‘Surviving in business is the toughest challenge now’

Small scale entrepreneur Md Mostofa Kamal makes all sorts of tasty snacks from sugar, flour, molasses and oil. The price of all these raw materials has spiked several times in the last one year. As a result Mostofa Kamal’s production costs have also surged, but the price of his products has not increased in that proportion. He is running his business at a loss now, instead of making any profit.

The name of Mostofa Kamal’s business is Safe Trading. The Safe factory Trading is in Uttara, Dhaka.

Speaking to Prothom Alo on Sunday, Mostofa Kamal said, “I have incurred loss in hundreds of thousands of taka over the past one year. I am not even getting any bank loan to mitigate the situation. Simply surviving in the business has become a big challenge now.”

In the one or one-and-a-half years after Covid-19 outbreak in 2020, many businesses managed to get back on their feet. But the crises emerged anew following the start of the Russia-Ukraine war in February 2022. The Cottage, Micro, Small and Medium Enterprises (CMSME) businesses, in particular, are now in dire straits.

The average inflation rate in the first 11 months of the ongoing 2022-23 financial year was 8.84 per cent. At the same time the exchange rate of the dollar against the taka spiked by 25 per cent. As a result, import costs also surged.

Again, the traders also struggling to open letters of credit (LCs) for imports due to the dollar crunch. This has led to a sharp rise in the price of raw materials in the local market, and people have cut down on their shopping due to the pressure of inflation.

Thousands of small scale entrepreneurs like Mostafa Kamal have been facing crises in the emerging situation.

SME Foundation chairperson Md Masudur Rahman said most of the entrepreneurs of SMEs have a smaller capital. Currently, the price of raw materials and production costs have increased multifold. But the price of products and services has not surged in that proportion. As a result, some of the entrepreneurs are trying to survive by decreasing production, making smaller profits and incurring losses.

It has become easier for the entrepreneurs of SMEs to avail bank loans than before. Despite this, many entrepreneurs consider this as the biggest problem. Tanzina Tareq, co-founder of SME company Hat Baksho, faced many hassles when she tried to get a bank loan for the first time. She said she did not get any response from several banks. It took her a long time to arrange the required documents for the loan.

Tanzina Tareq said that a new entrepreneur should not face such a huge burden of collecting so many documents.

Dhaka Chamber of Commerce and Industries (DCCI) president Samir Sattar told Prothom Alo the process of availing loans should be made easier for the small and medium scale entrepreneurs.

The DCCI president further said the SME entrepreneurs cannot borrow the required amount of money due to various complex document requirements. This business leader suggested that the authorities consider the SME as a separate industry sector while giving loans.

Md Shahed Hasan of Artisan Craft (BD) Ltd. produces different types of electronics equipment including cooling machines. He said, “The import of various machines has plummeted due to the dollar crisis. As a result, the sale of my factory products has increased.”

Economists said though the SME entrepreneurs are under pressure due to the ongoing crisis in the economy this has opened up doors for the growth of the local market. They could seize the opportunity and focus on business expansion rather than higher profits.

* The report was originally published in the print edition of Prothom Alo and has been rewritten in English by Shameem Reza