Repor

ton

"
SMEi
nBangl
adeshpr
ospect
sandchal
l
engesdur
ingcov
id-
19"

Cour
secode:
MGT-
306

Gr
oupName:
Igni
tedSquad

Ser
ial
no. Name I
D

1 Tanj
umaAkt
er 14

2 Zannat
ulFi
za 16

3 MahmudaAkt
er 24

4 MdAnwarHossai
n 55

5 MdI
mranHossen 59

6 Md.Fay
sal
Ahmed 62

7 Zi
nat
hJahanAsha 73

8 MstJahanurBegum 89

9 Ant
uBar
ua 97

Sect
ion-
A,Bat
ch-
24t
h

Depar
tmentofManagement

Uni
ver
sit
yofDhaka
 Repor
ton

"
SMEi
nBangl
adeshpr
ospect
sandchal
l
engesdur
ingcov
id-
19"

Abst
ract
:

TheCOVI D-19pandemi ci sanunf oreseengl obalphenomenon,whi chhas

thrown t he economy i nto chaos and ef fectively putcommer ce ata
standst ill
.I thasaf fectednotonl yl i
v elihoodsbutal soev eryeconomi c
activ i
ties especi allybusi ness ent er prises i ncl
udi ng smal land medi um
ent erpr ises( SMEs) . Howev er,SMEsi nBangl adeshhav eal readybeen
exper i
enci ngt hedev astat i
ngandr ut hlessi mpactassucht hemot i
vationof
thest udyt odev elopi nsightr elatingt owhati sexper i
enci ngbySMEsand
howt heyar emanagi ng.Fur ther mor e, thepr ofoundef fect sobser vedi nt he
l
ar ge cont ri
but orysegmentt hati sSMEs,ar e deepl yhear t
ed and st il
l
passi ngwi tht henegat i
vesi gnofCOVI D- 19.SMEspl aymaj orrolesi nmost
economi es as t heydr ive gr owt h,pr ov ide empl oy ment ,and open new
mar ket s.Howev er,ev ent houghSMEsar emaj orcont ributorst oeconomi c
growt h,t heyar eof t
ent hemostv ulner abl ewhent her ear emaj orpubl ic
cri
ses.SMEsar emostsev erelyi mpact edi ncr i
sesbecauseoft heirlower
l
ev el sofv igilance, hi
ghersuscept ibi l
ity, higherr elianceongov ernmentand
l
ocalagenci es,and t hegr eat eremot ionaland f inanci alimpactont he
owner s. These st udyf i
ndi ngs mi ghtassi sti nf or mul at i
ng the st rategi c
deci sionf ocusi ngonSME' sr evivalandr egrowt hdur ingt hepandemi c.
Studyf indingsal so ut terlyest ablishedt hef acti .e.gov er
nmentshoul d
i
nv estconsi derableef f
ect sf ormobi l
izat ionandef fi
ci entr eal
locat i
onof
resour cest hr oughcol l
abor at i
onofbot hBanksandnonbanksf i
nanci al
i
nst ruct ions.

Key
wor
ds:
SME,
Dev
elopment
,Fi
nanci
ng,
Economy
,Pol
i
cy.
I
ntr
oduct
ion:
TheNov elCoronavi
rus(Covid19)outbreakhasbeensoper vasive,i
ntense
anddet ri
mentaltot heeconomi cwel l
beingofBangladesh.Thought he
countr
yhadbeenexper ienci
ngsignifi
canteconomicgr
owt hinrecentyears
thr
oughi tsvi
branteconomicact i
vi
ties,theopti
mism wit
hwhi chabr i
ght
fut
uref orBangladesh was env i
sioned is wani
ng i
nt he wake oft he
pandemic.

