Often bypassed by banks, the informal sector is unlikely to get much benefit from the government's Tk 727.50 billion stimulus package, fear economists.
They hailed the Prime Minister for unveiling the package, but suggested the government allocate cash support for the informal economic establishments and entrepreneurs who generate substantial jobs.
Sheikh Hasina on Sunday announced a Tk 727.50 billion relief package for the industrial and service sectors and smaller enterprises to cushion the economic impact of Covid-19 pandemic.
Of the funds, the commercial banks will provide Tk 300 billion for the large industries and service sectors, and Tk 200 billion for the smaller firms as working capital.
Former lead economist of the World Bank's Dhaka office Dr Zahid Hussain expressed his fear that the support is unlikely to reach what he called the "missing group," informal enterprises, which have little or no banking involvement.
He laid emphasis on earmarking a certain portion of package for this vulnerable group, helping it sustain business while maintaining social distance.
"The informal economic establishments and entrepreneurs should be the first target group of the package as they do not have enough capital to recover from losses," Dr Hussain said
"But the formal sector enterprises may have capital to run businesses for two to three months from their own resources," he added.
The economist argued the government should consider replicating the European "payroll" model for the proper uses of taxpayers' money by the enterprises.
"All large, medium and small enterprises should have matching fund for getting the financial support from the banks to help them pay wages and salaries of their workers and employees and office rent and utility bills," he said.
For example, the banks will give 60-80 per cent of their total required fund and enterprises or service providers will bear the rest.
"This will make the support package sustainable and ensure optimal utilisation," Dr Hussain added.
Executive director at the think-tank Policy Research Institute of Bangladesh, or PRI, Dr Ahsan H Mansur agreed that the firms, who are unbanked, should get the handouts.
"I think many micro, small enterprises and service providing establishments are involved with the microfinance institutions across the country. So, the government could use some MFIs to support the micro and informal establishments, which do not have relations with banks," Dr Mansur noted.
According to the Economic Census 2013, Bangladesh is home of 8.07 million macro, micro and medium economic units across the country.
The PRI executive head also suggested the authority be cautious about proper distribution of the support as there is a possibility of the funds being eaten up by some "big and bad" companies. The bank loan defaulters should be barred from getting the support, he said.
Research director of the Centre for Policy Dialogue (CPD) Dr Khandakar G Moazzem told the FE that the package seems to be designed for the formal sector as the informal sector remains missing group.
"The informal sector and enterprises never go to the commercial banks. Some go to some cooperative societies and MFIs for getting loans. They may not have official documents like trade licence and other papers. So, how will avail this loan from the commercial banks?" he questioned.
The government should have a special package or a certain amount, which would be lent out to them properly in a sophisticated method, Dr Moazzem said.
The government can see their mobile financial transitions, verify identity by their respective associations, data support from the NGOs, and the available data from the BBS to identify them for providing the working capital support, he added.