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COVID-19 Impact on the SME Sector of Bangladesh

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LightCastle Analytics Wing
May 9, 2020
COVID-19 Impact on the SME Sector of Bangladesh

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:

https://www.slideshare.net/LightcastlePartners/covid19-impact-on-the-smes-of-bangladesh

To learn more about the Impact on Bangladesh’s SME Landscape [pdfwithmodal file=”https://lightcastlepartners.com/wp-content/uploads/2020/05/SME_WhitePaper_compressed.pdf”]

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WRITTEN BY: LightCastle Analytics Wing

At LightCastle, we take a systemic and data-driven approach to create opportunities for growth and impact. We are an international management consulting firm which creates systemic and data-driven opportunities for growth and impact in emerging markets. By collaborating with development partners and leveraging the power of the private sector, we strive to boost economies, inspire businesses, and change lives at scale.

For further clarifications, contact here: [email protected]

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