The novel coronavirus has already caused deadly havoc in the world, affecting more than 180 countries and the spread is still on the rise. Rich countries, including the USA, UK, Germany, Italy and Spain are all struggling helplessly as thousands of their citizens are dying amid the outbreak.
Meanwhile in China, the source of the virus, authorities have successfully handled it and eventually recovered.
The virus' impact on the world economy has been a major blow since it first broke out in December last year. In a recent speech, the secretary general of the United Nations expressed deep concerns over the impact of the novel coronavirus on the world economy, the deadliest catastrophe after World War II.
The virus has created an acute wartime situation. There is speculation that it will bring extreme poverty and unemployment, leading to major economic shock.
For Bangladesh, the sad part is the timing.
In 2019, the gross domestic product (GDP) growth rate of Bangladesh was 8.15 percent. Due to the current situation, this growth will slow down.
However, the government of Bangladesh has taken some measures to fight the impact of coronavirus in the country.
The steps, including the Taka 5,000 crore for the readymade garments sector, are praiseworthy. In addition, the government's decision to ensure food for the lower segment of the population is also praiseworthy if it can be implemented properly.
However, the question remains how Small and Medium Enterprises (SME)s, a major contributor to employment and GDP, will survive this crisis?
Although they are capable of creating numerous jobs and contribute heavily to the GDP of the country, the government is yet to fully utilise this sector.
The contribution of the SMEs to the GDP is only 20.25 percent in Bangladesh, whereas it stands at 80 percent in India, 60 percent in China and 69.50 percent in Japan.
The sector accounts for 35.49 percent of the total employment in Bangladesh, according to a study conducted by the International Cooperation Organisation for Small and Medium Enterprises in Asia (ICOSA), Japan.
The study found that Bangladesh has 17,384 micro enterprises, 15,666 small ones, 6,103 medium and 3,639 large scale enterprises, engaging a total of 5.02 million people.
Therefore, the SMEs cannot be avoided if the government seeks to meet the targets of the sustainable development goals, in terms of employment and contribution to the GDP.
The true potentials of Bangladesh lie in SMEs and therefore the sector should get more emphasis for the sustainable growth and development of the country.
The "shock absorbing capacity" of the SMEs is very thin, and they are not in a position to bear the losses of one month.
If this lockdown prevails for more than a month, they will be in tremendous trouble and the outcome will be devastating.
Many SMEs will be forced to shut down, triggering higher rates of unemployment in the country, as many people will lose their jobs. Others will lose their capacity of paying rent, utility bills, and salaries.
Many will literally be classified as defaulters (although Bangladesh Bank has allowed up to 30th June of this year for non-classification). They will lose the capacity to pay interest as they are not earning a single penny during this time.
The Bangladesh Bank can consult with the government and formulate a policy to either waive the interest or lessen it for the shutdown period.
The people involved in the SME sector will need money to run their families. Therefore, the government must focus on their survival, including cash flow and food supplies during this pandemic.
The government must also acknowledge and formulate a policy for the post-pandemic crisis. The SMEs will restart operations and will thus require cash flow.
To address this crisis, the government can make a fund of Taka 5,000 crore for the SMEs, so that they can borrow and repay at easy terms and affordable rates.
For this, the government will have to act with patience, wisdom and prudence to formulate a strategy.
It can take four measures roughly to procure the required fund to address the current issues of the economy:
A) The government can procure a fund of $1.5 billion of the global fund of $50 billion formed by world organisations for fighting the global pandemic.
B) The government can ask for soft loans at easy terms from the World Bank, ADB, IMF, IDB.
C) The government may impose wealth tax on the High Net Worth Individuals/ Businesses and procure a handful of funds.
D) The government may take urgent steps of bringing funds from abroad that Bangladeshi nationals, who looted from different locals banks/financial institutions, deposited in different countries including Canada, USA, Malaysia, Switzerland, Australia, Singapore and many other countries.
If the government takes these steps, it will not lose the pace of its development and income inequality will be lessened. In addition, all the vulnerable sectors including the SME will gain a new momentum.
The Prime Minister Sheikh Hasina has the courage, experience, leadership skills, wisdom, efficiency and farsightedness to handle the situation and save the economy from the upcoming catastrophe.
The author is a Columnist, Economic Analyst and Founder and CEO of FinPower Leadership International.