No doubt, things did not turn out as bad as many had predicted soon after the pandemic struck the country. The countrywide 'holidays' (a better coining for lockdown) also looked like causing a wholesale damage to life and livelihood. Mercifully, despite causing shocks to most areas of the economy, Bangladesh has demonstrated remarkable verve and fortitude to stay afloat, and now it is evidently set for a rebound. While we say this, we do keep in mind the many factors that keep impeding the recovery process involving trade, manufacturing, informal businesses, job or income loss of the masses, workers' remittance-- to name some key determinants of the economy.
While some sectors have shown resilience in coping with the situation like garment export and remittance, most others though trying to ride out the crisis, are yet to show signs of healing. This has been aptly pointed out at a webinar on "Covid-19 and Bangladesh: Path to economic recovery" organised by a think tank, South Asian Network on Economic Modeling (SANEM) on October 24. Addressing the discussion, SANEM executive director Selim Raihan, also a Professor of Dhaka University, said there are some signs of economic recovery but not in a uniform pattern. "Some sectors are recovering while some others are not. We need to make recovery in the social sector alongside economic recovery to achieve a sustainable recovery", he said adding that the country requires to come out of a narrow focus on growth and must give more attention to PIE (poverty, inequality and employment). "The crisis creates opportunity for us to rethink our policies for a larger scale of development," he said. Mentioning export and remittance as two major dominant drivers of economy because of their strong multiplier effects on other sectors, he remarked that there are uncertainties in apparel exports and remittance inflow and sluggishness in private investment and import growth. In this context, he emphasised the urgent need to implement the government announced incentive packages for SMEs as only a paltry one-fifth of the fund has been disbursed so far.
Utilisation of the incentive package, particularly for the benefit of micro and small businesses including cottage industries is a critical need, and already there have been much discussion on the poor scale of disbursement, mainly because of some built-in handicaps like collaterals or credit guarantee scheme as required for banks. Chambers and trade associations some days ago had urged upon the government to find an alternative and suitable mechanism to facilitate disbursement to the target groups. They also said that the government and non-governmental micro-finance institutions (MFIs) should be involved with the disbursement process in order that the entities can avail of the fund hassle-free.
Reaching out to these enterprises which cannot afford required collateral is crucially important. It is indeed difficult to have the exact number of such micro and small enterprises. Reportedly, their total number could be well over four million including small selling outlets, grocery shops and cottage industries in different districts. Observers and economists feel that providing these units a good share of the stimulus package can only render the government move meaningful.
Chambers and trade associations can play an important role in this regard. The authorities will need to work out a methodology whereby many of these units can be taken on board.
In the SANEM webinar, speakers said that besides poor disbursement of funds, the economy is fraught with sluggish demand in the domestic market and low private investment. Alongside these, they mentioned existing challenges of inequality, new poverty, lack of employment generation and institutional weaknesses as some other barriers to the country's economic recovery.
The speakers also suggested taking immediate actions to formalise informal sectors that account for more than 80 per cent of overall employment. It is here that the SME Foundation can play an important role. A majority of the members enlisted with the Foundation are small enterprises, still there is a need to bring more micro enterprises under its fold to be able to clearly identify their needs and suggest how the government can support them. The non-government organisations (NGOs) who are believed to be better placed in reaching out to the poor and the marginalised, especially in rural areas, should also be considered key partners in suggesting measures to help them.
It is rather early to say that the economy has taken the much desired rebound. Job loss and reduced income are the key concerns where there is no noticeable improvement. On the other hand, price spiral of essentials has added serious discomfort to not only the poor and low-income groups but also to most others except the well-off. Over and above, the possible threat of a next wave of the pandemic in the coming winter is no doubt worrying. The government will have to take all these into consideration while planning short- and mid-term strategies to help the economy bounce back.