Covid-19 puts young businessmen in deep financial crisis

Moshiur Rahman Suruz, founder of Rose Model Kindergarten in Meherpur, invested Tk10 lakh in the school in 2017. The school was doing well but after the outbreak of Covid-19 in March last year, the government closed all educational institutions.

He then sold a piece of land and spent an additional Tk5 lakh to pay teachers' salaries and the school's other expenditures. But in September, he was compelled to shut down the school permanently.

After everything returns to normalcy, he will need even more money to restart the school. But he has no way to recover the losses he incurred after the school's closure.

"I am now selling biscuits door to door to make ends meet. I was not prepared for such a situation. I always dreamt of founding a reputed school and being solvent financially but the pandemic has dashed all my hopes," he told The Business Standard.

Bahalul Ahmed Fahim has been doing fashion business since 2016. He started the business after his graduation with Tk20 lakh, which he had collected from his family members and well-wishers. He worked hard to establish his business and was waiting for a good time.

But the pandemic ravaged his business as his unsold stocks increased while sales declined. He has been counting losses for months and is now just trying to survive.

"I made a fresh investment of Tk20 lakh on the occasion of Pahela Baishakh and Eid-ul-Fitr. But the ongoing lockdown has put me in deep trouble. It will be difficult to even survive now," he told The Business Standard.

"I went to a bank to get loans under the coronavirus stimulus packages. But they refused to give me loans although I had all the required documents," he added.

Like Suruz and Fahim, a good number of young entrepreneurs were intensely affected by coronavirus and are now in a vulnerable situation.

Last year, Youth Co:Lab conducted a rapid survey of 410 young entrepreneurs across 18 Asia-Pacific countries, including Bangladesh, in a wide range of sectors. They found that the pandemic had negatively impacted the businesses of 86% of young entrepreneurs.

Of them, 88% experienced reduced customer demand, 34% suffered supply chain disruptions, and 25% witnessed distribution disruptions.

According to a 2020 survey carried out by business strategy consulting firm LightCastle Partners among 250 start-ups in the country, 60% of start-ups had less than three months of runway. One-fourth of them had to shut down operations and 30% of the start-ups reported a 50% drop in business.

Young businessmen were hopeful about recovering from last year's losses in the beginning of 2021 as coronavirus infections were decreasing and everything was on the way of getting normal. But the recent surge in cases and the lockdown shattered their dreams.

Helal Ahmed Khan, who runs IT firm ITBD, was providing IT services to the dorms at the University of Dhaka before the pandemic. But he is now counting losses as the university is closed.

"I was optimistic that the university would re-open. But it was uncertain as infections became unpredictable. I finally closed my business and incurred a loss of Tk5 lakh," he added.

Professor Selim Raihan, executive director of South Asian Network on Economic Modelling, told The Business Standard young entrepreneurs are in a vulnerable position as most of them started business by borrowing money using their personal capacity.

"Now their capital is under threat. Unfortunately, we did not see any initiative from the government to support them. That is why we have been working for a 'youth budget' in the upcoming budget. The youth will get funds to continue their businesses from the 'youth budget'," he said.

Rizwan Rahman, president of Dhaka Chamber of Commerce and Industry, said the government's stimulus packages had fulfilled only 60% of their targets in a year and there is no system to monitor the disbursement of these loans.

"Many new entrepreneurs, especially young businessmen, have lost their capital and are now trying to survive. They have no chance to get loans under the stimulus packages as they are not maintaining banking. There is no system to supervise them either," he said. 

He also said the government should form a central monitoring body comprising trade bodies and other non-governmental organisations to distribute loans among young entrepreneurs so that they can develop their businesses.

"The government must protect these businessmen. Otherwise, they will be demoralized, which will be harmful to the country in the future," he added.