Published in The Daily Star on Thursday 3 September 2020
Supporting small and medium enterprises through the Covid-19 pandemic
The Daily Star in association with LankaBangla Finance Limited organised an online discussion titled “Supporting small and medium enterprises through the Covid-19 pandemic” on August 23, 2020. Here we publish a summary of the discussion.
Dr Khondaker Golam Moazzem, Research Director, Centre for Policy Dialogue (CPD)
The government was responsible for handling the subsidies associated with stimulus packages; the banks were supposed to shoulder the other responsibilities, but they have not fulfilled them. It seems many businesses which do not necessarily need loans, have been issued funds. Industrial loans are important for export-oriented businesses, since they make big contributions to our economy. However, only this sector has been given most loans since banks find them to be risk-free, though SMEs are deemed to be important during this crisis. The government has established a loan guarantee scheme for risky businesses like SMEs and a 2,000 crore taka package has been declared for this purpose. Yet, no proper implementation is being seen by the banks.
The government has built a database for the informal sector. However, this database is still going through various difficulties. Cottage, micro, small and medium enterprises need to be brought under one database. This would allow the government to regulate its plans and schemes in a more concise and clear manner. For example, cottage and micro enterprise owners, who are not currently able to go to banks, could be helped in many other ways (exemptions on electricity, water bills, VAT and tax, etc).
Loan disbursements need to be made available to the marginalised communities in peripheral areas as well. Besides, we can even help cottage and micro enterprises in non-financial ways. BSEC, banks, MFIs and even NGOs can provide the required data in creating a database for enterprises.