LightCastle Partners & Sheba.xyz collaborated on an independent study about the “COVID-19 Impact on the SMEs of Bangladesh”. The survey was conducted in late April with over 230 SME respondents from all over Bangladesh covering industries involving Trading & Production (48.4%) that includes Perishable & Grains, Poultry, Dairy, Fisheries, Jute Diversified Products, and Retail Store; and Service Industry (51.6%) that includes food catering, electrician services, laundry, beauty salon, MFS agent, and restaurants.
The status-quo of the SMEs and their current hurdles
28% of SMEs have seen revenue drop by at least 50%, while 52% of SMEs have locks hung over their businesses generating no revenue at all
2/3rd of the SMEs have a window of fewer than four months to survive in current conditions before they exhaust all their cash reserves
Measures were taken by SMEs to tackle the Pandemic
Enterprises are cutting corners massively by optimizing costs – 46% of SMEs are projecting to layoff over 50% of their Staff within four months if the situation does not improve
42% of enterprises have cut their marketing expense down to zero
Implementation of the stimulus package to uplift the economy
The need of the hour is refinancing and providing capital at minimum cost to these marginalized SMEs
The SMEs mentioned their needs for soft loans (52%), moratoriums (6%), and existing loans to be rescheduled without fines (15%)
Recommendations & Way Forward
Extended Reach: There is a need to bring the MFIs into the equation to have a wider reach across the country in providing credit
Government Tax Exemption: These measures will remove significant additional financial burdens on SMEs
Digital Transformation: SMEs and micro-merchant would need a holistic solution to survive in the long run during this scenario. One of the ways would be to Initiate a SMART Digital Transformation engagement with MSMEs in specific regions. Solutions would include: A) Integration with Digital Supply Chain, B) Digital Financial Solution, C) Access to Credit
To learn more insights, check out the slides below:
At LightCastle, we take a data-driven approach to create opportunities for growth and impact. We consult and collaborate with development partners, the public sector, and private organizations to promote inclusive economic growth that positively changes the lives of people at scale. Being a data-driven and transparent organization, we believe in democratizing knowledge and information among the stakeholders of the economy to drive inclusive growth.