‘Small enterprises are most dynamic here’


"Since small enterprises are most dynamic in Bangladesh's economy…they have been shut and these are the enterprises which have lost working capital," said Eminent Economist and former Adviser to Caretaker government, Dr. Wahiduddin Mahmud on Saturday. 

He was addressing a webinar organised to release a study report conducted jointly by the Power and Participation Research Centre (PPRC) and the BRAC Institute for Governance and Development (BIGD) on Saturday.

Prof Mahmud said large enterprises will thrive again as stimulus package is there. But replenishing working capital of small enterprises is the main challenge, he said. 

He also said the recovery will depend on how the government supports small enterprises.

According to the study, the resumption of economic activities reduced the number of the crisis-caused "new poor" by only 1.1 percentage points to 21.7 per cent

In the April study, the percentage of emerging new poor was estimated at 22.8 per cent in April, which came down to only 21.7 per cent in June, the new episode of research said.

The study was carried out among 7,638 households in an urban slums, rural areas and hill tracts areas between 20 June and 2 July, the PPRC and the BIGD study also found that 15 per cent respondents migrated from Dhaka to other less-costly cities or rural districts during the period while only 1.26 per cent moved to Dhaka.

However, 8.35 per cent moved from Chittagong to other districts, whereas 0.62 per cent moved to Chottagong from other districts, the study found.

The study found that a significant and continuing learning loss is putting a generation of children at a new human capital disadvantage, particularly from poorer and rural families who have unequal access to technology.For the growing children, especially in extreme-poor and poor families, months of negative coping through reduction in consumption and diet diversity can result in stunting, the study observed.

The resilience evident through early recovery appears to have come through further in formalisation towards lower-skill jobs creating the risks of low-earnings trap and widening gender gap, it also observed.

The organisations started conducting the survey in April to analyse the economic shocks faced by the poor and vulnerable people after the government declared a countrywide shutdown.

The latest survey was carried out to analyse and understand the recovery journey of the poor and vulnerable populations since the government lifted the shutdown at the end of May.

The survey recommended a new stimulus package for low capital, but productive smaller firms through alternative delivery platforms such as microfinance institutions for the soonest rebound of small businesses.

The survey urged the government to address widening gender gap in the labour market through specific skill and financing support programme for urban and rural women

It also said there is an alternative 'stimulus' of targeted policy support to critical economic export and domestic economic sectors.

The final report of the research, unveiled by PPRC Executive Chairman Dr Hossain Zillur Rahman and BIGD Executive Director Dr Imran Matin, found that efficient micro and small enterprises were disappearing gradually due to the pandemic.

Dr Rahman said there is a critical need for new stimulus package for low capital, but productive MSME through alternative delivery platforms.

"That is a very important issue… But they utilised those delivery platforms, which were really not customised to address these clients," he said.  At the event, Minister for LGRD and Cooperatives Md Tajul Islam, Professor of Economics and Director of the International Growth Centre of London School of Economics Robin Burgess, Executive Director of Centre for Policy Dialogue Fahmida Khatun and Professor of the Practice of International Development, Georgetown University Shantayanan Devarajan, among others, spoke.