Small-scale industries, identified by the Bangladesh Bank as the third hardest Covid-hit sector, have rebounded strongly, with production growth surpassing pre-pandemic levels following the reboot of economic activities.
Their manufacturing growth even seems to be going faster than that of large-scale industries.
The Small and Medium Enterprise (SME) sector saw its production grow by 26.29% year-on-year in July-October last year, while its growth stood at 10% in pre-Covid times.
On the other hand, production of large industries rose by 18% year-on-year in the same period, according to the Bangladesh Bank data.
In April-June of 2020, after the pandemic had hit the country, small businesses suffered a 15% drop in manufacturing of goods, whereas the big ones met with a slowdown but still maintained a 7% production growth.
The SME had started to turn around since July last year and reached a stable position in the last half of FY21 onward, said central bank data.
Rashed Imam, a garment manufacturer meant for the local market – who had to keep his factory shut during the pandemic, came back to production with full capacity six months ago, with a target to get good returns with big sales ahead of the upcoming Eid festival.
Stimulus loan helped SMEs survive
Rashed, a small entrepreneur who supplies products to street sellers and small shop owners, resumed production after having made fresh investments by taking out a stimulus loan.
His comeback in production was reflected in the strong rebound of the small-scale manufacturing index.
While talking to The Business Standard, Rashed, owner of Moni Fabrics, said, "Small manufacturers like me who somehow survived in the pandemic have now come back to production, but some could not ride out the crisis."
Although sales did not increase to the expected level yet, they started production with full capacity targeting the next festival, he noted.
He said small businesses mainly depend on festival-centric sales.
The placement of loan applications in a big number from SME ventures to banks also bears witness to the strong recovery.
For instance, Brac Bank, a SME lender in the country, sees demand for SME loans cross the pre-pandemic level.
From October last year to January this year, the bank disbursed Tk1,400 crore to the SME sector on average every month when the amount was around Tk1,200 a month in pre-pandemic times, according to the bank.
The total bank loans given to small-scale industries increased by 9.69% year-on-year in the July-September of last year when it declined by 19% in the same period of 2020, according to Bangladesh Bank data.
When contacted, Syed Abdul Momen, deputy managing director and head of SME Banking Division in Brac Bank, said recovery of small businesses is very impressive as it is reflected in high loan demand. Sales of some small businesses crossed the pre-pandemic level too.
He said sales of locally-manufactured garment products increased significantly amid limited imports from China in the pandemic time. Moreover, implementation of the government's megaprojects has got back pace, giving life to other small businesses, such as steel, rod, and cement.
Brac Bank survey shows SME doing well
Brac Bank also conducted a survey for its own consumption, which also showed an impressive comeback of SME businesses.
The survey found that business operation status improved to the pre-pandemic level in December last year, which dipped to 33% soon after the imposition of the first lockdown in April 2020.
However, the operation status improved close to pre pandemic level after the first lockdown was lifted but dipped further to 48% in second and third lockdowns.
Sales of the SME sector revived to 86% in December last year recovering from a 27% dip in second and third lockdowns imposed in April and July last year. Sales dropped to 18% in the first lockdown time, according to the survey.
The survey showed that sales of the SME sector were affected severely in the first lockdown but impacts from second and third lockdowns were less as sales recovery was above 50% during these last two lockdown periods.
Pharmacies, agro, agriculture, grocery and consumer goods were the least-affected sectors, according to the survey.
Jobs see bounceback also
The strong rebound revived the job market too.
For instance, Rabeya, (not her real name) works at the city's Dhanmondi branch of a renowned beauty parlour who lost her job during the pandemic and got it back after the first lockdown was lifted. At first, she rejoined her workplace at half of her previous salary, but for the last six months, she has been getting her full salary.
Sharing her pandemic-led struggle with TBS, she said, "I could not pay my house rent for several months. It was very difficult for me to stay in Dhaka without a job as neither I could beg nor take relief. Now, I get a full salary but we lost many colleagues who left Dhaka during that crisis period."
The Brac Bank survey showed that the recovery of SME businesses also restored jobs lost in the pandemic.
The number of employees declined by almost 8% in the third lockdown in July last year but recovered to 82% by Dec 2021, according to the survey.
The Bangladesh Bank, in its survey on Covid-19 impacts released in March last year, identified the SME sector as the third hardest hit by the pandemic.
Following the survey, the central bank asked banks to increase lending support to the vulnerable businesses and eased the rule of getting stimulus loans for SMEs.