Itiscr ucialthatt heSmal l& Medi um Enterpri

se( SME)par ticul
arly,t
he
start
upsofBangl adesh,ar enotdeci matedbyt hi
sout break.I
nthiscount r
y,
theeconomi cdownt urnandf inanciall
ossesaccr uedt oSMEsandnascent
businessesowi ngt oCov id19ar enotcov er
edf ull
yorpar ti
all
y.SMEs,and
mor epar t
icularl
y,t hest artupst hatwer elaudedbyt hepr i
vat
eandpubl ic
sectorsalikef ortheirimpr essiveforaysintonewar easofweal thcreati
on,
andpr edictedt obet hef utureeconomi cpower housest othenat i
on,wer e
l
ef tcompl etelybyt hesedel i
berations.Despitet hei nstit
uti
onalattenti
on
(thatwaspubl i
cized) ,i
twaseasyt oassumet hatt hest art
upswoul dbehi t
hard.

Resear
chmayprovi
desomei nsi
ght
sregardi
ngt
hef
inanci
alcr
isi
sthat
suchfi
rmsar
egoi
ngthr
oughduetoCovi
d-19.

Decr easeddemandsi npoul t

ry,dairy,fi
sheri
eshav eledt oadr asti
cprice
dropi ntherespect ivesectors.Ont opoft hat,duet oindustri
alshutdowns,
garment swor ker sandur bandayl aborersl
ostt heirjobs.Consequently,a
l
argenumberofpeopl ewi t
h no i ncomesour cemov ed f
rom citi
est o
vil
lages,whichpushedt her uraleconomyatav ulnerablestance.Eggprice
fel
l45%,mi lkpr icedroppedar ound35%,pr oductionofdr yfi
shreducedby
40% and v eget ablepr i
cedecr eased signi
fi
cant l
y.Si zableand real-
ti
me
suppor tfr
om t heGov er
nmenti sneededt oforestalltheupcomi ngsoci al
andeconomi ccr isi
sintherural sector.
According totheI nt
ernat
ionalMonetar
yFund therealGDP growth of
Bangladeshi sproj
ectedtodecelerat
et o2.
0% inFY2019-20dr i
venby
fal
li
ngr eadymadegar mentexport
s,lowerpr
ivat
einv
estmentgrowthand
widerdisrupt
ionsduetoCOVI D-
19.

Themot iv
ationofthest udytodiscoverthepresentstateofSMEs,aswel l
as the pot enti
alchallenges,mi ghtbe blocking them t oreopen thei
r
operationsinduecourses.Todoso, bothprimaryandsecondar ydatahave
beenusedwi thdescr
iptivestat
ist
icstool
s.Thest udyrevealedthatSMEsin
Bangladeshhav etopasst hei
rdaywithlotsofli
mi t
ati
onsincludingli
qui
dit
y
cri
sis,almostzeromar ketdemand, andfinanci
alconstrai
nts.

Obj
ect
iveoft
heSt
udy
(
1)Toident
if
ythepr
esentscenar
ioofSMEsect
ori
nBangl
adeshdur
ing
covi
d19.

(2)
To ident
if
ythe pr
obl
ems ofSME sect
ori
n Bangl
adesh dur
ing t
his
pandemic.

(
3)Tor
ecommendsomesuggest
ionst
oov
ercomet
hosepr
obl
ems.

Met
hodol
ogyoft
hest
udy
Int hecur rentstateoft hepandemi c,iti sutt
erl
yimpossibletor eacha
substantialnumberofsampl esf oraccumul at
ingthei
rresponses.Howev er,
wi t
hourbestpossi bleef f
ortsint hepr ocessofdat acoll
ecti
on,wewer e
abletor eachasampl eofsomeSMEswi thasemi -
str
uctur
equestionnai re,
representingSMEsi ndustriesinBangl adesh.Dat ahasalsobeencol lected
from secondar ysources.Thest udyanal ysespubli
shedbooks,newspaper s,
magazi nes,di ffer
ent publ i
shed r esear ch works,reports of v arious
gov er
nmentaut hor
iti
esandwebsi tes.
Li
mit
ati
onsoft
heRepor
t
 Si
ncethisr
esear
chi sonlyforacademicpurpose,t
her
ear
esome
l
imit
ati
onsi
nthi
sstudy.Thesear
ementionedbelow:

 Discussi
onaboutt
heSmallandMedi
um Ent
erpr
isesi
savastsubj
ect
,
butonlysel
ect
edareasar
ecover
edinther
esear
chpaper
.

