladesh has allocated only 22%, Rahman said.

“The SME sector needs special attention to overcome the losses incurred by the coronavirus pandemic since March last year,” he suggested.

He also recommended taking Initiatives to verify and select the loan disbursement process of SMEs under the supervision of the SME Foundation and also advised for creating a digital dashboard to monitor the disbursement of loans from the incentive package.

“Creating linkages between banks and mobile banking institutions in the loan disbursement process and developing bank-customer relationships will also be effective,” he said.

Rahman also urged to give priority to export-oriented SMEs, women entrepreneurs, and environmentally friendly SMEs. 

Zakia Sultana, secretary of the Ministry of Industries, said that SMEs are the driving force of Bangladesh's economy. 

“This sector has incurred severe losses due to Covid-19. The government has already provided incentive packages and policy support to the SME sector to offset these losses,” she added.

Also Read - Markopolo.ai: A digital marketer for SMEs

Sultana also expressed hope that the SME Foundation would be able to disburse Tk200 crore in the current financial year like the Tk100 crore it disbursed in the last financial year under the government's incentive package for SME entrepreneurs.

Md Masudur Rahman, chairperson of the SME Foundation, said that it has been possible to distribute Tk15,000 crore among only 95,000 SME entrepreneurs as part of the government's incentives.

“But according to the economic statistics of 2013, the number of SMEs in the country is more than 7.6 million,” he added.

He also said that it is necessary to increase the capacity of the SME Foundation for the development of the SME sector, adding that structural and policy reforms are also needed for the development of the sector.

Md Mafizur Rahman, managing director of the SME Foundation, coordinated the program. 

M Abu Eusuf and Muhammad Shahadat Hossain Siddiquee, professors of Dhaka University, and UNDP Country Economist Nazneen Ahmed also spoke at the event.

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