Load shedding, price hikes put SMEs on survival fight yet again

Muminur Rahman Mithu, 40, is an Old Dhaka-based light-engineering entrepreneur, who grew a business having an annual turnover of Tk9 crore from almost zero investment over the past 17 years. 

His LED bulb manufacturing factory with 50 workers has a capacity of producing 30,000 bulbs a day. But, the ongoing multi-faceted crises, including load shedding, put him in a survival fight. 

"Due to unexpected load shedding that started last month, my bulb production fell by 30-35% to 15,000-20,000 units. On top of that, my workers remain idle for 2-3 hours every day, which increases my operating costs," Muminur Rahman Mithu said while talking to The Business Standard recently. 

"Besides, soaring dollar rates and the Russia-Ukraine war have pushed up our raw-material prices substantially," he said while adding the price of a 25-kg sack of plastic powder, for example, was Tk3,500 in early February this year and it has now reached Tk4200-4500. 

"Despite the hikes in raw material prices, our light engineering sector could not raise product prices accordingly which means we have been compromising on our profit margin. In such a situation, load shedding-induced additional costs for production became a great pain for us."

Mithu further added that they might shut businesses if the situation continues for long.

Another SME sector promising entrepreneur Esrat Jahan Chowdhury produces diversified jute products and exports those to Ireland, Italy, France, Sweden and the Netherlands.

"Before the Covid-19 pandemic, my business was growing well. But, the crises one after another such as the Russia-Ukraine war, global inflation and recently started countrywide load shedding, have led my business to a gradual fall," she told TBS. 

"Even before the load shedding, I could ship a container of goods to Europe per month, which is not possible now as the only power outage decreased my production by at least 30%."

"Yet, I am trying my best. Every day I work extra time to ensure the delivery of the export shipments at least. Otherwise, my order will be cancelled." 

The capital's Badda-based entrepreneur said the unusual workload and multi-faceted crisis not only increased her financial pressure but also hampered her daily life and mental health. 

Mithu and Esrat are just two of millions of small and medium entrepreneurs across the country who hit hard by several crises one after another over the past two and a half years – from the beginning of Covid-19 outbreak early 2020. Many of them are at the edge of losing business with frequent load shedding, raw material price hikes, and subsequent fallouts. 

According to the SME Foundation, there are a total of 177 industrial clusters across the country, where millions of different sector entrepreneurs and their workers are producing various types of products – from light engineering goods to cricket bats to processed food items.

Although the ongoing crises, including load shedding, have negative impacts on all businesses, the SME sector ones are the worst sufferers, believes Professor Mafizur Rahman, managing director of the SME Foundation.

"They [SMEs] get hit badly due mainly to their smaller capitals. If the situation lasts long, the small entrepreneurs will suffer a lot," he told TBS.

When asked whether the government will take any steps to help them survive, he said no government initiative to this end has been made yet. "If we receive instructions or incentives in this regard, we will work accordingly," Mafizur Rahman added.

Meanwhile, Abdur Razzak, president of the Bangladesh Engineering Industry Owners Association urged the government to ensure uninterrupted electricity for his sector saying that light engineering manufacturing is completely dependent on electricity.

As per the SME Foundation, the contribution of the SME sector to the country's GDP is 25%. The number of SME sector entrepreneurs is now 6 million, according to the Bangladesh Bank.