 Thestudyisbasi
cal
lybasedonsecondar
ydat
aandpr
imar
ysour
ces
arenotcol
l
ecteasi
lybecauseofpandemi
c.

 Lackofav
ail
abl
erecentdat
aonSME.

 Lackofpr
oper
lysour
cedmateri
alsi
ncl
udinglat
estpubl
i
cat
ionsand
mostsour
cemater
ial
sar
efor
-pai
dsubscri
pti
onsonly
.

 Themai nconstrai
ntsfacedinpr epar
ingt
hisresearchrepor
twas
‘
ti
meav ail
abi
li
ty’whil
edoi ng f
ulltimesearchi
ng dataalong wi
th
weekendcl
ass.

Def
ini
ti
onofSME.
Bangl
adesh Bank has reset t
he defini
ti
ons of smalland medi
um
ent
erpr
ises(
SME)aspertheNational
Industr
ial
Poli
cyOrder2010.

I
nmanufact
uri
ng,smalli
ndustr
y/ent
erpr
isewouldbethosewithasset
s
wor
thTk5to100mil
li
on(def
inedasabove)and/
or25to99worker
s.

Inser
vicei
ndustr
y,smallent
erpr
iseswi
llbet
hosewhichempl
oy10t
o25
andhaveasset
s(defi
nedasabove)wort
hTk500,000t
o10mill
i
on.

Inmanuf act
uri
ngindustr
y,medium indust
ry/
enter
prisewouldbethosewith
assetswor t
hTk100t o300mi ll
i
on( minuslandandf act
orybui
l
ding,and
i
ncludingrepl
acementvalue)and/or100to250wor kers.

I
nservi
ceindust
ry,medi
um enter
pri
seswil
lbethosewhi
chempl
oy50t
o
100andhaveassets(
def
inedasabove)wor
thTk10to150mi
ll
i
on.
Pr
ospect
sofSMEsi
nBangl
adesh
Developing count
ri
es,like Bangl
adesh,ar e pursuing to achievet he
Mill
ennium Dev el
opment Goal( MDG) of ensui ng sustainable socio-
economi cgrowth.
Thedev el
opmentofsmal landmedi um ent er
pri
sesonl y
can cont ri
bute progr
essivel
y to achi evi
ng MDG wi t
h sust ainable
devel
opment .Thekeyst rat
egicrolefrom smallandmedi um enterpri
se
devel
opmentaddr essesinruralareadev el
opment,forwardintegr
ationto
l
argei ndust
ri
esaskeyi nputsuppl
iers,andreduct
ionofr egionaldi
spar i
ty
aswel l
.

Employmentgener ation,opt imizat

ionofscar ceeconomi cr esources,and
entr
epreneurshi
pdev elopmentt heroleofsmal lbusinessinBangl adeshis
acknowledgedbyt hegov ernmentandt hekeypol i
cy makers.Likeanother
segmentoft heeconomy ,smal lenterpri
sesext endtheircontri
but i
onover
thepastdecadeatt heaggr egatedout putoft hegr ossdomest i
cpr oduct
.
TheeconomyofBangl adeshobser vesi gnif
icantcont r
ibut
ionf rom SMEs
i
ndustry wit
h 25% accumul at
ed gr owt hi n GDP,15% i n empl oyment
generat
ion,7.8% accelerationinexpor tgr owt h,and31% i mpr ov ementin
entr
epreneurshi
pdev elopment .

