Rampant power cuts hit small businesses hard

Frequent power outages, sharp fluctuations in currency values, and rising inflation are all posing existential threats to small and medium-sized businesses in Bangladesh.

Since the nationwide power cuts went into effect on July 19, business owners have been subjected to longer power outages than in days prior.

Typically, residents of rural areas complained about daily power outages lasting 10 hours or longer, mostly during the day, while those in cities and towns claimed that daily outages lasted for five to six hours as well.

Some of the entrepreneurs said they could even survive during the Covid-induced restrictions but the power cuts have pushed them to the floor.

M Rifat Islam invested Tk 2 crore in the toy sector and had a good response in the market even during the Covid-19-induced restrictions. But the present situation – particularly power cuts and the increased everyday expenditure of the people – pushed him into dire straits. “I’m experiencing the worst in my business career. We can neither go on full production nor sell the products properly,” he said.

Bangladesh Toy Merchants Manufacturers and Importers Association President Md Shajahan Mojumder said, “Our business did not fall even during the peak of the Covid restrictions. But, we are passing through a difficult time now. We had no toys in our warehouses during festivals like Eid, and Durga Puja last year but this year 30 to 40 per cent of our products remain in warehouses.”

Md Ismail Hossain and two of his friends initiated a printing press business at Meghna Ghat investing Tk 20 crore. They are now incurring losses and the figure is increasing day by day. “We cannot run our machines even for four to five hours a day. It means we remain in production for only eight days a month but we have to bear the cost for the entire month,” said an exhausted Ismail.

“I don’t know when the situation will get better and bring relief for us,” he said.

SME Foundation Managing Director Dr Mafizur Rahman told The Business Post there is no doubt that small entrepreneurs are now suffering too much, especially those whose investment is comparatively smaller.

“We always stand by the small entrepreneurs but amid the current situation prevailing across the globe, the entrepreneurs should avoid any extra expense.”

In Bangladesh, SMEs are considered engines of economic growth that contribute to over 90 per cent of business enterprises while it was 97.60 per cent in India, 99 per cent in China, 99.70 per cent in Japan, and 60 per cent in Pakistan, according to The Institute of Chartered Accountants of Bangladesh.

MSMEs cover around 80 per cent of total employment in Bangladesh and this sector contributes around 25 per cent of the country’s GDP.

As per the UN data, MSMEs account for 90 per cent of businesses, 60 to 70 per cent of employment and 50 per cent of GDP worldwide.

Md Ariful Islam started a small plant for producing electrical products such as switches, socket boards and electrical wire on a piece of his father’s land in 2020. Initially, he got a good response but for the past nine months, he is struggling for survival. Most of his clients are realtors and they stopped their construction works for the skyrocketing price of construction materials.

As everyday expenses increased, people are now controlling their expenditures and it also affected the small entrepreneurs, said Mohammad Habib who invested Tk 7 lakh for making stationery products.

“People are not spending money without any dire need. So our products are now going slow,” he said.

Small and Medium Enterprises Owners’ Association of Bangladesh President Md Ali Zaman said the small entrepreneurs now fail to go on expected production for power cuts and other reasons and the worsened economic condition also halted the sale of their products.

“The conglomerates are selling their products at much cheaper rates which is also wiping the small entrepreneurs out of the market,” he said, adding if small entrepreneurs cannot sell their products, how they could exist in the market competition?