Engage micro-lenders to grant stimulus loans to SMEs: Sanem
Microfinance institutions should be involved in the disbursement of funds from the government’s stimulus plan to small and medium-sized enterprises (SMEs) so that these enterprises have rapid access to financing in the context of the ongoing coronavirus pandemic, according to the Network. South Asian Economic Modeling (Sanem).
“Although entrepreneurs benefit from the stimulus package, disbursements are made through the banking system, which is a very slow process,” said Sanem Executive Director Selim Raihan.
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Raihan made the comments during a virtual discussion, held yesterday as part of the Sanem Internet User Forum on the Covid-19 Pandemic – Episode 8, titled “Assessment of the Global Current Pandemic Situation”.
The government previously announced a Tk 20,000 crore stimulus package for SMEs with the aim of providing the industry with enough working capital to survive the fallout from the coronavirus and continue to grow.
In his argument on why small lenders should be allowed to make disbursements, Raihan said that micro-lenders mainly provide finance to SMEs and therefore involving them would help the sector to take full advantage of the plan. relaunch. GAD Direct lender site is here to help
The executive director of Sanem also expressed his appreciation for the government’s initiative to protect SMEs, as it will help the sector to recover alongside the overall economy.
However, he also suggested that the authorities should monitor the implementation of the stimulus package to ensure that the funds are used correctly.
Regarding the social safety net program, Raihan said the government has yet to bring people recently forced into poverty by the Covid-19 epidemic under this program.
Many self-employed workers were made redundant and ended up returning to their villages after failing to secure sufficient working capital due to the ongoing pandemic.
“Thus, they should be added to the list of eligible people and receive full financial cooperation under the stimulus package,” Raihan said.
In the meantime, it is a good initiative to use the foreign exchange reserve to finance development activities. However, the reserve should not be overused as it will discourage foreign direct investment, he added.
While Bangladesh’s economic activities will not resume full swing until the outbreak is brought under control, East Asian countries like Vietnam are in full swing after successfully controlling the spread of the deadly pathogen.
Addressing the discussion, Sayema Haque Bidhisha, professor of economics at Dhaka University, said that inbound remittances have risen sharply in recent times, with expats transferring all of their income to their homes with a view to return to the country.
“However, their return will also create challenges for the economy as they will almost certainly return to their villages and remain uninvolved in economic activities,” said Bidhisha, also Sanem’s research director.
In addition, other low-income people have left Dhaka to save on rent, while some have even lost their jobs.
“So this sector should be placed under the social safety net,” she added.
Bidhisha also pointed out that SMEs are unable to pay 4% interest on the stimulus package loans and therefore the government should relax some of the criteria.
Mahtab Uddin, Associate Researcher, and Eshrat Sharmin, Associate Researcher, also spoke during the discussion.