I
mpact
sofcov
id-
19onSMEsi
nBangl
adesh
Adverseeffectsf
rom pandemiconbothsmal
landmedi um enter
pri
sear
e
obvi
ous,whi ch vari
eswiththemagnitudei
nr egar
dst otheeconomic
associat
ion.Ther
ear emanyprobl
em wi
llbef
acesduri
ngcov i
d19bysmall
businessarement i
onedbel
ow:

 l
ackofaccesstofinance:Becauseoflow marketdemand,l
esssel
l
butgr
owi
ngf i
xedcostmanyar eatri
skofbeingcomplet
elywi
pedout
.

 poormarketl
i
nkage:suppl
ychai
nofeverypr
oductincl
udingaccess
toraw mater
ial
s and i
nter
medi
ateinput
s has been subst
anti
all
y
di
srupt
ed.
  absenceofski
l
ledl abour:Labourmobi
l
ityt
oohasbeenseri
ousl
y
i
mpededasphysicalisol
ati
onisonekeymeasur
eofmi
nimi
zi
ng the
heal
thri
sks.

 l
ackofexpor
tmar ket
:Ongoi
nglockdownacr
ossexpor
tdest
inat
ions
hav
eledtobuyer
scancel
li
ngorpostponi
ngor
ders.

 Hindrance i
n operat
ion:l
ackofwor kerand raw mat
eri
alst
imel
y
operati
onwillhi
nderi
noperat
ionandproduct
ion.

 Dif
fi
cult
iesinrepay
ingloan:Duetobel
l
ow capaci
typr
oduct
ionand
sel
liti
squitt
oughtorepayloan.

 Compell
ed t o shut down many i
ndustr
y:The conti
nuati
on of
pandemic beyond 4 months wi
l
lforce a maj
ori
ty ofthe smal
l
busi
nessestoclosedown.

Recommendat
ionsandsuggest
ions
Thereshouldbearecover
yfundtohel
pthesect
orr
ecov
er.Furt
hermore,
rest
rict
ionsi
mposedbybanksshoul
dbeeasedt
ohel
pSMEent r
epreneur
s
getloans.

Saf et
yf oremployeescanbeensuredbyspaci ngoutt hefur
nit
ure,desk,
tablesandr otati
ngtheworkscheduleoft hewor kers.Empl
oyeeswhi l
e
attendingoffi
ceshoul dwearmask,glovesatal ltimes.Therestrooms
shouldhav eampl ehandwashi
ngmaterial
s,spaci
ngoutofwor kareasare
mandat or
y.

Inthepostpandemi csit
uati
on,thegov ernmenthast oformulat
epolici
es
forr evi
valoft he smal
lbusi ness enterpr
ises.The st i
mulus inj
ecti
on
declaredbyPr i
meMi ni
sterforsmallandmedi um enter
pri
seshast obe
equitabl
ydist
ri
butedandensureenduse.
Acashtransferpr
ogrammeatmi ni
mum wager at
ethr
oughmobiletr
ansf
er
coul
dhelpt hesector.I
ftheyf
ocusonobtai
ningthesti
mulusdecl
aredby
thegovernment,whichwi l
lbedi
str
ibut
edbyt hebanks,i
twil
lfundthei
r
busi
ness.

Empl oyeesofsmallbusi nessar emeagr el

ypaid.Ont opofitcut
ti
ngt hei
r
salari
eswouldpusht heirsurvi
v al
.Fortheinter
im sal
ari
escouldbereduced
toanext entwheretheycoul dsurvive.Thi
swoul dhavetobedeter
mi nedby
businesses.Becauset heempl oyeesalsoneedt ounderstandsurvivalof
thebusinessisimperativ
ef orthem tosurvi
ve.

Thesmal lbusinessownersneedt oespecial

lylooki nt
ohow tomi ni
mise
costandmaket heirst
affmor eeff
ici
ent.Mult
i-
taskingneedst obemade
i
mper ati
vef orallemployees.Resourceall
ocationandensur ingut most
resourceuti
li
sati
onwouldbekeyt oasuccessfulr ev
ivalandsustenanceof
thei
rbusinesses.

Becauseoft heinst
abil
i
tyofthenatureofsmallbusinesses,employ eeswil
l
defi
nit
elyhav el
owmor aleinthiscri
sis.Owner
sshowi ngempat hyt owards
thei
remploy eesandcounsell
ingthem couldhelp.Smallincent
ivesi ncash
whenevert heowner scanaffordcoul dbegivent otheempl oy ees.This
would make t he employee feeltaken care ofand mor al
e coul d be
maintai
ned.Wher epossibl
eremot ewor ki
ngshouldbeallowedi fnotdone
previ
ously
.

