How Lutfa's textbook example of entrepreneurship failed because of broken roads

Lutfa Sanjida, once a successful entrepreneur, finds herself entangled in a financial crisis due to the challenges posed by poor road access and other unforeseen obstacles.

Her journey from a humble housewife to a thriving businesswoman was once an inspiring tale of success, even featuring in textbooks for the ninth- and tenth-graders.

However, today, Lutfa Sanjida's life is a stark contrast to the portrayal of success in those textbooks. She is grappling with a staggering debt of nearly Tk1.4 crore owed to two leasing institutions. The debt includes Tk1.30 crore from Midas Finance and Tk8 lakh from United Finance.

Midas Finance has already filed a case against her under the Negotiable Instruments Act for non-payment of dues. The burden of loan defaults and legal entanglements has forced this once-successful woman entrepreneur to step away from her businesses.

According to information from Midas Finance, Lutfa Sanjida took a housing loan of Tk65 lakh in 2012 to purchase an apartment. The loan was supposed to be repaid in instalments, totalling Tk1.17 lakh per month, to be completed by 2025. However, due to unforeseen challenges, she was unable to pay the instalments on time, leading to an outstanding amount of nearly Tk1.3 crore after 11 years.

The rise

Lutfa Sanjida's entrepreneurial journey began in 1988 when she started a boutique business after her husband had been facing continuous losses in business.

Over the years, her business expanded, and she opened showrooms and parlours, becoming a prominent trader in Chawkbazar and Halishahar areas of the city.

At the peak of her success, Lutfa employed about 40 permanent and temporary workers, and her annual turnover exceeded Tk50 lakh.

Apartment loan and road access woes

In 2011, Lutfa booked a commercial apartment in Knight's Square, an under-construction building in Halishahar, intending to conduct business there instead of a rented shop. She took the Tk65 lakh loan from Midas for the apartment.

However, the developer's delays in completing the project created problems for Lutfa. Moreover, the situation worsened when the construction of Agrabad Access Road, the connecting road to the port and Sluice Gate caused significant disruptions to the area's communication system.

For three long years, the poor road access deterred customers from visiting Halishahar, causing a severe setback to the business and trade in the area, Lutfa told The Business Standard.

Just as the situation seemed to improve after the road work was finally completed, the Covid-19 pandemic struck.

"For several consecutive years, I struggled to repay the loan due to business losses. Additionally, the business had to be closed due to various reasons, including family problems. As a result, I gradually became a defaulter," Lutfa told TBS.

Even though there were regulations in place for providing housing loans to ready apartments, Midas Finance officials claimed that an exception was made in Lutfa's case. Despite the investment in her apartment, the property does not exist as yet.

During a visit to the building on Wednesday, The Business Standard found it to be only a two-storey structure. The entire ground floor was being used as an office of Sundarban Courier Service, while the first floor was lying vacant. And, there was no sign of any upper floors, including the fourth-floor commercial apartment supposedly bought by Lutfa.

Mohammad Rahim Ullah, assistant general manager of Midas and in-charge of the Chattogram branch, told TBS that Midas Finance had previously sanctioned loans to Sanjida on several occasions and those loans were recovered on time.

But, when asked specifically about why they sanctioned a loan for the purchase of a non-existent apartment defying rules, Rahim Ullah declined to give an answer on various excuses.

According to information from Midas Finance, Lutfa Sanjida's loan is currently in default status. The loan had been classified as non-performing back in 2019, leading the institution to file a case against her under the NI Act. As of now, the case is still pending at the District Judge's Court in Dhaka.

Seeking support to revive entrepreneurship

Lutfa Sanjida is currently managing a small-scale boutique business centring Dhaka.

"My products still have good demand, but the lack of investment hinders the growth. Large entrepreneurs obtained government incentives during the pandemic, but we did not," she told TBS, stressing the need for financial assistance to revive her business.

Speaking on this matter, Monowara Hakim Ali, president of the Chattogram Women's Chamber of Commerce and Industry, appealed to relevant authorities to support struggling entrepreneurs like Lutfa, especially those facing natural or man-made calamities.

"Entrepreneurs are susceptible to various risks, whether arising from natural calamities or man-made disasters. It is disheartening to hear about the case of a three-decade-old woman entrepreneur who was compelled to close her business due to loan defaults, potentially facing legal repercussions, including imprisonment if convicted," Monowara said.

She emphasised the need for initiatives from Bangladesh Bank, SME Foundation, and other related parties to help entrepreneurs get back on their feet.