Expand themarketthroughtheuseoftechnol
ogyand conductsoci
al
campaignstomarketourproduct
sandi
ncor
porat
epol
ici
estofacil
i
tat
ean
enabl
ingenvi
ronmentforSMEs.

It
'spredi
cted68per
centofsmallbusi
nesseswi
l
lbecl
osi
ngdown.Par
ti
al
cl
osingdownwouldbeabetteropt
ion.

Inthe end,sustai
ning t
he smallbusinesseswi l
lposi t
ivel
yimpactour
economyandt hei
rclosi
ngdownwi l
lsendr i
ppleeffectstothewel
lbei
ngof
theeconomy .Henceallpar
tiesofthef i
nancialsy
st em shoul
dsafeguar
d
theexi
stenceandsecuri
tyoftheSmallBusinesses.
Concl
usi
on:
Acknowl edgi
ngt hecont r
ibutionfr
om SMEsi ntheeconomyofBangl adesh
and t he pr esent pandemi c, upcomi ng f iscal year SMEs pot ent
ial
contributionmi ghtbesubst anti
all
ylowersi nceindependence.Fur t
hermore,
otherconst r
aintsincludi
ng,accesst ocr edit
,lackofmanagementski l
ls,
i
nsuf fi
cientcapi tal
,anddef i
citinaccount i
ng,poorcashf l
ow,andev en
technol ogy,mor alhazardwi l
laggravatedt heef f
ectsofCOVI D-19.Onthe
otherhand,duet ot hei
rinformalnat ure,smal lenter
prisestendt ofall
outsidet heradarofpol i
cysuppor t
,despit etheirimportantcontri
buti
onto
thenat i
onaleconomyandj obcreation;theymaynotgett henecessar y
suppor tfrom thegov ernment .

SMEshoul dbeamostengagi ngandcost -eff

ecti
vesect
orforincomeand
employmentgener at
ion which mayi nj
ectnew dy namism into nat
ional
i
ndustr
ialgrowth,l
eadingtopovert
yallev
iationandgreat
ercontri
buti
onsto
theGDP.Ther efor
e,‘ImproveOppor t
uni
tiesandpr opermeasurei nSME
i
ndustr
ycanmakeBangl adeshadev el
opcount ry
.
Ref
erences:
1) The impactof covi
d-19 on smallbusi nesses( August1,2020)
htt
ps:
//www.googl
e.com/
amp/ s/
www. t
hedail
ystar.
net/coronavi
rus-
deadl
y-
new-t
hreat
/news/t
he-i
mpact-
covi
d-19-
small
-businesses-1939197%3famp

2)Md.Qamruzzaman,
(jul
y17,2020)COVI
D-19ImpactonSMEsin
Bangl
adesh:AnInv
est
igat
ionofWhatTheyAreExper
ienci
ngandHowThey
AreManaging?

ht
tps:
//paper
s.ssr
n.com/
sol
3/paper
s.cf
m?abst
ract
_id=3654126

3)Cov i
d-19 pandemic:76% pr oducts ofSMEs remain unsol
d.(June
24,
2020) ht t
ps://
www. dhakat
ri
bune.com/busi
ness/
2020/06/24/
cov
id-
19-
pandemic-76-
product
s-of-
smes-remain-
unsol
d

4)htt
ps://
bb.
org.
bd/about
us/
dept
/sme/
sme_
faq.
pdf(Bangl
adeshcent
ral
bankoff
ici
alwebsi
te)

5) Mi zanur R. (2020) COVID-19 and Bangladesh’

s macroeconomic
chall
enges. htt
ps://www.thedai
l
y st
ar.
net/
opi
nion/
economics/
news/covi
d-
19-and-bangl
adeshsmacr oeconomic-chal
l
enges-
1884391.